LISTED companies will by November replace the original share certificates issued to shareholders as prove of ownership of shares.

Through a process called dematerialisation, share certificates will be converted from paper certificates to electronic form. As a result, all shares represented by share certificates will be substituted with book entries.

"Share certificates will therefore cease to be prima facie evidence of ownership once the shares are dematerialised," said Safaricom in a notice to shareholders yesterday.

Shareholders holding onto share certificates have now been asked to open CDS accounts to immobilize their shares.

Fears have however emerged over whether old shareholders are going to adopt this new development given that they are used to the share certificates.

But the Kenya Association of Stockbrokers said the old generation of shareholders are embracing the idea once the clear explanation has been provided.

"Once they realise that their shares are more secure in an immobilised format than in the share certificate form, they are becoming more responsive to it," said Kasib CEO Willy Njoroge. Njoroge said the response has also been fueled by the understanding that they have to do this if they want to trade in their shares.

"Generally, the response is good, actually better than we had anticipated," Njoroge said.

According to the Central Depository and Settlement Corporation, after the dematerialisation date, shareholders' registrar will open a CDS account where all shares that have not been immobilised shall be held in trust by the respective issuer.

Some of the benefits of this exercise include prevention of loss since the share certificates will be kept in an electronic form.

It will also be easier and faster to transfer and sell ones shares. In addition, cost of issuing new shares will be greatly minimised.

"If you wish to access your shares for purposes of trading, transfer etc, you will need to follow a verification process through your registrar after which your shares will be transferred to your personal CDS account once you have opened it," said CDSC in a press notice.