Finding the right transfer agent can be a difficult task, often you have recommendations from multiple people and no clear direction on which way to turn.

You’re going to need a solid foundation of knowledge regarding the services most offer.

So, what are stock transfer agents?

What do transfer agents do?

And how do you find your ideal transfer agent?

This is our beginners guide to transfer agents. It’s designed to help people of all levels of experience and expertise get involved in this market.


What is a Stock Transfer Agency?

A stock transfer agency is a financial institution. It’s like a bank that maintains a corporation’s account balances and records. This institution takes care of a wide range of services for a company. Some examples are transaction records, certificate issuing, investor problems, and investor mailing processes.

What Do Transfer Agents Do?

An agency appoints a transfer agent. They are hired to maintain the records that belong to security owners. Their main job is to keep track of any ownership changes that occur with the securities they handle. They can issue certificates and cancel them as needed. Really, they act as a company’s intermediary. 

Public companies use these workers to stay on top of the entities and individuals that own their bonds and stocks. Companies put a lot of trust in agents. It’s not unheard of for a company to be its own agent. 

Stock transfer agents perform the following services:

Record Keeping

There is a ton of tracking, recording, and maintenance involved with maintaining securities.

Transfer & Issuance

When a company announces a stock split or dividend, the agent will issue the new shares. It is important for agents to keep track of how many bonds or shares that belong to each investor. How the stocks and bonds are held can play a large role in the future of the company. This is why it is so important to have someone dedicated to overseeing these financial matters.

Repository

If a certificate is stolen, lost, or destroyed, it needs to be handled professionally. Agents assist shareholders and bondholders if a certificate is facing one of those unfortunate ends.

Commonly Known Tasks

  • Record keeping for registered shareholders
  • Share cancellation and issuance
  • The monitoring and controlling of VIP and restricted stock transactions
  • Elections inspector
  • Tax reporting
  • Corporate action (such as acquisition and mergers) administration
  • DSPP, or Direct Stock Purchase Plan, administration
  • DRIP, or Dividend Reinvestment Plan, administration
  • Reconciliation and payments for dividends

Less Commonly Known Tasks

  • Escrow services
  • Administration of abandoned property through cash and stock
  • Proxy solicitation
  • Shareholder odd-lot reduction programs
  • Share reward program managing for non-employees
  • Foreign currency and cross-border transactions

What Should You Look For in a Transfer Agent?

There are a lot of details involved with each of these tasks. If you’re interested in learning more about Transfer Agent duties, head over to our blog. However, we’re going to focus now on what makes a good transfer agent. If you’re interested in working with one, you’re going to want to know how to choose.

Table of Contents:

  1. A Good Fit
  2. A Reasonable Quote
  3. Positive References
  4. Openness to Answering Your Questions
  5. Desirable Policies

1. A Good “Fit”

It is important to find an agent who has goals that match with yours. For example, maybe you aren’t looking for someone who is striving to grow and become the industry’s top Transfer Agent. Instead you are looking for someone who will stay with your business. It’s smart to look for a Transfer Agent that will be loyal to your company. Over time they’ll be familiar with your work. It’s easier to develop a long-lasting trust.

Make your needs clear from the start. Ask many questions to get a better sense of who they are. 

2. A Reasonable Quote

Sometimes you may be quoted a number that looks outrageous at first. However, upon examining the breakdown you’ll find that it covers a great deal of services. Sometimes that large number is actually just a large number. In this case you should inquire as to what the cost is based on and if it can be adjusted to suit your budget. An agency should offer you a reasonable quote. The agency should respect that each of their clients has their own financial limitations. You’re no different. 

3. Positive References

It is always recommended to check with existing clients to verify the company’s assertions for cost containment, as well as to just check on their client relations. Does the agency really share their savings and printing discounts with their customers? Only a current customer will be able to verify that for you. If you are looking for a reputable agency, asking friends and checking online for positive reviews and references can point you in a good direction.

4. Openness to Answering Your Questions

A reliable agency will respond earnestly to any questions you ask them as opposed to answering some and dodging the ones they don’t want to answer. For example, try asking them what clients they lost within the past year and why. This is a tough question as it might make them own up to a fault of theirs that you might not want to work with, or maybe you will completely understand and be able to move forward with your partnership.

5. Desirable Policies

When looking at a proposal and subsequent invoices given to you by agencies, they can be a bit tough to look at with the many individual line items. To make this easier to absorb, ask the agent to bundle their fee categories. However, it is important to pay attention still and make sure things aren’t “over” bundled where you lose track of what services you are paying for.

Check with your agent to make sure that their disclosure policies are up to your standards. Choose an agent that you believe will be professional and follow all regulations and procedures. At Easy Stock Loans, our team prides itself on our disclosure to clients. We strive to keep our clients informed throughout the entire process, so when a potentially threatening quorum comes about, they will not be taken by surprise.

Transfer Agent Reviews

You can always learn more about Transfer Agents by visiting some of our reviews of some popular transfer agents. Alternatively, you can also learn more by visiting our blog. We know exactly what it takes to find a good fitting transfer agent!