Any trust company, bank or financial institution assigned by an authorized corporation for the maintenance of investor records as well as balances and transactions of accounts for the issuance and cancellation of certificates, for the processing of mailings of the investors and for dealing any associated issues like lost, destroyed and stolen certificates is a transfer agent.
Transfer agents are needed for the sole reason that many publicly traded companies as well as mutual funds and small entities have a number of investors owning a small portion of the organization need records that are accurate and have the rights to get all the information of the company that have invested in. It is here that the transfer agent plays a vital role in providing them with all the information they need. There are some corporations that choose to act as their own transfer agents however most of them choose a third-party financial corporation to fill in the above role.
There is generally a third party that is unrelated to stock transactions and is known as a stock transfer agent. In some nations of the world like the UK, Australia and New Zealand stock transfer agents are called share registry. Public companies generally designate one company to transfer stocks belonging to it.
The above stock transfer agent do not need to work with banks and they are independent. They can also finance big companies at affordable costs. These transfer agents are able to conduct proxy voting as well and annual meetings. They are also an inspector of elections and are also the official record keeper of the shareholder records of the company they are entrusted with. They are also authorized to conduct special meetings for the shareholders.
It is the first and foremost task of stock transfer agents to verify the stock owners. They need to ensure that the owners of the stock are genuine owners with signature guarantees. This action in the United States is known as the medallion signature guarantee. This is a kind of warranty that the endorser of the stock certificate of the stock power document is the genuine person to endorse and transfer the security. This verification is done by the signature guarantor. This medallion guarantee needs to be present on the stock transaction document. This is a stock certificate. The above is generally backed with a bond and it protects the individual that has issued the security and averts fraud to a large extent. The medallion guarantee is one that is generally obtained from primary brokerage firms, credit unions or even banks. A transfer will help you buy stocks and bonds in an accurate and genuine manner. Public companies use these stock transfer agents for keeping track of individuals and entities that own their bonds and stocks.