transfer of shares deed of assignment

Philippine Legal Forms

Deed of assignment of shares of stock sample.

Philippine Legal Forms Tags: Deed of Assignment , Deed of Assignment of Shares of Stock , Deed of Assignment Sample

HOW ARE SHARES OF STOCKS TRANSFERRED?

After reading How are shares of stocks transferred? , read also Administrative Sanctions and Criminal Penalties under the Pre-Need Code of the Philippines

For shares of stocks with a stock certificate, there must be delivery of the stock certificate, indorsement and recording in the stock and transfer book of the corporation.

For shares of stocks without a stock certificate, transfer must be done by means of a deed of assignment and recording in the stock and transfer book of the corporation.

The Corporation is not a party to the transfer of shares of stocks through any form of conveyance.

S hares of stocks in a corporation are treated as personal property under our existing laws. Like any other personal property, an owner of shares of stocks can sell, assign, transfer or convey his property to another person as an attribute of ownership. However, the law may regulate shares of stocks since by its nature, it is considered as intangible personal properties. As such, any manner of conveyance or transfer must also be regulated.

The law says:

Section 62 of the Revised Corporation Code of the Philippines states that:

SEC. 62 . Certificate of Stock and Transfer of Shares . – The capital stock of corporations shall be divided into shares for which certificates signed by the president or vice president, countersigned by the secretary or assistant secretary, and sealed with the seal of the corporation shall be issued in accordance with the bylaws. Shares of stock so issued are personal property and may be transferred by delivery of the certificate or certificates indorsed by the owner, his attorney in-fact, or any other person legally authorized to make the transfer. No transfer, however, shall be valid, except as between the parties, until the transfer is recorded in the books of the corporation showing the names of the parties to the transaction, the date of the transfer, the number of the certificate or certificates, and the number of shares transferred. The Commission may require corporations whose securities are traded in trading markets and which can reasonably demonstrate their capability to do so to issue their securities or shares of stocks in uncertificated or scripless form in accordance with the rules of the Commission. No shares of stock against which the corporation holds any unpaid claim shall be transferable in the books of the corporation. (Emphasis supplied.)

What are the requirements of a valid transfer of shares of stocks?

For shares of stocks that are represented by a stock certificate, the following must be strictly complied with:

• delivery of the stock certificate;
• indorsement by the owner or his agent;
• recording in the books of the corporation. (Sec. 62, Revised Corporation Code)

However, if the shares of stocks are not represented by a stock certificate, such as when the certificate has not yet been issued or when such certificate is not in the possession of the stockholder, the transfer must be:

• by means of a deed of assignment; and
• such is duly recorded in the books of the corporation.

Jurisprudence says:

For the delivery of the stock certificate, the Supreme Court ruled that the term delivery means delivery to the assignee or the transferee and not delivery to the corporation. (Teng v. Securities and Exchange Commission, G.R. No. 184332, 17 February 2016)

In the case of Rural Bank of Lipa v. Court of Appeals (G.R. No. 124535, 28 September 2001) , the Supreme Court has held that for the transfer of shares of stocks to be valid and binding to third parties, such transfer must be recorded in the books of the corporation.

It must be noted that the registration in the stock and transfer book is not necessary if the conveyance is by way of chattel mortgage. However, there must be due registration with the Register of Deeds . (Chua Guan v. Samahang Magsasaka, G.R. No. L-42091, 2 November 1935)

Registration is likewise necessary if the heirs of the deceased shareholder acquire the latter’s shares of stocks. (Reyes v. RTC and Zenith Insurance Corporation, G.R. No. 165744, 11 August 2008)

The corporation whose shares of stock are the subject of a transfer through sale, donation, or any mode of conveyance, is not a party to the transaction. (Forest Hill Golf & Country Club v. Vertex Sales and Trading, G.R. No. 202205, 6 March 2013)

May a stockholder bring a suit to compel the corporate secretary to register valid transfer of stocks?

Yes, a stockholder may compel the corporate secretary to register a valid transfer of stocks. It is the duty and obligation of the corporate secretary to register the transfer of stocks.

Is the attachment or mortgage of shares of stocks required to be registered in the corporation’s stock and transfer books to be valid and binding on the corporation and third parties?

No, an attachment or mortgage of shares of stocks need not be registered in the corporation’s stock and transfer books inasmuch as a chattel mortgage over shares of stocks does not involve a transfer of shares.

Only absolute transfers of shares of stocks are required to be registered in the corporation’s stocks and transfer book in order to have the force and effect against third persons. (Chemphil Export and Import Corporation v. Court of Appeals, G.R. No. 112438-39, 12 December 1995)

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How to Transfer Shares of Stock in a Corporation

Philippine law treats shares of stock in a corporation as personal property . Similar to other personalty, the owner of the property can sell, assign, transfer or convey his property to another as he wishes. This is an attribute and principle of ownership which cannot be taken away. However, being in the nature of intangible personal property, the law regulates such kinds of properties, including the manner in which they can be conveyed or transferred.

