When you are interested in buying stocks and bonds it is mandatory that you should be aware of the functions of the transfer agent who will act for you. A transfer agent is generally a financial institution appointed by a corporation to act as record keeper of master stocks. It performs any kind of transactions that affects the registered stock or the stockholders for the company. Besides the maintenance of records stock transfer agents also issue and cancel stock certificates, incorporate the processing of stock action, disburse dividends and proxy all tabulations of shareholder meetings.
The agent generally performs three prime functions. The first is to issue and cancel certificates in order to reflect changes in ownership. An example of the above can be when a company declares any stock spilt or stock dividend; the agent in consequence will issue new shares. The transfer agents need to keep records of the owners of the stocks and bonds and how these stocks and bonds are held. This means whether they are held in certificate form or in book form. Stocks can also be held by the brokerage firm of the investor in street name. The agent also needs to keep records on the number of shares and bonds every investor owns.
The agent, secondly, needs to act as a primary intermediary for the stock company. The transfer agent also requires serving as the paying agent of the company to pay out the cash, interest and stock dividends. Other distributions to bondholders and stock also need to be handled by these agents. Besides the above reliable transfer agents are also required to act as a proxy agent by sending out proxy materials. It also requires carrying out the responsibility of an exchange agent that is to exchange the stock or bonds of a company in a merger. The agent also plays a vital role in tendering shares in any tender offer and lastly performs the task of a mailing agent where the quarterly, annual and other reports of the agent need to be mailed.
Finally the transfer agent needs to handle certificates that are lost, destroyed and stolen. Transfer agents take the onus of helping shareholders and bondholders when a certificate or a bond is lost, stolen or destroyed. In case an individual who holds shares and securities in his/her name needs to get the signature “medallion guaranteed” before the appointed transfer agent accepts the transaction.
In most of the cases if you are willing to find out which transfer agent a particular company uses you should visit the website of the company or even call the company directly. If you have a broker you can ask him/her too for the information.
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Vital Functions Of A Transfer Agent
