Also known as a paying agent, a fiscal agent is an entity that is appointed by a business of government to manage specific financial matters on behalf of that client. In some instances, the agent is also called upon to provide suggestions and opinions on other financial matters that may or may not be specifically assigned to the care of the agent. An agent of this type is often a commercial bank, but may also be some type of non-profit organization that is acting in behalf of the interests of a different non-profit entity.
One of the most common examples of the work assigned to a fiscal agent has to do with aiding companies in creating stock issues and arranging the underwriting for the securities that are issued. Once the security is in place, the agent is often involved in structuring public offerings of the shares, and in making sure investors are provided with the proper documentation once a sale is complete. In situations where the issue of a corporate or government bond is involved, the fiscal agent will normally be responsible for making sure interest is paid to the bondholder according to the terms of the bond, and also making sure the holder receives the principal when the bond reaches maturity.
A fiscal agent may provide other types of financial support and service, based on the needs of the client and the provisions established in the contract between the two entities. Along with assisting in the process of repaying the principal and any interest due, the agent may also handle the details of redeeming bond issues or coupons, and providing investors with replacements of documents that are lost or damaged in some manner. The agent will also ensure that the coupons or bonds are properly disposed of once payments are processed and received by the holders of those documents. It is not unusual for a fiscal agent to also be involved in the calculation and payment of any taxes associated with the issued securities.
Utilizing the services of a fiscal agent has several benefits. Agents typically are well-versed in laws and regulations that relate to the issuance of securities, making them invaluable to the process of issuing and maintaining securities in a manner that complies with current laws. In addition, use of an agent is often cost-effective and time-efficient, since the issuing entity does not have to spend company resources to manage the day to day tasks involved in managing the securities.