Section 63 of the corporation code affirms that the owner of a share of stock in a corporation has the right to transfer his shares . It is the provision that outlines the fundamental requirements which must be complied with if a stockholder in a corporation wishes to transfer his shares to another. Section 63 reads:

“ Sec. 63. Certificate of stock and transfer of shares. – The capital stock of stock corporations shall be divided into shares for which certificates signed by the president or vice president, countersigned by the secretary or assistant secretary, and sealed with the seal of the corporation shall be issued in accordance with the by-laws. Shares of stock so issued are personal property and may be transferred by delivery of the certificate or certificates endorsed by the owner or his attorney-in-fact or other person legally authorized to make the transfer. No transfer, however, shall be valid, except as between the parties, until the transfer is recorded in the books of the corporation showing the names of the parties to the transaction, the date of the transfer, the number of the certificate or certificates and the number of shares transferred.

No shares of stock against which the corporation holds any unpaid claim shall be transferable in the books of the corporation. “

Being intangible personalty, the corporation code requires that , before a share of capital stock is validly sold, transferred, assigned or in any manner conveyed, it must be covered by a stock certificate . This requirement is borne out of practical considerations. It is a fundamental principle of contract law (be it of sale, assignment or any other conveyance) in the Philippines and probably in any jurisdiction, that the parties to any contract must be aware of the subject matter – what is being sold, transferred or otherwise conveyed. On the other hand, shares of stock in a corporation do not have physical form, unlike ordinary chattel such as goods or vehicles, where a person has a clear notion of what is being sold or conveyed.

The stock certificate is evidence of the personalty owned by the stockholder. It defines the nature and extent of his ownership over the share/s of stock. It also outlines the regulations and limitations of ownership, which must be considered and made known to the parties prior to any conveyance. Obviously, without the stock certificate, these matters would be unknown to a prospective buyer or transferee of shares of stock. Simply stated, the subject matter of the conveyance will not be clear. Therefore, only shares of stock covered by a stock certificate can be subject of a legally demandable and binding sale or disposition.

There may be instances where shares of stock are sold or transferred prior to the issuance of stock certificates. At best, these transactions are only binding between the parties, and will not bind the corporation. As a matter of fact, the corporation can legally refuse to recognize such transfers, especially if the shares which were sold have not yet been fully paid. The last paragraph of Section 63 states that no shares of stock against which the corporation holds any unpaid claim shall be transferable in the books of the corporation. This means that the corporation can altogether refuse to recognize the validity of a sale or transfer of a share of capital stock that has not been fully paid, or which the corporation has a lien. In this case, the purchaser’s only remedy lies with the stockholder.

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.

Further, the Supreme Court in the case of Padgett vs. Babcock & Templeton, Inc., G.R. No. 38684, 21 December 1933, held that shares of corporate stock are regarded as personal property and may be disposed by the owner as he sees fit, unless the corporation is dissolved, or unless the right to do so is properly restricted or the owner’s privilege is hampered by his actions. A corporation cannot impose undue restrictions upon the owner’s right to sell, transfer or otherwise convey his shares of stock.

According to the Supreme Court, a restriction imposed upon a stock certificate, which unduly prohibits the owner from conveying his property, is null and void on the ground that it constitutes and unreasonable limitation of the right of ownership and is in restraint of trade. It was also held that any restriction on a stockholder’s right to dispose of his shares must be construed strictly; and any attempt to restrain a transfer of shares is regarded as being in restraint of trade, in the absence of a valid lien upon its shares, and except to the extent that valid restrictive regulations and agreements exist and are applicable. Subject only to such restrictions, a stockholder cannot be controlled in or restrained from exercising his right to transfer by the corporation or its officers or by other stockholders, even though the sale is to a competitor of the company, or to an insolvent person, or even though a controlling interest is sold to one purchaser.

However, recognizing the right of the corporation to regulate the transfer of shares of stock in a corporation, the Supreme Court stated that there can be restrictive regulations or agreements which can be entered into between the corporation and the stockholder, to regulate ownership of the shares of stock. These regulations or agreements pertain to those indicated in the certificates of stock, and also those that may be found in the By-Laws of the corporation. The Supreme Court emphasized that these regulations are construed strictly against the corporation, and in favor of the ownership rights of the stockholder. An absolute prohibition from selling shares of stock was held as null and void on the ground that it constitutes and unreasonable limitation of the right of ownership and is in restraint of trade.

An example of a invalid restriction upon the right of a stockholder to dispose of a share of stock in a corporation is found in the case of in the case of Fleischer vs. Botica Nolasco Co., 47 Phil 583 . In this case, the Supreme Court discussed the validity of a clause in the by-laws of a corporation which prohibited the owner of a stock certificate from selling his shares to any person other than the corporation. The by-laws mandated that the owner of a share of stock could not sell it to another person except to the corporation.

In deciding the legality and validity of said restriction, the Supreme Court ruled that the only restraint imposed by the Corporation Law upon transfer of shares is that no transfer of shares of stock shall be valid, except as between the parties, until the transfer is entered and noted upon the books of the corporation so as to show the names of the parties to the transaction, the date of the transfer, the number of the certificate, and the number of shares transferred. According to the Supreme Court, this restriction is necessary in order that the officers of the corporation may know who its stockholders are, which is essential in conducting elections of officers, in calling meetings of stockholders, and for other purposes.

