Each company decides on an administrator for its DRIP, which is usually a bank. The bank maintains an account for each participant to record transactions under the plan. The bank also buys and sells stocks for participants.
The administrator also holds shares of stock as the custodian for participants. We talk more about account administrators and what they do in Chapter 6.
Each company sets its own rules for DRIP eligibility. As part of its eligibility requirements, a plan will specify:
• The number of shares you must own before becoming eligible to apply for participation in the DRIP.
• If you don’t own all the shares in your name, the eligibility requirements will specify how to transfer ownership of the shares to your name. ...