Typically, paying agencies are a corporate trust division of a bank or trust company intended to pay dividends, coupons and capital to a security holder on behalf of the issuer. If the paying agencies are used for shares, the agent receives dividends that he then pays to the shareholders. For bonds, paying agencies receive coupons that they then give to bondholders. In the case of a bond issue, a paying agency is usually designated responsible for interest and principal payments. A paying agent acts as an intermediary in these transactions and receives a fee for its services. There are many formats for paying agency agreements. Banks usually have their own standard agreements, as does the Securities and Exchange Commission (SEC). An agreement of paying agencies shall indicate the date of the agreement and the parties concerned, as well as, where appropriate, the physical addresses where the principal amount is kept. These agreements typically cite the details of the offer, such as: “The Municipality of XYZ is offering $200,000,000 in variable-rate notes as of August 10, 2019.” The agreement could ensure that the payment of principal and interest on the bonds is guaranteed by a guarantor or agent. The paying agency agreement also describes the exact date and method (when and how) the paying agent provides interest on the bonds or other securities issued. A paying agent, also known as a “payment agent”, is an organization that accepts payments from the issuer of a security and then distributes the funds to the holders of the securities. Under the advance contract and in connection with the bonds and coupons, a paying agent acts exclusively as a representative of the issuer and guarantor and does not assume any obligation vis-à-vis any agency or trust agreement for or with any of the holders of bonds or coupons. Specialised companies, such as investment banks, which act as paying agents, can offer related services that go beyond a simple disbursement of funds, including, but not limited to: for bond issues for which there is more than one jurisdiction, there will be more than one paying agency, one of which will play a coordinating role.
If it is not a fiduciary agreement, the role of the coordinating officer is carried out by the tax treasury. If it is a fiduciary agreement, the agent is called the “primary payer”. The bank and the computing and payment agent may accept, without the consent of the registered holders, a modification of these conditions or any of the provisions of the calculation agency and paying agent contract which, at the reasonable discretion of the bank and the computing and payment agency, is not significantly prejudicial to the interests of the registered holders; (ii) of a formal, minor or technical nature, or (iii) to correct a manifest error. . . .