The Supreme Court declared that any restriction in the by-laws which exceeds what is provided in the corporation code is ultra vires, violative of the property rights of shareholders, and in restraint of trade. This is because the by-laws of a corporation cannot contradict the general policy of the laws of the land, and must always be strictly subordinate to Philippine laws.

In Rural Bank of Salinas vs. Court of Appeals, G.R. No. 96674, 26 June 1992, the Supreme Court held that a corporation, either by its board, its by-laws, or the act of its officers, cannot create restrictions in stock transfers. The corporation code contemplates no restriction as to whom the stocks may be transferred. It does not suggest that any discrimination may be created by the corporation in favor of, or against a certain purchaser. The owner of shares, as owner of personal property, is at liberty, under said section to dispose them in favor of whomever he pleases, without limitation in this respect, than the general provisions of law. The only limitation imposed by Section 63 of the corporation code is when the corporation holds any unpaid claim against the shares intended to be transferred, which was not present in the case.

This is how to transfer shares of stock in the Philippines.

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How to transfer shares of stock in a corporation

• October 16, 2017
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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  [email protected]  or (+632) 478 5826.

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Drafting a Deed of Assignment

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Note: Want to skip the guide and go straight to the free templates? No problem - scroll to the bottom. Also note: This is not legal advice.

Introduction

A Deed of Assignment is a vital legal document used to transfer rights, interests or assets between parties. It is regularly used in business transactions, and often regarding real estate or intellectual property. A well-crafted deed of assignment can protect both sides from potential legal disputes, ensuring that everyone involved understands their obligations and responsibilities.

The Genie AI team has seen many instances where having a valid deed of assignment can make all the difference - without it businesses could be exposed to considerable risk. That’s why we offer free templates and step-by-step guides to help those wishing to draft their own deed.

When creating a Deed of Assignment it is important to take the specific circumstances into account - any changes or additions should be accurately documented and agreed by all involved parties beforehand. Furthermore, it is essential that the terms are clearly written out in an unambiguous way so every party knows exactly what they have signed up for. Beyond protecting both sides’ interests, this type of agreement can also be used for copyright assignments, leases, debt transfers and trusts.

Before signing on the dotted line it’s also critical that executing such documentation is done properly - all parties must sign in the presence of a witness who will also affix their signature and date the document accordingly. Once this process has been completed filings must then be made with any relevant government authorities whenever necessary (especially in cases involving real estate or intellectual property transfers).

In summary, drafting a Deed of Assignment not only safeguards everyone’s best interests but also provides additional benefits depending on its use case - reading through our step-by-step guidance below should provide you with more information on how to access our template library today and start benefitting from its advantages without needing to sign up for an account with Genie AI first!

Definitions (feel free to skip)

Legal Binding: When a legally binding document is used, it means that all parties involved are legally obligated to follow the terms and conditions set forth in the document.

Assignor: The assignor is the person who is transferring rights, interests or assets to someone else.

Assignee: The assignee is the person who is receiving the rights, interests or assets from the assignor.

Witness: A witness is an independent third-party who is present when a document is signed, in order to ensure that the process is completed in a secure and legally binding manner.

Stamp: A stamp is an official seal or mark that is used to verify and authenticate a document.

Tax: A tax is a sum of money that is paid to a government or public authority.

Duty: Duty is an obligation or responsibility assigned to someone.

Defining the Deed of Assignment

What is a deed of assignment and what is its purpose, parties involved, who needs to be involved in the making of a deed of assignment, drafting the deed, determine what kind of deed of assignment needs to be drafted, consider the subject matter to be assigned in the deed, research the legal requirements for the kind of deed to be drafted, draft the deed of assignment in accordance with the legal requirements, executing the deed, check that the parties to the deed are correctly identified, confirm that the deed is correctly signed and dated by all parties, confirm that the deed is witnessed by an independent third party, have the deed of assignment properly executed by all parties, registration, determine whether the deed of assignment needs to be registered, if registration is necessary, confirm the registration procedures, take necessary steps to register the deed of assignment, considerations, consider any applicable tax or stamp duty implications of the deed of assignment, consider any restrictions or limitations on the rights being assigned, consider whether the deed of assignment needs to be registered in any public records, common mistakes, not accurately identifying all of the parties to the deed, not having the deed properly executed by all parties, not having the deed witnessed by an independent third party, not considering any applicable tax or stamp duty implications, not considering any applicable restrictions or limitations on the rights being assigned, record keeping, ensure that the original deed of assignment is securely stored, create a digital copy of the deed and store it in a secure manner, review the deed of assignment to ensure accuracy, confirm that all steps have been completed correctly, seek advice from legal professionals if necessary, get started.

• Establish the parties involved in the Deed of Assignment
• Identify the property or service being assigned
• Specify the terms of the assignment
• Ensure the Deed of Assignment is properly witnessed
• Check that all signatures are valid

When you have completed the steps above, you will have successfully defined the Deed of Assignment and can proceed to the next step.

