The function of a transfer agent is to maintain up-to-date records of the ownership of a corporation's securities and to execute transfers of the corporation's stock and other securities. A transfer agent may be an officer or clerk of the corporation, or an outside individual, bank, or trust company. Larger corporations may have their own transfer departments. It is common practice for corporations to utilize the services of a bank's transfer department to fulfill the duties of a transfer agent.

A transfer agent is responsible for seeing that stock and other securities transfers are properly executed. When a corporation's stock is sold, the transfer agent reregisters the securities that are to be transferred. The securities that have been sold must be canceled, and the transfer agent must establish the validity of the securities to be canceled. The transfer agent then cancels...