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Initial Public offerings (IPOs)

 

You’ve Got Questions About Your IPO. we have the Answers.

You're about to "Go Public." Everything’s in place. The working group has been assembled some time ago, the Underwriters are hired, the registration statement is filed — you’re excited. Then — someone mentions "Transfer Agent."

"All right," you say. "Pick one, any one."

Pre-Offering Essentials

What does a transfer agent do?
What information will I have to provide to the transfer agent prior to the Offering?
How do I know which agent is right for my needs?
Shouldn’t I simply appoint a big transfer agent?
Don’t I need a bank to serve as the transfer agent?
What is a CUSIP number?
How is a CUSIP number obtained?
I need a stock certificate. How do I get one printed?
How many stock certificates should I order?

After You're Public Essentials

How will I know who my shareholders are?
What happens if a shareholder loses a stock certificate?
What is a "registered owner"?
What is "street name"?
What is DTC?
What other costs are associated with the transfer service?

Annual Meeting Essentials

What assistance will I get with my Annual Meeting?
What is ADP’s role in the voting process?
Must I hire a Solicitor for my Annual Meeting?

How Do I Get Started?

How can I begin to work with you on my firm’s IPO?

What does a transfer agent do?

The transfer agent is primarily a record-keeper. We keep track of your shareholders and their stock positions. We also transfer stock, provide a variety of reports on shareholders and stock activity, facilitate mailings to the shareholders, provide a variety of Annual Meeting services and perform any of a number of other related services, including paying dividends and assisting shareholders with their needs. Our internet service provides a useful informational tool for those clients wishing the latest, cost-effective technology. This service is very efficient and is very much in demand by shareholders.

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What information will I have to provide to the Transfer Agent prior to the Offering?

We will need the basics. Among the items you should be prepared to provide are: name, address and telephone number for your corporate contact, the underwriter(s) and corporate counsel, information related to the security such as CUSIP, exchange listing and symbol and information about the Offering, including the effective date, the price range and the closing location. If there are selling shareholders we will need complete information on these. We can assist you with many of these items and we are very happy to address your questions.

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How do I know which agent is right for my needs?

I'm confused! Now that we’ve filed, I’ve received a number of proposals from transfer agents. They all appear to be fairly similar. How do I know which Agent is right for my company’s needs? In fact, how do I even know what my company's needs are?

First, don’t worry. All major transfer agents do perform the same basic functions and all will do the job fairly well. It’s likely that all of the proposals you have received properly anticipate your service requirements, although many agents may have individual charges for some of these.

However, not all Agents are equally equipped to meet your long term needs or methods of operation. In many cases, you will find "you just simply don’t fit!" Selecting the agent that's right for your company’s unique requirements and personality will involve just a bit of analysis. We suggest the following guidelines as a way to avoid an unpleasant and costly mistake.

Make certain you select the agent! Avoid "signing on" blindly with any agent merely at the recommendation of your Counsel or Underwriter. You and your team should develop a firsthand knowledge of the agent before any commitment. As much as possible, be certain that there is a "fit" between you and the agent. Understand that some agents are structured to service a particular market segment and will not necessarily view an IPO as important business.

Interview several agents! This can be easily done by phone or in person. How important is your business and what specific resources will be provided during the Offering process and beyond? How does your account profile match those of other clients? What is the staff’s experience, especially with IPO’s? What is the Agent’s organizational chain of command? Will you and your shareholders be dealing directly with experienced personnel or will you find yourself leaving messages on voice mail? What if a problem arises? Finally, will you have access to the top people when you need it most?

Don’t tie your selection of the agent to another relationship. The stock transfer relationship is unique and likely quite independent of any other dealings you may have had with that organization. The performance of one area of a bank, for example, does not necessarily assure performance in stock transfer nor does it mean that you are receiving the best possible value.

Use referrals wisely. Lawyers, underwriters and banknote vendors all work with many agents and each will be able to contribute to a picture you will be forming of the agent that is right for you.

Check references. Check both those provided by the agent and any you can obtain independently. This is time well spent. A number of our clients have provided helpful comments. You may be interested to view these.

Don't overpay for the service! As a newly public company, your day-to-day needs likely will be modest and routine for the most part. Paying a high minimum fee or for "value-added" components, which may be useful for mature companies with many thousands of shareholders, provide no benefit to the vast majority of newly public firms.

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Shouldn’t I simply appoint a big transfer agent?

Not necessarily. In fact, the opposite is more likely true as the banks withdraw from the business or form huge conglomerates to focus on the service needs of extremely large and mature firms.

Every company has different needs. The very largest agents have resources specifically developed for large companies with hundreds of thousands of shareholders. A smaller company — and certainly a newly public one — will likely benefit by using an agent with resources focused on serving a particular market niche. In making your selection, weigh several factors. Consider costs, personal attention, staff expertise, access and organizational stability.

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Don’t I need a bank to serve as the transfer agent?

No! As a matter of fact, most banks have visibly withdrawn from the transfer agent business or have already formed partnerships to focus on serving large corporations.