• A deed of assignment is a legal document that is used to transfer the rights and responsibilities of one party (the assignor) to another party (the assignee)
• It is used to transfer contractual rights and obligations between parties
• It should include information such as the names of the parties, the date of the assignment, and the description of the rights transferred
• You will know that you have completed this step when you have an understanding of what a deed of assignment is and why it is used.
• Identify the party transferring their rights (the assignor) and the party receiving the rights (the assignee)
• Draft the deed in the name of both parties, including full names and contact details
• Ensure the deed is signed by both the assignor and assignee
• Once the deed is signed, the parties should exchange copies of the document

Once the assignor and assignee have been identified and the deed has been drafted and signed, you can check this step off your list and move on to the next step.

• Identify the parties involved in the Deed of Assignment. This would typically include the assignor (the party transferring their rights or interest) and the assignee (the party receiving the rights or interest).
• Ensure that all parties involved have the legal capacity to enter into a contract.
• When all parties have been identified and their legal capacity has been verified, you can check this step off your list and move on to drafting the Deed.
• Read the applicable laws in your jurisdiction to determine the required language and structure of the Deed of Assignment
• Gather the necessary information on the parties, the asset being assigned, and other relevant details
• Draft the Deed of Assignment, taking into account all the necessary details
• Make sure the language is clear and unambiguous
• Have the Deed of Assignment reviewed by a legal professional
• When the Deed of Assignment has been drafted and reviewed, you can move on to the next step.
• Identify the type of assignment that needs to be drafted and the legal requirements that need to be satisfied
• Consider the purpose of the Deed and the rights and obligations of the parties to the Deed
• Determine if the Deed is for an absolute or conditional assignment
• Consider if the Deed should be an express or implied assignment
• Determine if the Deed needs to be in writing or if it can be oral
• Check the applicable laws in your jurisdiction to ensure that you are drafting a valid Deed
• Check if there are any additional requirements that need to be included in the Deed

When you can check this off your list: Once you have identified the type of assignment and the relevant legal requirements, you can move on to considering the subject matter to be assigned in the Deed.

• Identify the subject matter of the Deed of Assignment, such as a patent, trademark, copyright, or other intellectual property
• Assess the value of the subject matter and any associated liabilities
• Understand the relationship between the assignor and assignee
• Have all necessary documents, such as a purchase agreement, to provide more detail about the assignment

Once you have identified the subject matter of the Deed of Assignment, assessed its value, understand the relationship between the assignor and assignee, and gathered any additional documents, you can move onto the next step of researching the legal requirements for the kind of Deed to be drafted.

• Research the relevant legislation, case law, and other materials related to the Deed of Assignment to be drafted
• Consult with a lawyer familiar with the relevant law to understand the requirements
• Take detailed notes on the legal requirements that must be adhered to in the Deed of Assignment
• Once you have all the necessary information, double-check that you understand the requirements before moving on to the next step.
• Prepare the text of the Deed, ensuring that all relevant information regarding the parties, the subject matter, and the consideration is included
• Check to make sure the language conforms with relevant laws and regulations
• Have the Deed reviewed by a solicitor to ensure that it complies with all legal requirements
• Once the Deed has been approved by a solicitor, have the parties sign the document
• Once the Deed has been signed by both parties, make multiple copies and ensure each party has a copy
• This step is complete once the Deed has been signed and each party has a copy of the document.
• Ensure both parties sign the Deed of Assignment in the presence of two witnesses who are over the age of 18 and not parties to the Deed
• Have both parties sign the deed in the presence of two witnesses and have the witnesses sign the deed to attest to witnessing the signature of the parties
• Check that the parties have signed the Deed in the presence of the witnesses by noting the signatures and the dates of signature in the execution clause of the Deed
• Once the Deed has been executed, have the parties date and keep a copy of the Deed in a secure place
• You will know that you have completed this step when the Deed has been properly executed by the parties in the presence of two witnesses.
• Identify all parties to the Deed and verify that their details are correct.
• Ensure that all parties to the Deed are identified in the document and that the details of each party are accurate and up-to-date.
• Check that the names, addresses and contact details of each party are correct.
• Once you have verified that the parties and their details are correctly identified, you can move on to the next step.
• Check that all parties have signed the Deed in the correct place, and that the date of signature is correct
• Ensure that each party has signed the Deed in the presence of an independent witness
• Check that all parties have signed the Deed with their full name and title, if applicable
• Confirm that the date of signature is correct and that all parties have signed on the same date
• Once you have verified that all parties have correctly signed and dated the Deed, you can proceed to the next step.
• Ensure that the Deed is witnessed by an independent third party who is not a party to the Deed.
• Ask the third party to sign the Deed and provide their name, address, occupation and date of signing.
• Check that the third party has signed and dated the Deed.
• Once the above is complete, you can check this step off your list and move on to the next step.
• Obtain signatures from all parties on the deed of assignment, ensuring that each party signs in the presence of a witness
• Have an independent third party witness each party’s signature
• Ensure that all parties have a valid form of identification, such as a driver’s license or passport, available for inspection by the witness
• Ensure that all parties sign the deed of assignment in the presence of the witness
• Obtain the witness’ signature, confirming that all parties signed in the presence of the witness
• You will know this step is completed once all parties have signed the deed of assignment and the witness has signed confirming they were present during the signing.
• Obtain a copy of the executed Deed of Assignment from all parties
• Contact the relevant state or territory office to determine whether the Deed of Assignment needs to be registered
• If registration is required, complete the necessary forms, pay the registration fee, and submit the required documents
• Once the Deed of Assignment is registered, the registrar will issue a certificate of registration
• Check off this step when you have received and reviewed the certificate of registration.
• Research the applicable laws and regulations in the relevant jurisdiction to decide if the Deed of Assignment needs to be registered
• Consult a legal professional if unsure
• When you have the answer, you can move on to the next step.
• Confirm what type of Deed of Assignment requires registration with the relevant government agency or registry.
• Research the registration procedures and the requirements you must meet in order to register the Deed of Assignment.
• Obtain any fees or additional documents that are necessary to complete the registration process.
• Ensure that all parties to the Deed of Assignment understand the registration process and the requirements for completing it.

