Families of shareholders who died with an interest in British plcs, face on average, up to a year’s delay in gaining probate – due to the complexity of liquidating shares in firms which have subsequently been bought by American companies over the past two decades.
An average delay of up to 12 months has been noted by the UK’s largest probate research firm, involving shares in major companies such as CRH, Cadbury Schweppes, Pfizer and Ferguson Plc, among many others.
Finders International has seen cases involving former UK plcs which have been bought by US firms since the early 2000s adding months of delays when it comes to winding up estate administration, after a sample of 748 cases was measured over the past five years.
Unlike the UK, US transfer agents (or US share registrars) and financial institutions, require medallion signature guarantee stamps on share transfers, which have to be secured during the probate process. While not standard practice in the UK, the medallion signature guarantee stamp has become the standard way for US and Canadian institutions to authenticate and greenlight securities transactions.
This stamp asserts that the person signing over shares or other securities, is capable of doing so, and has the authority to sign for the deceased shareholder, for example. Due to the liability they take on, stamp providers set stringent compliance requirements for the person needing the stamp. Securing the necessary documents and information has added weeks and in many cases, months to the process. This adds a layer of complexity that isn’t present for UK share transfers. Louise Levene, international expert at Finders International, the UK’s largest probate research firm commented:
“Many of Britain’s most famous plcs have been part of high profile US-based M&A activity, particularly over the past fifteen years, and the implications of this is that many UK shareholders now have an interest in American firms. We call this ‘the Cadburys effect’ – a seemingly British firm now part of an American conglomerate.
Many elderly UK shareholders bought shares in what were once UK firms, perhaps decades ago. Executors dealing with the estate administration now find they are owned by US holding companies. These shares are now subject to the rules of a US institution, and to US state and even (US) federal laws, with stricter compliance steps and hurdles, that many solicitors winding up exclusively UK-based probate matters would not normally have to contend with.
It is taking longer to wind up estates affected by these changes, as those unused to the lengthier US procedures can struggle to meet the requirements of the institutions. This places strain on practitioners, executors and families alike.”
Geoffrey Odds, Chair of the International Association of Professional Probate Researchers (IAPPR), commented:
“While many of these firms are typically some of Britain’s most famous companies, we’re also finding many European families facing similar complexities, in many cases even longer, not least because of the challenges they experience meeting country-specific compliance and probate requirements across borders.”
