What is a Transfer Agent?

When completing your 1099 series forms, you’ll find that it asks you to name the Payer’s Transfer Agent, if applicable. In many cases, you can find the name and information of your company’s Transfer Agent under the investor relations section of a company’s website.

In short, a Transfer Agent is appointed by a company to keep track of who owns the company’s stocks or bonds and how those stocks and bonds are held. While most Transfer Agents are banks or trust companies, a company could act as its own Transfer Agent.

The Securities Exchange Act of 1934 defines a Transfer Agent as any person who engages on behalf of an issuer of securities or on behalf of itself as an issuer of securities in:

  1. countersigning such securities upon issuance;
  2. monitoring the issuance of such securities with a view to preventing unauthorized issuance (i.e., a registrar);
  3. registering the transfer of such securities;
  4. exchanging or converting such securities; or
  5. transferring record ownership of securities by bookkeeping entry without the physical issuance of securities certificates.

The term ‘‘transfer agent’’ does not include any insurance company or separate account which performs such functions solely with respect to variable annuity contracts or variable life policies which it issues or any registered clearing agency which performs such functions solely with respect to options contracts which it issues.

Any person performing any of these functions to registers with the Securities and Exchange Commission or other Appropriate Regulatory Agency (“ARA”). Once registered, either compulsorily or voluntarily, the Commission “is empowered with broad rulemaking authority over all aspects of a transfer agent’s activities as a transfer agent.”

Transfer Agent Registration

Because transfer agents operate within the National C&S System, it is important to understand that system, especially concerning the services transfer agents provide by maintaining accurate ownership records on behalf of issuers, facilitating the issuance or cancellation of securities, and distributing dividends within that system.

A transfer agent must register with its ARA before it is able to perform any of the statutory transfer agent functions. It must apply for registration by submitting Form TA-1 (Uniform Form of Registration as a Transfer Agent and for Amendment to Registration).

Form TA-1 requires a transfer agent seeking to register to disclose information including the following:

  • general identification information about the transfer agent and whether it is part of any service company arrangements;
  • the identity of its direct and indirect owners and other control persons; and
  • whether it or any of its control affiliates has been subject to investment-related criminal prosecutions, regulatory actions, or civil actions.

Once registered, either compulsorily or voluntarily, the Commission “is empowered with broad rulemaking authority over all aspects of a transfer agent’s activities as a transfer agent.”

The registration automatically becomes effective 30 days after the Form TA-1 is filed. This is unless the ARA takes affirmative action to accelerate, deny, or postpone registration in accordance with the provisions of Section 17A(c) of the Exchange Act. Amendments must be filed within 60 days following the date on which information reported therein becomes inaccurate, incomplete, or misleading.  For transfer agents for whom the Commission is their ARA, they must file Form TA-1 and amendments electronically.

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