Legal Definitions - transfer-agent-run dividend-reinvestment plan

A transfer-agent-run dividend-reinvestment plan is a program that allows investors to reinvest their dividends and additional voluntary payments into shares of a company's common stock. This program is usually managed by a financial institution for several companies.

For example, an investor can participate in more than one DRIP program simultaneously and also make additional cash investments in multiple companies. The investor never receives the cash, but it is still treated as income to the investor. An investor may be allowed to make optional cash purchases of additional stock.

There are three types of dividend-reinvestment plans: brokerage-run, company-run, and transfer-agent-run. Brokerage-run plans are usually limited to dividend reinvestment and are managed by a brokerage. Company-run plans are operated by a corporation for its own shareholders and may offer additional features such as IRAs.

Overall, a transfer-agent-run dividend-reinvestment plan is a convenient way for investors to reinvest their dividends and potentially convert additional voluntary payments into shares of a company's common stock, often at a discount from the stock's market price.