Your Money: Windfall Special - So where's my certificate?

If you fail to get the paperwork right you could lose money. Tony Lyons spells out the dangers

The first rule of finance is to read the documents carefully - to make sure that you know what you are being offered. The fact that you are not being asked to pay for your windfall shares is no excuse for leaving the paperwork unread.

Among the next wave of conversions from mutual to plc status, savers and borrowers with Halifax Building Society and eligible policy-holders with the Norwich Union and Colonial insurance companies have received notice of their share handouts.

Make sure you have received the correct share allocation. Savers with the Halifax, for example, will be receiving 200 free shares for investments of up to pounds 1,000, plus one share for every pounds 50 above that. With nearly nine million receiving windfall shares, there are bound to be mistakes.

If John William Smith has two accounts with the society, one in his full name and one in the name of JW Smith, the company's computer systems might well think there were two different people - each of whom would be entitled to their own share handouts. Unfortunately for Mr Smith, it is against the rules for anyone to receive the basic allotment of 200 shares more than once - and in time the society will discover the error and ask for the extra shares to be returned.

Just as important as receiving the correct share handout is deciding how you want to hold or sell the shares. If you want full control over your windfalls - whether to sell or re-invest - you must make sure you ask for the share certificate, which is in effect your proof of ownership, by completing, signing and returning on time the relevant section of the paperwork.

The converting societies are not exactly making it easy for people to get their certificates, and are encouraging investors to leave the shares in one of their special shareholder accounts instead. But that may not be the best way to profit from your windfall, whatever your long-term intentions.

Halifax, which plans to demutualise in June, is to offer a nominee share account for its new shareholders. Those who use the service will not receive a share certificate. Instead the Halifax will look after their shares and arrange for dividends to be sent to them. The nominee account service is free for the first three years, and during that time shareholders can use the Halifax's cheap share-dealing service. They can sell up to 1,500 of Halifax shares for pounds 7.50, and any amount over 1,500 attracts a charge of 0.5 per cent.

The advantage of using the nominee share account is that there is no danger of losing your share certificate and you can use the cheap dealing service. The disadvantage is that you will be able to sell your shares only through the Halifax's postal dealing service. Unless you are committed to letting the converting society look after your shares, you should read the forms carefully and sign the correct part of the documentation so that it sends you the certificate.

The case of the recent Alliance & Leicester flotation shows how unwise it can be to let the transformed society sell on its investors' behalf in one of its share auctions to investing institutions. Just over a quarter of its investors had their shares sold at the average price of 533p in the auctions. If they had taken their share certificates and sold their windfall through a bank or stockbroker 10 days or so after the float, they would have received more than 620p. They would have got the extra from a few strokes of the pen and 10 minutes on the telephone.

Many fund managers are offering attractive personal equity plans, and if you want to put your windfall into one of those, you must ask for the share certificate.

Both the Halifax and Norwich Union are offering PEPs, but those are corporate single company plans; you can only invest in their shares, and there is a pounds 3,000 limit. If, however, you have some extra cash, you may prefer to put both cash and your free shares into a general PEP plan. That will provide a wider spread of investment, and there is a higher annual limit, which at the moment stands at pounds 6,000n