You can check off this step once you have researched and confirmed the registration procedures for the Deed of Assignment.

• Gather the necessary documents for registration, such as the Deed of Assignment, supporting documents, and the applicable fee
• Visit the registration office to register the Deed of Assignment
• Submit the necessary documents to the registration office
• Pay the applicable fee
• Obtain a copy of the registered Deed of Assignment
• Upon completion of the above steps, you can check this off your list and move on to the next step.
• Review and understand the nature of the rights and obligations being assigned
• Determine if there are any restrictions or limitations in the assignment
• Assess if any approvals are needed from third parties before the assignment is valid
• Confirm that the assignor has the right to assign the interest being transferred
• Check to see if the assignee has the necessary capacity to accept the assignment
• Analyze if the assignment is subject to any applicable laws or regulations
• Determine if any additional documentation is needed to support the assignment
• Once you have considered all of the above, you can proceed with drafting the Deed of Assignment.
• Check with your local taxation authority or a qualified tax professional to see if the Deed of Assignment is subject to any taxes or stamp duty.
• Ensure that the Deed of Assignment includes any required taxes or stamp duty payments.
• Check to see if the tax or stamp duty implications vary by jurisdiction.
• Once you’ve considered the tax or stamp duty implications, you can move on to the next step.
• Identify any restrictions or limitations that could affect the transfer of rights in the Deed of Assignment
• Consider whether there are any legal restrictions that must be observed in the transfer of the rights being assigned
• Research any relevant industry standards or regulations to ensure that the restrictions or limitations on the rights being assigned are compliant
• Ensure that the Deed of Assignment clearly outlines the restrictions or limitations of the rights being assigned
• When all restrictions or limitations on the rights being assigned are taken into consideration, checked for compliance and outlined in the Deed of Assignment, this step is complete.
• Consider whether the Deed of Assignment needs to be registered with any government or public agencies.
• Determine if any registration is required or optional.
• Research the relevant regulations and laws to ensure that the assignments are properly recorded.
• Check any local requirements or restrictions.
• Once you have determined that the Deed of Assignment does or does not need to be registered, you can move on to the next step in the process.

• Read over the Deed of Assignment twice to make sure you’re accurately identifying all of the parties to the Deed. Make sure you include the full names and addresses of the assignor and assignee, as well as any other relevant parties. • Check that the legal description of the subject property is accurate. • Ensure that the consideration (the amount being exchanged for the assignment) is stated clearly and accurately. • Make sure that the names of the initial parties to the Deed are also included in the recitals. • Ensure that the recitals and the express terms of the Deed are consistent with one another. • Make sure that the Deed is signed, notarized, and delivered in accordance with state law.

Once you’ve completed the above steps, you can check off this task and move on to the next step in the guide.

• Identify the assignor and assignee. The assignor is the party transferring their rights and the assignee is the party receiving the rights.
• Check all of the details are correct. This includes the names, addresses and other contact information for both parties.
• Draft the deed to ensure that the assignor and assignee are accurately identified.
• You can check this off your list and move on to the next step once you have confirmed that the assignor and assignee have been accurately identified in the deed.
• Ensure that all parties to the Deed have read, understood and agreed to the terms and conditions of the agreement.
• Have all parties affix their signature to the Deed and the accompanying documents.
• Check that all the signatures are dated and in the presence of a witness.
• When all parties have properly executed the Deed, you can move on to the next step.
• Ensure all parties have signed the Deed in the presence of a witness.
• The witness must be an independent third party who is not a party to the Deed.
• The witness must sign each page of the Deed that contains a party’s signature.
• The witness must also include their full name, address and occupation on the Deed.
• Once all of the above requirements are met, then you can check this off your list and move on to the next step.
• Determine the applicable taxes or stamp duty implications for the Deed of Assignment.
• Research any applicable taxes or stamp duty fees for the Deed of Assignment.
• Calculate the applicable taxes or stamp duty fees for the Deed of Assignment.
• Make sure to include the applicable taxes or stamp duty fees in the Deed of Assignment.

