A trust company commonly acts as trustee under the trust deed or mortgage securing an issue of bonds. It certifies to the regularity of the issue and to the genuineness of the document, but does not guarantee the value or payment of the bond. In this capacity the company acts for the interest of the bondholders, and in case of default of the issuing company it could foreclose on the property covered by the deed or mortgage.

Another trust activity is to act as fiscal agent for states, municipalities, railroads, and industrials, handling the payments relating to the bonds, coupons, interest, dividends, taxes, acting as depository for the above corporations, receiving subscriptions to their securities, and delivering the issues.

Trust companies act as transfer agents for stocks and registrars for stocks and bonds, their duty being, in that connection, to prevent the fraudulent overissue of securities. The transfer agent cancels old certificates of stock and issues new ones in the names of the new owners. Bonds are registered as to principal or interest, or both, and usually the trustee of the mortgage underlying the bonds acts also as registrar of the bonds.

Other important operations of trust companies are connected with corporate reorganization and financing. This is a risky line of service and if the trust company is to maintain its good-will it must handle only conservative propositions. When charged with such work the trust company determines upon a plan of reorganization, recalls the outstanding certificates, distributes the new ones, makes assessments, and manages the reorganized company until it is an assured success. When a new enterprise is to be financed, the trust company investigates the concern and the value of its physical and other assets, undertakes the sale of its securities, and acts as a regular investment banker.