What is the role of a transfer agent in crowdfunding?

6/20/2017 3:03:41 PM,
Patrick Tracey replied:

The role of the transfer agent is the same - whether the issuer is a Fortune 100 publicly listed company or a small non-exchange listed company with 20 shareholders.  The primary role is to maintain the share register using the best practices of the industry and adhereing to the regulations set forth by the agencies which regulate this space.   

Within the Crowdfunding community - in the Regulation A space - the use of a transfer agent is required by the Securities and Exchange Commission ("SEC").   Perhaps one of the attorneys on ECO can provide chapter and verse....as I did not get a law degree on the way to work today.   However, the reason why a Transfer Agent is required - is an attempt by the SEC to provide some oversight to the process.   The SEC has regulatory oversight of those Transfer Agents who register with it.   Accordingly, they have the ability to oversee the process during yearly audits and believe that new issuers who are using a transfer agent who is SEC compliant - will benefit from their experience in handling shareholder records and that share transfers are posted within timing guidelines set by the SEC.    It provides the SEC with some assurance that somebody's brother in law is not keeping the share register.   It gives comfort to the SEC, and it should give comfort to the ecosystem ( Issuers, Portals, Lawyers, Investors and other interested parties) that the issuer is availing itself of 'best practices' in governance, compliance and shareholder relations.   

At the appropriate time after capital is raised - shareholder records move from the Portal to the Transfer Agent.   From there - the Transfer Agent is the recordkeeper of the shares of the company.   The transfer agent keeps the share registry and often performs other tasks for the issuer such as dividend payments, corporate actions processing, annual meeting proxy tabulation and some offer the company a web based tool to track issues important to them ( shares outstanding, investor lookup) and offer shareholders a portal to view their share position, and have some "self service" tools to perform some work ( i.e.  address changes, proxy voting, replace uncashed dividend checks and obtain a copy of 1099 Forms) requested by the shareholder.  Shareholder transfers also are performed by the transfer agent as well.  

It's not much different from the work a transfer agent would do for a large cap public company.

So in closing - the Transfer Agent's role is in a support role once the capital is raised and the company is in "business as usual" mode - and helps insure that the shareholder records are in order and helps the company and its investors keep track of their respective concerns on an ongoing basis.   It's an important part of the crowdfunding ecosystem.   Happy to discuss with anyone - just get in touch with me.

6/20/2017 3:03:41 PM,
Patrick Tracey replied:

The role of the transfer agent is the same - whether the issuer is a Fortune 100 publicly listed company or a small non-exchange listed company with 20 shareholders.  The primary role is to maintain the share register using the best practices of the industry and adhereing to the regulations set forth by the agencies which regulate this space.   

Within the Crowdfunding community - in the Regulation A space - the use of a transfer agent is required by the Securities and Exchange Commission ("SEC").   Perhaps one of the attorneys on ECO can provide chapter and verse....as I did not get a law degree on the way to work today.   However, the reason why a Transfer Agent is required - is an attempt by the SEC to provide some oversight to the process.   The SEC has regulatory oversight of those Transfer Agents who register with it.   Accordingly, they have the ability to oversee the process during yearly audits and believe that new issuers who are using a transfer agent who is SEC compliant - will benefit from their experience in handling shareholder records and that share transfers are posted within timing guidelines set by the SEC.    It provides the SEC with some assurance that somebody's brother in law is not keeping the share register.   It gives comfort to the SEC, and it should give comfort to the ecosystem ( Issuers, Portals, Lawyers, Investors and other interested parties) that the issuer is availing itself of 'best practices' in governance, compliance and shareholder relations.   

At the appropriate time after capital is raised - shareholder records move from the Portal to the Transfer Agent.   From there - the Transfer Agent is the recordkeeper of the shares of the company.   The transfer agent keeps the share registry and often performs other tasks for the issuer such as dividend payments, corporate actions processing, annual meeting proxy tabulation and some offer the company a web based tool to track issues important to them ( shares outstanding, investor lookup) and offer shareholders a portal to view their share position, and have some "self service" tools to perform some work ( i.e.  address changes, proxy voting, replace uncashed dividend checks and obtain a copy of 1099 Forms) requested by the shareholder.  Shareholder transfers also are performed by the transfer agent as well.  

It's not much different from the work a transfer agent would do for a large cap public company.

So in closing - the Transfer Agent's role is in a support role once the capital is raised and the company is in "business as usual" mode - and helps insure that the shareholder records are in order and helps the company and its investors keep track of their respective concerns on an ongoing basis.   It's an important part of the crowdfunding ecosystem.   Happy to discuss with anyone - just get in touch with me.