Once you have determined the applicable taxes or stamp duty implications for the Deed of Assignment, and included them in the Deed of Assignment, you can move on to the next step.

• Determine the rights that you are assigning and review any applicable laws or regulations to ensure that the assignment of such rights is permitted.
• Consider any applicable contractual restrictions or limitations on the rights being assigned, such as any applicable confidentiality obligations or restrictions on the transfer of rights.
• Once you have determined that the assignment of the rights is permitted and there are no applicable restrictions or limitations, you can proceed to the next step of recording keeping.
• Create a record of the Deed of Assignment, including the date it was executed, by each party
• Maintain a copy of the Deed of Assignment in a secure place
• Record any additional related documents, such as any security documents, release documents, or other agreements
• When all of the above have been done, you can check this off your list and move on to the next step.
• Obtain a physical copy of the original Deed of Assignment
• Ensure the original Deed is signed by both parties
• Keep the original Deed in a safe and secure place, such as a locked filing cabinet or safe
• Make sure the document is stored in a location that is accessible to both parties
• Ensure that the original Deed is not destroyed or tampered with in any way

You can check this off your list and move on to the next step once the original Deed of Assignment is safely stored in a secure location.

• Scan or take a digital photo of the original Deed of Assignment and save it to a secure location.
• Ensure that the digital copy is readable and clearly displays all of the information contained in the original document.
• Ensure that the digital copy is stored in a secure location, preferably on a cloud-based storage system or other secure server.
• Make sure that only authorized personnel have access to the digital copy of the Deed.
• When finished, you will have created a digital copy of the Deed and stored it in a secure manner.
• Read over the Deed of Assignment to ensure accuracy
• Make sure all details are correct, and all parties are named
• Verify that all signatures are complete and accurate
• Make sure the date of the assignment is correct
• Check that the document is formatted and laid out correctly
• Once you are satisfied with the accuracy of the Deed of Assignment, you can move on to the next step.
• Read through the entire document to make sure all the information is correct
• Double check that the names and details of the parties involved are spelled correctly
• Ensure that all the dates are accurate, and that any and all parties have signed the deed in the right places
• Check that the terms and conditions in the deed are consistent with the agreement between the parties
• When you have verified all the details, you can check this off your list and move on to the next step.
• Check the Deed of Assignment to ensure that all required elements are present, including accurate information and signatures of all parties.
• Verify that any and all attachments to the Deed of Assignment are included and accurate.
• Ensure that all dates, signatures, and other pieces of information are accurate and up-to-date.
• Once you’ve confirmed that all of the steps have been completed correctly, you can move on to the next step.
• Seek professional advice from a lawyer or other legal professional to ensure that the deed of assignment is legally binding and enforceable.
• Request that the legal professional checks that all steps have been completed correctly, and that the deed of assignment meets all requirements under local law.
• Ask the legal professional to provide you with written advice on any changes or revisions that may be necessary to make the deed of assignment valid and enforceable.
• Once the legal professional has confirmed that the deed is legally sound, you can check off this step and proceed with the next one.
• Research legal professionals who are able to provide advice and assistance with the drafting of a deed of assignment
• Contact the legal professionals to discuss the specific requirements and details of the deed of assignment
• Ask the legal professionals if they are able to provide advice and assistance with the deed of assignment
• Receive advice from the legal professionals and make changes to the deed of assignment accordingly
• Once you are satisfied with the changes to the deed of assignment, you can move on to the next step.

Q: Does a Deed of Assignment need to be signed?

Asked by John on April 23rd 2022. A: Yes, a Deed of Assignment needs to be signed by both the assignor and the assignee in order for it to be legally binding. The signatures should be witnessed and dated, and should be in front of an independent witness who is not related to either party. It is also important to include the relevant clauses and provisions in the deed, as these will set out the rights and obligations of each party.

Q: What is the difference between an assignment and a novation?

Asked by Sarah on July 29th 2022. A: An assignment is a transfer of rights or obligations from one party to another, while a novation is a transfer of rights or obligations from one party to another with the consent of all parties involved. An assignment does not necessarily require the consent of all parties, while a novation always requires the consent of all parties. Additionally, an assignment can transfer rights or obligations without necessarily extinguishing any pre-existing agreements, while a novation extinguishes any pre-existing agreements.

Q: Is a Deed of Assignment legally binding in different jurisdictions?

Asked by Tyler on October 17th 2022. A: Yes, a Deed of Assignment can be legally binding in different jurisdictions, though the exact requirements for validity may differ from jurisdiction to jurisdiction. In general, however, a Deed of Assignment needs to be signed by both parties and witnessed by an independent third party in order for it to be legally binding. Additionally, the deed should include all relevant clauses and provisions that are applicable in each jurisdiction.

Q: Are there any tax implications when drafting a Deed of Assignment?

Asked by Emma on January 15th 2022. A: Yes, there are tax implications that need to be taken into account when drafting a Deed of Assignment. Depending on the jurisdiction and specific tax laws, there may be tax implications for both parties if they are transferring rights or obligations under the deed. It is important to seek professional tax advice before entering into any agreement that involves transferring rights or obligations between parties as this could have significant financial implications for all involved.

