How to transfer shares of stock in a corporation

When you own shares of stock, not traded thru stock exchange,in a company registered in the Philippines, this isconsidered part of your personal property. Not only are you entitled to stockholder benefits, you also have the right to transfer your shares.

You may decide to transfer them as a gift, sell them, or assign them to someone else. Here are the steps for transferring shares of stock in a corporation:

1. Gather the necessary documents

The first and foremost, the item you should have is a stock certificate, assuming your shares are fully paid. Your shares of stock must be covered by a certificate – this is proof of your stock ownership.

Another document that you may need is the Certificate Authorizing Registration (CAR). The CAR is a certification required by the Bureau of International Revenue (BIR) for the stocks that are not traded on the Philippine Stock Exchange. This document allows the corporate secretary of the corporation to record your transfer of stocks in their books. The BIR may also need a proof of acquisition of the shares. This may be in the form of a subscription agreement, or prior deed of sale or deed of donation, or even a deed of partition, as the case maybe.

2. Get an endorsement of the share

Once you have the documents, you may now endorse your stock certificate. The endorsement can come from you as an owner of the shares.

3. Deliver the stock certificate with a Deed showing the proof of transfer

After you have your stock certificate endorsed, you may then transfer it. By delivering the stock certificate, ownership is now transferred to the person of your choice, whether they bought your shares of stock or received them from you as a gift.

Always make sure that your stock certificateis properly endorsedbefore you deliver it. Simplyhanding over the stock certificate is not a transfer of ownership. The transfer will not be valid because there is no proof without the endorsement and the recording of the transfer in the books of the corporation involved.

As proof of transfer, you will need to execute a Deed of Sale, or Donation or a similar transfer document, transferring the shares to your vendee or donee or heirs.

4. Record the transfer in the books

After delivering your endorsed stock certificate, finalize your transfer by having it recorded in the Stock and Transfer Book of the said corporation. According to Section 63 of the Corporation Code, it is important to have the transfer recorded in their books or else it willbe considered invalid. Make sure that the bookkeeper documents the following:

  • Names of the parties involved with the transfer
  • Date of the transfer
  • Number of certificate/s
  • Number of shares transferred

Having the transfer recorded in the books updates the corporation on who its current shareholders are. It also lets the corporation know who they can call for stockholder meetings and officer elections.

Learn more about owning and transferring shares of stock in the Philippines

For more information, get in touch with Duran & Duran-Schulze Law at info@duranschulze.com or (+632) 478 5826.