Definition - What does Transfer Agent mean?
A transfer agent is a third party that manages important financial information on behalf of a corporation. Transfer agents do things such as keep records of investors, manage investor mailings, process transfers of stock shares, etc. Transfer agents are typically banks or other financial institutions.
In the context of the law, transfer agents must have permission from the corporation and authorization from the government in order to do the work they do. This is because they handle large amounts of sensitive financial data. They must also follow corporate laws related to their work.
Justipedia explains Transfer Agent
The reason why corporations often use transfer agents is because large companies can literally have tens or even hundreds of millions of shares of stock. This can be difficult to manage. So, rather than do it in-house, they use transfer agents who specialize in this sort of financial service.
Another reason why transfer agents are important is because stocks are traded on the major stock markets every business day. So, the people who actually own the stocks are constantly changing.