Transfer agent
Encyclopedia
Public companies
typically use transfer agents to keep track of the individuals and entities that own their stock
s and bond
s. Most transfer agents are bank
s or trust companies, but sometimes a company acts as its own transfer agent.
Transfer agents perform three main functions:
Public company
This is not the same as a Government-owned corporation.A public company or publicly traded company is a limited liability company that offers its securities for sale to the general public, typically through a stock exchange, or through market makers operating in over the counter markets...
typically use transfer agents to keep track of the individuals and entities that own their stock
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
s and bond
Bond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
s. Most transfer agents are bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
s 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 splitStock splitA stock split or stock divide increases the number of shares in a public company. The price is adjusted such that the before and after market capitalization of the company remains the same and dilution does not occur. Options and warrants are included....
, 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.