Public companies typically use transfer agents to keep track of the individuals and entities that own their stocks and bonds. Most transfer agents are banks or trust companies, but sometimes a company acts as its own transfer agent.
Transfer agents perform three main functions:
- Issue and cancel certificates to reflect changes in ownership. For example, when a company declares a stock dividend or stock split, the transfer agent issues new shares. Transfer agents keep records of who owns a company's stocks and bonds and how those stocks and bonds are held—whether by the owner in certificate form, by the company in book-entry form, or by the investor's brokerage firm in street name. They also keep records of how many shares or bonds each investor owns.
- Act as an intermediary for the company. A transfer agent may also serve as the company's paying agent to pay out interest, cash and stock dividends, or other distributions to stock- and bondholders. In addition, transfer agents act as proxy agent (sending out proxy materials), exchange agent (exchanging a company's stock or bonds in a merger), tender agent (tendering shares in a tender offer), and mailing agent (mailing the company's quarterly, annual, and other reports).
- Handle lost, destroyed, or stolen certificates. Transfer agents help shareholders and bondholders when a stock or bond certificate has been lost, destroyed, or stolen. Also a medallion signature stamp officer is the transfer agent.
Transfer Agent has normally to perform a due diligence to comply with Anti Money Laundering requirements and regulations in order to properly identify the entities involved in the business concerned and/or to ensure that counterpaties services providers have equally performed a due diligence and adopted all Anti Money Laundering measures necessary to identify clients eventually provided.
- Note: this article was originally based on public domain text from the U.S. Securities and Exchange Commission website
|This economics-related article is a stub. You can help Wikipedia by expanding it.|