Paying agent service is a brokerage service for accepting payments from the issuer of a security and then distributing the payments to the securities holders. Payments are made on dividends, interest and principal amounts.

This service is regulated by a respective agreement. The paying agent agreement describes how the issuer will deposit the funds, to be disbursed by the paying agent, as well as the exact timing and method of when the paying agent will deliver interest or principal payment to the investor. Accordingly, the paying agent receives the service fee.

The paying agent service can also include a tax agent service. Tax agent service is a service for investors to calculate the taxable income and transfer them to the state budget accordingly. The paying agent agreement specifies if a paying agent also provides tax agent service.

While the banks usually serve as a paying agent, the central depositories may also provide this service.

The responsibilities of the National Depository Center as a paying agent include the following:

  • To ensure the calculation of dividends, interest and principal payments in accordance with the relevant regulations, as well as their distribution to investors;
  • In accordance with the applicable legislation, to ensure the calculation of taxable income of investors and its transfer to the state budget;
  • To provide the issuer with information on dividends, principal and interest payments paid to securities holders, as well as on taxes upon request.