Registrar

A registrar is an institution, often a bank or trust company, responsible for keeping records of bondholders and shareholders after an issuer offers securities to the public. When an issuer needs to make an interest payment on a bond or a dividend payment to shareholders, the firm refers to the list of registered owners maintained by the registrar.

One role of the registrar is to make sure the amount of shares outstanding does not exceed the number of shares authorized in a firm’s corporate charter. A corporation cannot issue more shares of stock than the maximum number of shares that the corporate charter discloses. Outstanding shares are those that shareholders currently hold. A business may continue to issue shares periodically over time, increasing the amount of outstanding shares. The registrar accounts for all issued and outstanding shares, as well as the number of shares owned by each individual shareholder.

The registrar determines which shareholders are paid a cash or stock dividend. A cash dividend is a payment of company earnings to each shareholder, and a stock dividend means additional shares are issued to each shareholder. To pay a dividend, the corporation sets a record date. The registrar verifies the shareholders who own the stock on the record date and the number of shares owned as of that date. Both cash and stock dividends are paid based on the registrar’s list of shareholders. The registrar changes this shareholder data based on current buy and sell transactions.

For example, when an issuer offers a bond to investors, the company works with an underwriter to create a bond indenture. The indenture lists all of the pertinent information about the bond, including its face amount, the interest rate, and the maturity date. A bond indenture also certifies the bond is a legal obligation of the issuer. A bond may be secured by specific company assets or simply by the issuer’s ability to pay. Just as with stock, the bond registrar tracks the investors who own the bond and investors who should receive interest payments. When the bond matures, the registrar’s records determine which investors should be repaid the principal amount on the bond issue.

Mutual funds operate using a transfer agent, which is a company that acts as the registrar and also performs the duties of a transfer agent. While the registrar keeps records, the transfer agent handles the mutual fund share purchases and redemptions.