What is a 'Paying Agent'

A paying agent is an agent who accepts payments from the issuer of a security and then distributes the payments to the holders of the security. Also known as a "disbursing agent."

BREAKING DOWN 'Paying Agent'

Paying agents are usually banks, designated to make dividend, coupon, and principal payments to the security holder on behalf of the issuer. In a bond issue, for example, the bond’s indenture will name a paying agent, responsible for making interest and principal payments.

A paying agent agreement will often state, up front, the date of the agreement and the parties involved, along with physical addresses, if applicable, where the principal amount will be kept. This agreement could also details the proposal of what the issuer (e.g. a government) will offer in securities (e.g. $200,000,000 in floating rate notes, due August 10, 2018). If appropriate, these floating rate notes will be guaranteed as to payment of principal and interest by a Guarantor. A Trustee could also be named.

The paying agent agreement describes the exact timing and method of when the paying agent will deliver interest on the notes or other issued securities (e.g. the Issuer must furnish to the paying agent – no later than five business days before interest on the floating rate notes is due and payable – the exact name, address, and amount due to each registered user of the notes, along with their bank account information.) This information could also include any applicable tax withholding forms, such as Form W-8BEN.

The agreement could also lay out, prior to each interest or principal payment date, how the issuer will deposit the funds, to be disbursed by the paying agent.

Additional Paying Agent Services

In addition to banks, specialty firms, which act as paying agents, could provide further services, including but not limited to:

  • Automating the payment process for dividends and/or interest payments to maximize shareholder convenience
  • Structuring and processing all required documentation
  • Providing additional Investment management services
  • Offering access to a full team of professionals and applicable technology

For such firms, services offered can be broader than a straightforward disbursal of funds. Paying agencies can help link its clients with target company shareholders in the event of a distribution of cash proceeds for an acquisition or leveraged buyout, for example.

RELATED TERMS
  1. Agent

    An agent is any person who has been legally empowered to act ...
  2. Agent Bank

    An agent bank is a bank that performs services in some capacity ...
  3. Real Estate Agent

    A real estate agent is a licensed professional who represents ...
  4. Shareholder Services Agent

    A shareholder services agent is a third party that partners with ...
  5. Captive Agent

    A captive agent is an insurance agent who only works for one ...
  6. Independent Agent

    An independent agent is an insurance agent that sells insurance ...
Related Articles
  1. Investing

    Understanding Real Estate Commissions: Who Pays?

    When you set out to buy or sell a house, one factor worth considering is the real estate agent's fees.
  2. Investing

    Why You Don't Need A Real Estate Agent

    While there are times when a real estate agent earns the commission, there are other times when you can do it yourself.
  3. Investing

    Career Comparison: Real Estate Agent or Mortgage Broker

    Considering a career as a Real Estate Agent or Mortgage Broker? This article can help you understand important differences between these careers.
  4. Investing

    How Real Estate Agents Sell Their Homes For More

    A well-publicized statistic finds that when real estate agents sell their own homes, they tend to get a higher price. But why?
  5. Investing

    Tips For Succeeding As A Real Estate Agent

    Here are a few ways of being better at prospecting, contacts management, and marketing. These and other suggestions will advance your career as a real estate agent.
  6. Investing

    Buying a Home Remotely: A Step-by-Step Guide

    Buying a home remotely can be a good option for a variety of reasons. The important thing is to find a good real estate agent whom you can trust.
  7. Investing

    6 Steps to Become a Real Estate Agent

    Here, we'll show you the main steps to becoming a successful real estate agent.
  8. Insurance

    Best Ways to Find Life Insurance Leads

    Learn the most effective ways life insurance agents find leads, including company leads, third-party leads, LinkedIn and networking.
RELATED FAQS
  1. How do real estate agents get listings?

    Learn about how real estate agents get listings in top real estate markets, as well as in smaller areas, through utilizing ... Read Answer >>
  2. I lost my share certificate. Do I still own the stock?

    Regardless of whether a shareholder loses his or her stock certificate, that person still owns the shares. However, in order ... Read Answer >>
  3. Do real estate agents need a degree?

    A career in real estate often leads to great opportunities. Find out what are the kind of education and training a real estate ... Read Answer >>
Trading Center