any estate of $50,000 or upwards is liable to a tax. In order to check up the transfers of property in estates of decedents, a provision of this law requires that a 60-day notice must be given to the collector of internal revenue. The 60 days start to run from the date of the qualification of the personal representative who is executor or administrator. Therefore, when a transfer agent is requested to transfer stock, it should know that the 60-day notice above referred to has been properly filed with the collector of internal revenue for the district in which the estate is located. The kind of proof that the transfer agent should require is not set forth in any law, but an affidavit made by the executor or a certified copy of the notice with the acknowledgment of its receipt, endorsed by the collector of internal revenue of the district, or an acknowledgment from the collector of internal revenue that such a notice has been filed, are a few of the kinds of proof that the transfer agent may properly require.

Requirements If Corporation Is Foreign. If the corporation whose stock is sought to be transferred was incorporated in a state other than the state where the transfer agent has its office, then a waiver must be obtained from the state where the corporation was incorporated. If the decedent died a resident of one state, the transfer agent is in another state, and the corporation was incorporated in a third state, then three separate waivers will be required. It must be borne in mind, however, that in all of the states, the transfer tax laws, sometimes called "inheritance tax laws," differ; and in some few states there is no inheritance tax, and in others the tax is only against collateral descendants of the decedent. These facts must be taken into consideration at the time of making the transfer. Therefore, it is always well for the transfer agent to have accessible the law with respect to the inheritance or transfer tax in the various states.

Endorsement of Executor.

The stock certificate in the

case of a decedent will of course be endorsed by the executor or administrator on behalf of the decedent. Where stock belonging to an estate is sought to be transferred into the name of an individual not the executor or administrator, and someone not designated as a beneficiary under the will, it may, in certain of these cases, be necessary to obtain a certified copy of a decree of the surrogate's or probate court, directing the transfer of the stock to the individual. A case like this might arise where the estate was of insufficient value to meet all the debts of the decedent. It would, of course, in such a situation, be necessary to sell some or all of the assets of the estate, irrespective of the fact that some of the assets might be specifically bequeathed. The transfer agent would have a certified copy of the will filed with it, showing that certain stock was specifically bequeathed to an individual other than the one to whom it is sought to transfer this same certificate of stock. In order to justify such a transfer, it would, as stated above, be necessary to have a decree of the surrogate's or probate court. This decree should be filed with the transfer agent.

It would also be necessary to have such a decree where the stock was to be transferred out of the estate to someone other than a beneficiary, or even if it were to a beneficiary other than a specific legatee. If the transfer is made first to the executor or administrator, then he takes the responsibility for a transfer out of the estate, but the transfer is attempted to be made directly from the name of the decedent to another party, then the rules above mentioned apply. An example of a specific legacy of stock would be as follows:

A will provides that Certificate No. 889 of the Jones and Brown Iron Works Company, Inc., be bequeathed to Richard Roe. In a case like the above it is not necessary to obtain a decree of the court. A certified copy of the will will be sufficient authority to the transfer agent to make the transfer directly to Richard Roe.

§ 533. Lists of Stockholders for Dividend Payments

Among the duties of a transfer agent, there is, as has been stated, the maintenance of stockholders ledgers and transfer records. One of the reasons for maintaining these records is to have a list of stockholders with their addresses and amounts of their respective holdings, when the corporation is in a position to declare a dividend. The transfer agent at that time would be called upon to supply the corporation for which it is acting, with a certified list of stockholders, their addresses, and the respective amounts of stock held by each stockholder. The transfer agent may, of course, be called upon for a stockholders list at other times than dividend periods. Such occasions arise when the corporation wishes to send out notices of any kind, including increase of capitalization and rights to subscribe to stock, and the like. When a corporation is about to pay a dividend, a meeting of directors, of course, is held and the rate of dividend is declared and the time of payment is set, and it is decided to whom it shall be paid. The way this is done is to have the resolution declaring the dividend read that the dividend is payable to stockholders of record as of a given date. Often the resolution will declare the books to be closed as of a given date, and will set a time for reopening the books after the dividend has been paid. If the books are declared to be closed, then no transfers may be permitted during the time that they are closed. The certified list of stockholders in either case must be made up as of the date specified in the resolution.

§ 534. Definition of Registrar

The registrar is one who registers something, in this case securities of some kind, usually either stock, bonds, or notes, and sometimes commercial paper. The New York Stock Exchange rule requires that the registrar shall be a bank or trust company. If the stock is not listed, however, no rule exists

as to who the registrar shall be. Some corporations act as their own registrar as well as their own transfer agent, while other corporations have their transfer agency and registration work handled by one bank or trust company. The better practice, however, is to have the registration handled by a bank or trust company other than the organization acting as transfer agent.

§ 535. Duties of the Registrar

The duties of the registrar are much less complicated than those of the transfer agent. It is his duty to see that the corporation does not overissue stock, that is, that it does not issue more than the stock authorized by the board of directors under the charter limitations. In addition to this, the registrar must receive and examine the certificates to see that they are genuine. He will record registrations in a book kept for that purpose and then deliver the certificates to the transfer agent.

Of course before accepting the appointment as registrar, a bank or trust company which cares to maintain a high-class reputation will make an investigation similar to and as drastic as that which it would make were it going to act as transfer agent. In fact it may be said that in all cases no bank or trust company will act on behalf of another corporation or individual unless it is satisfied of the standing of the corporation or individual.

§ 536. Fees

The fees for acting in the capacities of transfer agent and registrar differ in different localities. No set rules can be laid down as to charges which may be made, although certain fees have been recommended as proper by the American Institute of Banking.

In addition to the fees that can be made for services, a

transfer agency frequently carries with it a deposit account which is, of course, valuable and adds to the attractiveness of the business.

REVIEW QUESTIONS

1. What are the duties of a transfer agent? What is the procedure when shares of stock are sold? What are the books kept by a transfer agent?

2. Why do small corporations not require a transfer agent? Why do the largest corporations maintain their own transfer offices? 3. What are the reasons for employing banks and trust companies as transfer agents?

4. Why do banks and trust companies investigate carefully before accepting a transfer agency or registrarship? What papers are filed before a bank acts as transfer agent for a corporation?

5. Who has charge of the book of stock certificates? What is the first duty of the transfer agent? What does the transfer agent do with funds as received? Can the trust department hold funds subject to check?

6. What is the transfer agent's book of original entry? To what books are these entries posted? What is the federal tax on original issues of stocks on transfer? What tax laws has your state as to original issues and transfers? How is the signature of the transferor proved?

7. When stock belonging to an estate is to be transferred, what must the transfer agent require to make the transfer safe? When is it necessary to have a waiver of notice from the state comptroller? Why does a transfer agent want to be sure that the 60-day notice has been filed with the collector of internal revenue for the district? If the corporation whose stock is to be transferred was incorporated in another state, what caution is necessary? Why should the transfer agent have laws of all the states accessible? Who signs the certificates belonging to an estate? When is a decree of the court of probate needed? In case of a specific legacy of stock, what is needed? 8. When are lists of stockholders required? What fixes the date of a dividend?