A stock transfer agent or share registry is a company, usually a third party unrelated to stock transactions, which cancels the name and certificate of the shareholder who sold the shares of stock, and substitutes the new owner's name on the official master shareholder listing. Stock transfer agent is the term used in the United States and Canada. Share registry is used in the United Kingdom, Australia and New Zealand. Transfer secretary is used in South Africa.[1]
A public company usually only designates one company to transfer its stock. Independent stock transfer agents are independent of large banks, but are fully capable of servicing even the largest companies, often at far less cost. Stock transfer agents also run annual meetings as inspector of elections, proxy voting, and special meetings of shareholders. They are considered the official keeper of the corporate shareholder records.
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The shares are issued in "street name" which is the term given to securities held in the name of a brokerage on behalf of a customer, usually done to facilitate subsequent transactions. Shares held in "Street name", usually Cede & Co., refers to beneficial shareholders who maintain their ownership through a brokerage. Street name holders are the opposite of registered holders.
Stock transfer agents verify genuinity of owners of stock through signature guarantees. This is often referred to as a "Medallion Signature Guarantee" in the United States. A signature guarantee is a warranty by the signature guarantor that the endorser of a stock certificate or stock power form is an appropriate person to endorse and thus transfer the security. Signatures on a stock certificate or stock power must have the medallion guarantee. A medallion guarantee is also used to validate the genuineness of a securities transaction document (typcially a stock certificate). It is backed by a bond and protects the issuer of the security and their transfer agent from fraudulently transferred securities. A medallion guarantee may be obtained from most major banks, brokerage firms or credit unions.
Registering with the U.S. Securities and Exchange Commission and Financial Industry Regulatory Authority is typically a legal requirement to operate in the U.S.