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We have said a lot of things about the stock transfer industry on this website over the past five years, but have never summarized for our readers what a stock transfer agent actually does. We do so here, citing both the widely known and not-so-widely known functions:
Widely Known
- Registered shareholder recordkeeping
- Share issuance and cancellation
- Responding to individual shareholder inquiries
- Restricted and VIP stock transaction monitoring and control
- Dividend payment and reconciliation of cancelled checks
- Dividend reinvestment plan (DRIP) administration
- Direct stock purchase plan (DSPP) administration
- Employee stock purchase plan (ESPP) administration
- Employee stock option plan administration (ISOs versus ESOPs)
- Proxy distribution and tabulation
- Proxy materials web hosting
- Inspector of elections
- Corporate action (merger & acquisition) administration
- Tax reporting
Not-So-Widely Known
- Lost shareholder tracing and escheatment
- Escrow services
- Proxy solicitation
- “Virtual” shareholder meeting facilitation
- Odd-lot shareholder reduction program administration
- “Stakeholder” outreach, facilitating share purchases by key constituencies
- Share reward program administration
- Facilitation of large institutional investment via DSPP “waiver discount” transactions
- Foreign currency cash distributions
- Office of Foreign Asset Control (OFAC) screening
We at Shareholder Service Solutions are, of course, quite familiar with everything a transfer agent does, and regularly share that knowledge with corporate clients who seek “best practices” in their stock transfer service contracts.
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