Q: Do I need legal advice when drafting a Deed of Assignment?

Asked by Jacob on June 5th 2022. A: While it is not necessary to seek legal advice when drafting a Deed of Assignment, it is generally recommended in order to ensure that all relevant legal requirements are satisfied and that all involved parties are aware of their rights and obligations under the deed. It is also important to make sure that all language used in the deed is clear and unambiguous so that it can easily be understood by all parties involved.

Q: How can I ensure that my Deed of Assignment is valid?

Asked by Michael on August 28th 2022. A: In order for your Deed of Assignment to be valid, it must meet certain legal requirements which vary between jurisdictions. Generally speaking, your deed should include all relevant clauses and provisions applicable in your jurisdiction as well as signatures from both parties which should be witnessed by an independent third party who is not related to either party involved. Additionally, any language used within the document should be clear and unambiguous so that it can easily be understood by all involved parties.

Q: What information do I need to provide when drafting a Deed of Assignment?

Asked by Ashley on November 10th 2022. A: When drafting a Deed of Assignment, you will need to provide information about both parties involved such as their names, addresses, contact details and any other relevant information required under applicable laws in your jurisdiction. Additionally, you will need to include any relevant clauses or provisions applicable in your jurisdiction which will set out the rights and obligations of each party under the deed as well as any other information required for the document to be legally binding.

Q: What are common mistakes made when drafting a Deed of Assignment?

Asked by Joshua on February 20th 2022. A: One common mistake made when drafting a Deed of Assignment is failing to include all relevant clauses or provisions applicable in your jurisdiction which set out the rights and obligations of each party involved in the agreement. Additionally, failing to have the document signed by both parties or witnessed by an independent third party can render the document invalid or unenforceable under applicable law in some jurisdictions. Moreover, using ambiguous language within the document can also lead to misunderstandings and disputes further down the line which could be avoided if clear language was used throughout the document instead.

Example dispute

Lawsuit referencing a deed of assignment.

• The plaintiff may raise a lawsuit if they have been wronged by the defendant in a way that is outlined in the deed of assignment.
• For example, the deed of assignment may outline that the defendant is responsible for paying a certain amount of money to the plaintiff, and the defendant has failed to do so.
• The plaintiff may also raise a lawsuit if the defendant has failed to adhere to any other obligations laid out in the deed of assignment.
• The plaintiff would need to prove that the defendant has breached the deed of assignment in order to win the lawsuit.
• If successful, the plaintiff may be able to obtain a judgment in their favor, which may require the defendant to pay the plaintiff the money they are owed.
• In addition, the plaintiff may be able to seek other damages, such as punitive damages, if the breach of the deed of assignment was particularly egregious.
• Depending on the severity of the breach, the plaintiff may also be able to seek an injunction to prevent the defendant from continuing to breach the deed of assignment.
• Settlement of the dispute may also be possible, wherein the defendant agrees to pay a certain amount of money to the plaintiff, or agrees to adhere to the obligations laid out in the deed of assignment.

Templates available (free to use)

Deed Of Assignment For Rent Deposits Occupation Lease Deed Of Assignment Of Benefit Of Claim For The Freehold Or Extended Lease House Under Section 8 Or Section 14 Deed Of Assignment Of Equitable Interest In Residential Land Deed Of Assignment Of Goodwill And Intellectual Property Rights Transfer Of A General Partnership To An Llp Deed Of Assignment Of Property Sale Benefits [Section 42 Deed Of A

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• How to Transfer Shares of Stocks in the Philippines: Step-by-Step Process, Key Reasons, and Involved Government Agencies
• September 13, 2024
• Philippine Business Blog

The transfer of shares of stocks is a fundamental process within any corporation, representing the movement of ownership from one party to another. This transfer can occur for a variety of reasons, whether as part of a sale, a gift, an inheritance, or a corporate reorganization. Regardless of the reason, the transfer of shares carries significant implications for both the shareholders involved and the corporation itself.

When shares are transferred, the new owner (transferee) gains the rights tied to those shares, including voting power and dividend entitlements, while the previous owner (transferor) relinquishes these rights. This change in ownership can impact the company’s governance, particularly if a significant number of shares are involved, potentially shifting control within the corporation. Therefore, it’s important for all parties involved to follow the correct procedures and comply with legal and regulatory requirements to ensure the transfer is handled efficiently and legally.

Procedure for Transfer of Shares of Stocks in the Philippines:

• Gather the necessary documents . 

You’ll need the stock certificate to prove ownership. A Certificate Authorizing Registration (CAR) from the BIR is required if the shares were previously owned by an individual or entity, but is not necessary if the acquisition of shares is through subscription or if you are the first shareholder of the company. Additionally, you will need proof of acquisition, such as a subscription agreement, a previous deed of sale, or other relevant documents.

• Get the share endorsed. 

This step is essential for validating the transfer, and it can be done by the shareholder or their attorney-in-fact. Be sure to complete the endorsement before handing over the stock certificate, as the transfer is invalid without it.

