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 What is a Transfer Agent?
Transfer agents are hired by companies as "caretakers" for their shareholders. They keep shareholder records and issue new certificates
(virtual or paper), recording it on the books of the company and providing reports on those transactions.
They also distribute proxies, dividends and annual reports to shareholders and brokers, and they forward company correspondence to shareholders.
Why hire a Transfer Agent? Most public or private companies with shareholders choose a professional transfer agent
to act as custodian for their shareholder records, and to handle any changes in shareholder ownership. Purchasing the necessary software
solutions to handle the processing and recordkeeping, and hiring someone with the corresponding expertise in corporate securities
and compliance is an expensive undertaking - one that transfer agents are able to leverage over multiple issuers. The transfer agent also makes
sure that the company meets and stays in compliance with the rules of the Securities and Exchange Commission.
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When choosing a Transfer Agent, companies should
consider the satisfaction level of that Agency's current client base before they commit their business to them, and too should consider the following
items, for which the Transfer Agency will be responsible:
- Accuracy of your shareholder records
- Controls to prevent out-of-balances
- Prevention or elimination of duplicate accounts
- Correspondence from shareholders
- Shareholder access to online account information
- Shareholder online transactions
- Handling shareholder complaints
- Routine, legal, restricted stock, and rush transfers
- Replacing lost certificates
- Tabulating proxies and reporting results
- Online and telephone proxy service
- Annual meeting support
- Efforts made to find lost holders
- Promptness of dividend mailings
- Escheatment reporting
- Replacing lost checks
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- Accuracy and promptness of shareholder mailings
- Stock option plans
- Knowledge and responsiveness of your account administrator
- Accessibility of your transfer agent's top management
- Apprisal of problems that impact you
- Introducing technological changes (e.g. software, internet, call center)
- Reorganizations (e.g. mergers, tenders, stock splits, spin offs)
- Compliance with SEC, IRS, and other statutes and rules
- Training level of your transfer agency's personnel
- Controlling your out-of-pocket expenses
- Validity of fee structure, given the type and level of service
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Transfer Online™ vs. Other Transfer Agents
The largest transfer agents have depth and experience. Â Smaller agents, however, may offer more
personal service and may be more flexible in meeting client needs.
Transfer Online™ creates
niche accounting and recordkeeping products and services that bridge the gap between the personal level
of service found with small transfer agents, and the resourcefulness and budget of a larger,
less-personal transfer agency.
We are a traditional transfer agency - but we embrace technology, and develop unique and powerful
software and web solutions via our own in-house IT department.
There are no other agents that combine our levels of service,
professionalism, technological expertise, and pricing.
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Commercial Transfer Agents vs. In-House or Attorney Transfers
More than 85% of all public companies
outsource the transfer agent function to commercial transfer agents. Outsourcing is usually more affordable.
Commercial agents are highly competitive and are always mindful of the
fact that companies can select a different agent or take the transfer
agent function in-house.
When selecting a smaller agent, be sure to inquire about its financial resources and
insurance. When selecting any agent, ask about its commitment to stay in the
business.
The transfer agent
business is highly specialized. Commercial transfer agents:
are regulated by the SEC;
have the resources to handle peak loads;
utilize specialized equipment;
assume all corporate recordkeeping liability;
can achieve efficiencies through mass processing;
may provide expert advice.
Notes on going in-house
Even though the trend
is to outsource the transfer agent function, a few large companies and some
small companies handle their own shareholders by keeping all or some of the
transfer agent functions in-house.Â
However, here are some points to consider:
Price: Small annual savings are quickly reversed by a serious transfer agent error.
Internet Connectivity: The ability to view and download your account data online.
Proximity of the agent to the company: Not a critical factor.
Liability: Agents are willingly responsible for the company's recordkeeping.
Business Relationship: Long-term relationships between the client and the agent can prove valuable.
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