What Does a Stock Transfer Agent Do?

We  have said a lot of things about the stock transfer industry on this website  over the past seven 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
  • 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

  • Abandoned property administration (stock and cash)
  • Office of Foreign Asset Control screening
  • Escrow services
  • Proxy solicitation
  • “Virtual” shareholder meeting facilitation
  • Odd-lot shareholder reduction programs
  • “Stakeholder” outreach, facilitating share purchases by key constituencies
  • Non-employee share reward program administration
  • Facilitation of large institutional investment via DSPP “waiver discount” transactions
  • Cross-border/foreign currency transactions
  • Sponsorship of industry thought leadership media (symposiums/advisory boards)

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.