Choosing a Transfer Agent

Choosing a transfer agent is an important decision in determining your companies’ success. Selecting the wrong one may be detrimental to your companies’ investor relations campaign. Smaller transfer agents cater to small, mid-size public companies with more personalized services and lower fees, while larger transfer agents cater to the needs of large public companies with higher fees and more advanced services. Some mid-size agents who provide more advanced technological services are often more flexible to service small, mid-size, and large public companies at the same time. There are several key factors that you should consider when selecting your transfer agent.

  • Does an actual live representative pick up the phone?  Knowing that your transfer agent has live people to answer your phone call and service your requests is very comforting. Many large transfer agents have automated attendants that can’t give you the help you need. And once you get to a person, they may have to transfer you around even more.  This is an important point to keep in mind when trying to impress shareholders and encourage them to do business with you.
  • Service friendly or just the opposite? Depending on the transfer agent, how large they are, and how important your company is to them, you may feel that your service is not great.  Most larger transfer agents cater only to the Fortune 500 companies, while leaving small to mid-size companies behind.  Smaller transfer agents may be more friendly than the larger agents depending on the business culture of the agent. Some of the small agents may not have the expertise or carry some of the same services as the larger transfer agents. But overall, you will have greater personalized service with people who will be willing to help you.  
  • Ask tough questions – Don’t be afraid to let them know that you are looking for a good transfer agent.  Ask them for references, how long they have been in business, if they have had any SEC complaints or judgements against them, which clients they have lost recently and why, and if they expect any changes in fees or regulatory changes in the coming months. 
  • Get clear on the fees and invoices – Know what you’re signing up for. Steer clear of the transfer agents that list little on their fee schedule, unless the fees are listed in a bundle.   Most transfer agents will charge fees that are not on your invoice. Know what they are. Question your flat-fee bundles. Question the agent on these fees. More than likely, if you have little activity and are still paying a large monthly fee, you can get this reduced by finding an agent that doesn’t charge fixed fees.
  • Find references yourself – One of the most important things you can do is find references on You will be able to see what other companies are using the transfer agent that you are looking into.  This is a great way to obtain answers from unbiased sources.
  • Does the provider stay on top of regulatory changes? – It is important that your transfer agent knows when regulatory changes are occurring and also that they notify you so that you are prepared to comply.  Being with an agent that doesn’t notify you in advance or that isn’t compliant with the IRS cost basis rules, OFAC, notice and access, and other SEC regulations, is not desirable.  Issuers can be partially liable for non-compliance when a transfer agent isn’t following SEC rules completely. For example, if a transfer agent isn’t tracking cost basis appropriately, the issuer may not be notified by the transfer agent that they need to supply that information. In this case, the issuer may be liable for not supplying the cost basis information. This is why it is important that you have a knowledgeable transfer agent to guide you in providing the most critical checks and balances. Ask the transfer agent if they are up to date on all of these regulations.
  • See who the provider partners with – Have you had issues with one of their partners before?  You may not like the service that these partners have provided in the past.

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