Private Company Benefits of Using a Transfer Agent

More and more private companies around the world are employing the specialized services, and enjoying the benefits, of a professional stock transfer agency.

Traditionally, the number of shareholders in privately held companies is relatively small, and stock activity is not very high. Recordkeeping is usually the responsibility of a company official or the company’s legal counsel. Either way, this important task can become the duty of either someone ill-trained to do it well, or an overpriced third-party legal service.

From a shareholder’s perspective, problems exist; owners of stock who receive a physical certificate of ownership must deal with the responsibility of holding onto this receipt. If the company issuing the certificate in question goes through an IPO, the shareholder must surrender the document itself.

These issues can become exacerbated in certain situations. If there are a significant amount of employees under an EOP (employee ownership plan), shareholder maintenance can become extremely complex and time-consuming. In addition, if the firm in question is planning on going public, the act of recordkeeping itself can become an arduous and confusing task. Therefore, it is very important to be accurate in your recordkeeping. Stock transfer agencies can maintain your stock ledger, process share transfers, replace lost stock certificates and issue additional shares. The benefits of using a stock transfer agent for your private company needs include:

  • Significant cost savings
  • Maintain an electronic book-entry system
  • Benefits to investors including shares held in book entry form
  • Guidance in handling restricted share transfers
  • Reduction of liability and efficient support

Private and public companies both benefit from streamlined stockholder reports and correspondence. Along with the stockholder record maintenance system, stockholder communications and documentation is improved and streamlined.