Question

Company A does not employ an independent stock transfer agent, but rather issues its own stock and maintains its stock records. When outstanding shares are transferred from one holder to another, the certificate of the selling shareholder should be:

Answer 1

Answer:

Canceled. It is usually perforated and attached to the certificate book.

Explanation:

An independent stock transfer agent is an agent which a corporation has assigned the responsibilities of keeping the financial records of all its investors and track the movements of their account balances. The agent can be a bank, trust company or other related financial institutions.

Basically the functions of a transfer agent are to maintain the records of the owners of securities like bonds and stocks of a company that are traded publicly as well as cancelling and issuing certificates, and dealing with other issues.

When a does not employ an independent stock transfer agent, but rather issues its own stock and maintains its stock records, all these functions have to performed by it, especially by the registrar of the company. As the issue of selling and transferring stocks is a specialized area of functions carried by agent with the specialized training which the registrar may not have, a simple method of cancelling the certificate of a selling shareholder is employed when outstanding shares are transferred from one holder to another.

Therefore, the certificate of a selling shareholder is employed when outstanding shares are transferred from one holder to another especially by perforating and the attach it to the certificate book.

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