Outsourced vs. In-House Transfer Agents

Pros of Outsourced Transfer Agents:

Regulatory Compliance

SEC registered transfer agents are required to follow all SEC rules as specified under Section 17 of the Federal Register, release no. 34-13636, including any subsequent amendments.  If issuers do not utilize the services of an SEC registered transfer agent, they will be responsible to maintain compliance on the following:

  • Any SEC, State, and UCC regulations regarding transfer agent duties
  • IRS cost basis regulations passed on January 1, 2011
  • OFAC rule compliance as mandated by the SEC
  • Annual audits performed by the SEC and an independent auditing firm
  • Escheatment and 1099 filings
  • Document retention according to the specified time periods allotted by the SEC

Transfer Agent Benefits

  • Your corporate identity, logos and images will be displayed through proxies, mailings and more
  • You will have greater access to faster processing and delivering of registered security positions through the Depository Trust Company’s (DTC), Deposit/Withdrawl At Custodian (DWAC), and Direct Registration System (DRS) platforms
  • Outsourced transfer agents usually carry mail loss insurance for stock certificates lost in transit
  • Outsourced transfer agents can create additional surety bond coverages for lost certificates,  waive probate submissions, and more
  • Medallion guarantee validation without membership fees
  • You will have the ability to manage your stock online. The fees to outsource your transfer agent duties will be minimal compared to the fees required if you were to perform the transfer agent role in-house
  • The process is much easier and smoother than acting as your own transfer agent in-house.

Proxy Benefits

  • Online and telephone proxy voting for your shareholders
  • Transfer agents act as independent proxy agents and tabulators
  • Direct personalized advice from your transfer agent will help you save money and manage your proxy

Pros of In-House Transfer Agents:

  • Work with shareholders that you know and help them perform stock transfers and other services
  • If you are a large company (Market Cap: $1B+) with a large number of registered shareholders, you may be able to save money in-house
  • You will have greater control over the stock transfer process: creating issuances, corporate action processing, shareholder retention, and more
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