A large public corporation normally uses registrars and transfer agents to maintain records of the stockholders.
The correct answer and explanation is:
Correct Answer: ✅ True
Explanation (Approx. 300 words):
A large public corporation typically has thousands or even millions of shareholders, which makes it impractical to manage stockholder records internally. For this reason, such companies use registrars and transfer agents to maintain accurate and up-to-date records of ownership.
🔹 What Are Registrars and Transfer Agents?
- A registrar is responsible for maintaining the official list of shareholders, ensuring that the number of shares issued does not exceed the authorized amount, and preventing any fraudulent issuance of stock.
- A transfer agent is responsible for:
- Recording ownership changes when shares are bought or sold.
- Issuing stock certificates (if used).
- Distributing dividends to shareholders.
- Managing proxy voting and handling shareholder communications.
Together, they ensure the smooth and legally compliant transfer of securities and help manage the administrative functions related to shareholders.
🔹 Why Do Corporations Outsource This Role?
- Efficiency: Managing millions of records internally would be labor-intensive and inefficient.
- Accuracy: Specialized firms have systems and controls in place to ensure accuracy in ownership records and dividend payments.
- Compliance: They help ensure the company meets SEC regulations and stock exchange rules.
- Cost-effectiveness: Outsourcing is often cheaper than maintaining a large in-house team.
- Risk reduction: Professionals help minimize the risk of record-keeping errors or fraud.
🔹 Common Registrars and Transfer Agents
Examples include:
- Computershare
- American Stock Transfer & Trust Company (AST)
- Broadridge Financial Solutions
In conclusion, it is standard practice for large public corporations to employ registrars and transfer agents to maintain their shareholder records and ensure legal, efficient, and accurate handling of securities.