A transfer agency is a company that is usually a third-party that is unrelated to the stock transactions it handles. The agents cancel the certificate and name of the shareholder that sold the stock shares and substitute a new owner’s name on the official listing. These agents usually offer a variety of services.
What They Do
Primarily, a public company transfer agent helps public companies keep track of any entities and individuals who own bonds and stocks within the company. Most agents are part of trust companies or banking institutions, but you can find companies that act on its own as a transfer agent. Sometimes, they are called brokers. The term isn’t quite interchangeable, but it is used often.
Primarily, transfer agents issue and transfer/cancel certificates to reflect any ownership changes. For example, if you declare a stock split or stock dividend, the transfer agent is required to issue the new shares. Agents also keep updated records of who owns stocks and bonds within the company and how the bonds and stocks are held, such as in certificate form, by the investor’s brokerage firm (street name), or by the company in a book-entry formation. They also record how many bonds and shares the investor owns.
The transfer agent keeps track of all issuer securities and maintains the record thoroughly. They can also monitor the issuance of securities to prevent unauthorized issuance. Sometimes, they are called registrar.
The transfer agency also acts as a paying agent that pays out cash, interest, stock dividends, and other distributions to the bond- and stockholders. Along with such, your agent might act as a tender agent, as well, which means they tender shares in the tender offer. They can also be an exchange agent, where they exchange company bonds and stocks during mergers. Other tasks your transfer agent can handle include being a liaison between shareholders and being a treasury manager. For more information visit EquityTrack.
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