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How To Transfer Shares of Stock in A Corporation

To transfer shares of stock in a corporation, you must gather documents like the stock certificate and Certificate Authorizing Registration. You must endorse the stock certificate by signing the back. Then deliver the endorsed certificate along with a deed showing the transfer of ownership. Finally, have the corporate secretary record the transfer in the corporation's stock and transfer book, documenting details of the parties and shares. The transfer is not valid until all these steps are completed according to Philippine corporate law.

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505 views

How To Transfer Shares of Stock in A Corporation

To transfer shares of stock in a corporation, you must gather documents like the stock certificate and Certificate Authorizing Registration. You must endorse the stock certificate by signing the back. Then deliver the endorsed certificate along with a deed showing the transfer of ownership. Finally, have the corporate secretary record the transfer in the corporation's stock and transfer book, documenting details of the parties and shares. The transfer is not valid until all these steps are completed according to Philippine corporate law.

Uploaded by

Carlos James
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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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.
In the case of De los Santos, et al. vs. MacGrath, et al., G.R. No. L-4818, 28 February
1955, the Supreme Court interpreted the provisions of Section 63 of the corporation code.
The Supreme Court held that any voluntary transfer of shares of stock in a corporation that
is represented by a certificate of stock must strictly comply with the following conditions:

a. There must be delivery of the certificate;

b. The share must be indorsed by the owner or his agent; and

c. To be valid to the corporation and third parties, the transfer must be recorded in the
books of the corporation.

One of the requirements to effect a valid transfer of shares of stock is that the
certificate of stock must be endorsed by the owner or his agent. Mere delivery or
handing over of the stock certificate is insufficient, and does not produce the effects of a
transfer or conveyance to another. Endorsement of the stock certificate is one of the
operative acts which validates the transfer. Without the act of endorsement by the
stockholder, the sale or disposition will not be binding upon the corporation. Of course,
there are remedies under the law to compel the owner to endorse the stock certificate which
he or she has already conveyed to another. But before endorsement of the stock certificate,
the corporation can refuse recognize the transferee stockholder.

Moreover, as between the corporation on one hand, and its shareholders and third persons
on the other, the corporation looks only to its books for the purpose of determining who its
shareholders are. Thus, as between the “real” owner of a stock certificate and the registered
owner or the person actually registered in the Stock and Transfer Book of a corporation, it is
the person registered in the Stock and Transfer Book who must sign or endorse the
certificate of stock to allow its sale or transfer.

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