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Glossary

Transfer agent

What a transfer agent does for a company with many shareholders, when an SEC-registered one is required, and why crowdfunded companies use one.

A transfer agent keeps a company's official record of who owns its securities, and records issuances, transfers, and cancellations of those securities. Transfer agents for most securities must register with the SEC (or a bank regulator, for banks) under Section 17A of the Securities Exchange Act of 1934, on Form TA-1.

What it does

  • Maintains the shareholder register, usually in book-entry form rather than paper certificates.
  • Records new issuances at each closing of an offering.
  • Processes transfers when holders sell or gift securities, and replaces lost certificates.
  • Often acts as paying agent for dividends and distributes proxy and annual meeting materials.

When a registered one is required

A company with more than a threshold number of holders of record must register its class of securities under Section 12(g) of the Exchange Act, which brings full public-company reporting. Securities sold in exempt offerings count toward that threshold, but two exemptions condition relief on using an SEC-registered transfer agent:

  • Regulation Crowdfunding. Rule 12g-6 excludes Reg CF holders from the count if the issuer is current in its annual reports, has total assets of $25 million or less, and engages a registered transfer agent.
  • Regulation A+ Tier 2. Rule 12g5-1(a)(7) excludes Tier 2 holders if the issuer is current in its Reg A reports, engages a registered transfer agent, and stays below public float or revenue limits. See reg-a-tiers.

Why it matters to a raise

A crowdfunded offering can add hundreds or thousands of shareholders. A transfer agent keeps that cap table accurate and is part of the all-in cost of a raise. Many platforms bundle one, so ask who it is, what it costs, and what happens to the records after the offering.

Further reading

This page is general information about securities rules, not legal advice. Whether a company qualifies for a Section 12(g) exclusion is a question for its securities counsel.

Topics:glossarycrowdfundingregulation

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