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Transfer Agents

Does Cake offer Transfer Agent services?

Shannon Griffin avatar
Written by Shannon Griffin
Updated over a week ago


As a private company, you generally do not require a transfer agent unless you are about to IPO or you meet any of the following criteria:

  1. Assets exceeding $10 million.

  2. 2,000 or more shareholders

  3. 500 or more shareholders who are not accredited investors

If you do meet any of those criteria, or if you wanted to set up a transfer agent regardless, we can introduce to you our transfer agent partner who can utilise the Cake platform as your source of truth.

πŸ‘‰ With Cake's advanced equity management tools, companies and shareholders can interact and exchange information with ease. Issuing shares, tracking vesting, and documentation are just a few clicks away! πŸ‘©β€πŸ’»

πŸ‘‰ Our services are just as efficient as transfer agents in the market. US law generally doesn't require private companies, including C-Corporations, to have a transfer agent for processing share transfers or managing their cap table.

πŸ‘‰ Cake does not act as the 'official' transfer agent on record, but most private companies or startups with limited shareholders don't need one or are not legally required to have a transfer agent.

πŸ‘‰ If you're a privately held company with no plans of going public, hiring a transfer agent may not be necessary.

πŸ‘‰ Private companies can choose to handle share transfers in-house by maintaining a share registry and updating it as needed. The CFO or another authorized person in the company can do this.

Do I need a Transfer Agent?

The vast majority of private companies do not require a transfer agent's services. While transfer agents are crucial for public companies to handle their complex tracking and recording needs, private companies can often manage their equity using more cost-effective methods (*introducing, Cake*).

For companies that have publicly traded securities, a transfer agent is typically used to manage the complex ownership structure of their stocks and bonds. Transfer agents handle administrative tasks such as tracking changes in share ownership, correspondence with shareholders, cancelling and issuing certificates, and distributing dividends and tax documentation. Publicly traded companies often outsource these tasks to transfer agents due to their strict SEC filing obligations, which can be complex, time-consuming, and pose compliance risks.

However, for a private company with far fewer shareholders, hiring a transfer agent is more than likely unnecessary. Although transfer agent companies do serve an important role, if your company is privately owned and isn't on the brink of going public, your resources are probably better allocated elsewhere!

A private company only needs to engage a transfer agent in a few SEC-regulated fundraising circumstances. If an IPO is imminent, it's wise to partner with a transfer agent to help you navigate the process. However, your company's day-to-day tracking and recording of share ownership can be managed by your staff using an equity management tool like Cake! So unless you're in these special circumstances, it's best to save your money, maintain control over your shareholder relationships and data, and take advantage of the software tools available to you.

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