What Role Does a Transfer Agent or Share Registry Provider Play?

Role of a transfer agent and share registry provider

For companies, both private and public, a transfer agent plays a vital role in financial success. With everything a company needs to keep track of on a day-to-day basis, maintaining an accurate record of shareholders is one of these important tasks. However, it is also time consuming, so having a transfer agent or share registry provider that can keep accurate and timely records may be a convenient solution.


One of the main functions of a transfer agent is to issue and cancel certificates. When someone purchases shares in the company, the transfer agent issues a certificate of their ownership, either physically or electronically. As shares are issued to investors, the transfer agent also records all transactions, keeping a record of who the investors are and what they own. When shares are transferred to a new owner, typically through a secondary market, the transfer agent cancels the certificate issued to the original investor and issues a new certificate to the new owner.


The transfer agent must maintain an accurate and up-to-date record of all investors, as the company will need it to maintain its capitalization table (also known as the cap table). When it comes to future business deals, having the equity distribution clearly outlined in the cap table will be essential to know how much equity remains for future investors. Additionally, accurate records of investors’ shares are essential to facilitating smooth secondary market transactions. 


It is also the transfer agent’s responsibility to work as an intermediary for the company they represent. If dividends are to be paid to shareholders, the transfer agent pays the distributions due to each investor. As an intermediary, the transfer agent also communicates on behalf of the company with investors. They are responsible for mailing any reports and proxy materials released by the company. If the company were to hold a vote, shareholders with voting rights would communicate their choice to the company through the transfer agent. 


In addition to issuing and canceling certificates, the transfer agent is also responsible for handling lost or stolen certificates. If an investor were to lose their certificate, they would need to contact the transfer agent. The transfer agent would then place a “stop transfer” on the shares so that they cannot be transferred from the investor to another individual. 


Companies can choose to issue certificates electronically and may choose to use software such as KoreConX’s Transfer Agent. Completely integrated with their all-in-one platform, the KoreConX Transfer Agent is SEC-registered, ensuring compliance with worldwide securities regulations. Streamlining and simplifying the process, the KoreConX Transfer Agent updates records in real-time and is seamlessly integrated with the company’s cap table. Reducing errors that may result in manually filing and updating information, the KoreConX Transfer Agent creates reliability and transparency for both investors and issuers. 


Understanding the role of a transfer agent and share registry provider is essential for successfully managing shareholders and the many forms of securities that companies can choose to offer. Choosing the right transfer agent will enable companies to provide real-time information to their investors, without unnecessary expenses. More importantly, a good transfer agent allows for integration with other capabilities, allowing them to manage their data more efficiently. 

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