Transfer Agent

A transfer agent is a third-party firm — often a bank, trust company, or specialized equity management platform — appointed by the company to maintain the official record of share ownership (the cap table) and to process all share transfers, issuances, and cancellations. For private companies, Carta, Shareworks (now Solium/Morgan Stanley), and Capshare are common platforms.

The transfer agent's role is essential for completing secondary transactions: after the company approves a transfer (post-ROFR review), the transfer agent updates the cap table to reflect the new ownership. Without this update, a buyer may have a purchase agreement but no official record of ownership.

Illustrative example: a fund completes a $2M secondary purchase of shares from an employee. The company's board approves the transfer, waiving ROFR. The fund's legal team submits a transfer notice and assignment agreement to the company's transfer agent. The agent updates the cap table, adding the fund as a shareholder of record. This process typically takes 3–10 business days after approval.

The gotcha: for secondary buyers using SPVs, the SPV — not the individual investors — appears on the cap table as the shareholder of record. If the SPV manager changes, dissolves, or is unable to act on behalf of the SPV, individual investors may have no direct legal relationship with the company and may struggle to enforce their rights at a liquidity event. Verify the SPV's operating agreement and manager continuity provisions.