We are one of several non-bank agents which meets all requirements to serve any public company, including those listed on the New York Exchange. We specialize in helping companies through the IPO process and we have hundreds of success stories.

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What is a CUSIP number?

CUSIP stands for Committee on Uniform Securities’ Identification Procedures. A CUSIP number specifically identifies a particular security. This number is particularly important within the broker community in that brokers make all identification of securities by the CUSIP number. All issuers are required to obtain a CUSIP for each security issued.

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How is a CUSIP number obtained?

Standard & Poor’s operates the CUSIP Service Bureau which provides a variety of services related to CUSIP numbers. The Bureau is located at 55 Water Street, New York, New York 10041. You can get a number by calling 212.438.2000 and following the prompts on the telephone messaging system, or by accessing www.cusip.com on the internet. In either case, you will be asked to provide a preliminary prospectus and a request for a number. Required information can be e-mailed to cusip@mgh.com. The fee charged for a CUSIP number changes occasionally, but currently is a bit over $100 for the first number, with an additional charge for each additional request. Requests for same-day service will carry an additional charge. In some cases, your banknote company may get the CUSIP number for you.

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I need a stock certificate. How do I get one printed?

A banknote company will likely contact you to solicit your business. We will also be happy to provide you with contacts at several firms to allow you to obtain competitive bids. The stock certificate should be ordered and available in time to be shipped to the agent prior to the closing date of the Offering.

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How many stock certificates should I order?

Generally, a supply of 2,000 will be ample to satisfy your needs for several years.

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How will I know who my shareholders are?

As your transfer agent, We will keep a current listing of your shareholders of record and their ownership positions. We will update this daily based upon transfer requests processed and other file maintenance information we receive, such as address or name changes. You have access to this information through regular reports or through our service.

What happens if a shareholder loses a stock certificate?

The shareholder should contact Us and we will place a "stop" on our records to prevent the certificate from being transferred. We will also supply the shareholder with the forms required for obtaining a replacement certificate. A surety bond will be required. The shareholder will have to pay a premium for this bond; the cost is generally 2% of the value of the certificate lost.

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What is a "registered owner"?

The registered owner of shares is the shareholder of record on the books of the corporation, generally kept by the transfer agent. The registered owner may be an individual, a trust, a broker, etc. Registered owners receive communications, proxies, dividends, etc. directly from the corporation through the transfer agent. A registered owner differs from a "street name" owner.

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What is "street name"?

Securities held in a broker account and registered in the name of the broker or other institution are referred to as being "in street name." As the manager of a public company, you will see the broker, for example, as the registered shareholder of your stock. One broker position will represent any number of individual owners (beneficial owners), most of whom will remain anonymous to you. Shares held in the name of "CEDE," the nominee name for DTC, are also in street name.

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What is DTC?

Depository Trust Company (DTC) is basically an electronic storage and clearing house for securities. A large portion of the stock held in street name is held by DTC in electronic or "book" form, registered under the nominee name of CEDE & Co. You will find that upwards of 70% of your stock will be held in street name and much of this will be registered as CEDE. DTC provides the banks, brokerage firms and other institutions with an efficient means of moving securities and settling trades electronically.

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In addition to the fees for service, what other costs are associated with the transfer service?

Our all-inclusive flat fee pricing includes unlimited certificate issuance, lists, management reports and mailings. Consequently, except for specially requested additional services such as a stock or cash dividend, an acquisition or exchange, etc., you can expect to be charged only for out-of-pocket cost items. Generally, these are consumables used in the processing of your account. Examples include postage, envelopes, stationery and delivery expenses.

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What assistance will I get with my Annual Meeting?

In a word, complete. Prior to your Meeting, we will contact you and provide you with all the requirements for your Meeting and set up a timetable of events. We understand the importance of the Meeting and will leave nothing to chance. Among the services we can provide are: a record date listing of shareholders eligible to vote, broker search to determine the number of street name holders of your stock, broker fulfillment to be certain sufficient sets of your Annual Meeting materials are in the hands of the brokers, mailing services to registered holders, tabulation services to insure an accurate, independent tally and Inspector of Election services should you feel an independent party should be present at your Meeting.

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What is ADP’s role in the voting process?

Brokers are obligated to pass Annual Materials, including a proxy, to all of their clients holding stock in your company. To accomplish this, most hire ADP. ADP will obtain the appropriate number of sets of materials and forward them to the street name holders. Voted proxies are returned to ADP which tabulates the vote and forwards this to the transfer agent for inclusion with the other votes being gathered for the Meeting. ADP will present the company with a separate bill for its forwarding services.

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Must I hire a Solicitor for my Annual Meeting?

Probably not. A solicitor performs two very valuable roles: encouraging votes necessary to reach a quorum or other voting threshold and providing information about proposals which reflects the company’s positions and increases the likelihood of a favorable vote. Generally, a company will need a solicitor if a controversial issue is on the ballot or if a super majority vote is required. we are able to provide solicitation services and we encourage you to inquire about these.

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How can I begin to work with you on my firm’s IPO?

We would be happy to introduce our services and provide you with assistance and a quote for services. Simply contact us.

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