• Deliver the stock certificate along with a Deed of Transfer.  

This deed will vary based on how the shares are being transferred. For instance, if the shares are sold, a Deed of Sale is required, while a Deed of Donation is needed if the shares are being gifted. Delivering the stock certificate finalizes the transfer of ownership to the recipient.

Reasons for Transferring Shares

The transfer of shares can occur for various strategic and personal reasons, each with its own set of considerations and implications:

A common and straightforward reason for transferring shares is through a sale. Shareholders may opt to sell their shares to other individuals or entities, either within the same company or externally. This transfer can be driven by the desire to realize a financial gain from the sale or as a means of divesting from the company. Sales of shares require careful planning to ensure compliance with legal requirements and the corporation’s internal policies.

Shares may also be transferred as a gift, often to family members or close associates. This type of transfer is particularly prevalent in family-owned businesses, where shares are passed down to the next generation as part of succession planning. Gifting shares involves specific legal considerations, including potential tax implications, and must be carefully documented to ensure the transfer is legally valid.

3. Inheritance:

Upon the death of a shareholder, their shares may be transferred to their heirs as part of the estate distribution process. This type of transfer necessitates meticulous legal management to ensure it aligns with the deceased’s wishes and complies with applicable laws, including probate requirements. Inheritance transfers are often complex, involving coordination with legal representatives and careful handling of tax obligations.

4. Reorganization:

Corporate restructuring events, such as mergers, acquisitions, or spin-offs, frequently involve the transfer of shares. During these processes, shares may be exchanged, consolidated, or redistributed among different parties. These transfers are typically governed by the terms of the restructuring agreement and must adhere to regulatory requirements, including those set forth by the Securities and Exchange Commission (SEC) and other relevant authorities.

Each of these scenarios underscores the importance of proper legal guidance and thorough documentation to ensure that the transfer of shares is executed smoothly and in full compliance with relevant laws and regulations.

For a detailed overview of the necessary documentation for transferring shares of stocks, be sure to check out this comprehensive blog post on the requirements for share transfers . 

Government Agencies Concerned:

• Capital Gains Tax (CGT) for the sale of shares in private companies.
• Documentary Stamp Tax (DST) payable on the share transfer.
• Donor’s Tax in cases of gifted shares.
• BIR must issue a Certificate Authorizing Registration (CAR) before the share transfer is completed.
• The SEC monitors corporate shareholdings and requires updates when ownership changes.
• For publicly listed companies, the transfer of shares must comply with the SEC’s rules and reporting requirements.
• For publicly traded companies, the stock exchange may be involved to ensure compliance with trading rules.
• In some cases, local government units may impose taxes or fees on certain transactions.
• While not a government agency, the corporate secretary of a company is responsible for recording the transfer in the company’s stock and transfer book.

Governing Laws

The transfer of shares is governed by a comprehensive legal framework designed to protect the rights of shareholders and ensure the smooth operation of corporations. In the Philippines, this framework includes various laws and regulations that dictate how shares can be transferred, the documentation required, and the procedures that must be followed.

Key legal instruments include the Corporation Code of the Philippines , which provides the foundational rules for corporate governance, including the transfer of shares. Additionally, the Securities Regulation Code (SRC ) and guidelines issued by the Securities and Exchange Commission (SEC) play a critical role in regulating share transfers, particularly for publicly listed companies.

Corporations also operate under their Articles of Incorporation and Bylaws, which may impose specific restrictions or conditions on the transfer of shares. These internal documents are essential in shaping how share transfers are managed within a particular company and must be adhered to in conjunction with national laws.

Why the Transfer of Shares of Stocks is Important

The transfer of shares of stocks can occur for various reasons—selling shares, corporate restructuring, or even as part of an inheritance. However, regardless of the reason, the process must be done in accordance with Philippine laws and regulations. Failing to comply with legal requirements can result in delays, penalties, or even the invalidation of the transfer.

Introducing FileDocsPhil: Your Trusted Partner in Transfers of Share of Stocks

At Filepino , we understand the importance of handling share transfers correctly to ensure that all legal and regulatory requirements are met. That’s why we’re proud to introduce our sister brand, FileDocsPhil , a reputable service provider with a team of experts dedicated to assisting you with every aspect of the transfer process.

To know more about how a transfer of shares provider in the Philippines helps you, read here .  

By choosing FileDocsPhil for your share transfer needs, you’re not just getting a service provider—you’re gaining a trusted partner who will guide you through the process with professionalism and expertise.

Contact FileDocsPhil Today

For more information about how FileDocsPhil can assist with your share transfer needs, visit https://www.filedocsphil.com/ or contact their team directly at (+63) 917 149 2337 or send an email to [email protected] .

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Transfers of shares held in trust are not subject to tax

MANILA  -In corporate law, it is common practice for lawyers to handle transfers of shares of stock from nominees to their principals, or to new nominees. Prior to the Revised Corporation Code, which came into effect in February 2019, corporations were required to have at least five stockholders and directors, each holding a minimum of one share of stock in the company.

When establishing a corporation, business owners would often seek out nominees to hold a qualifying share in order to meet the requirement of five shareholders. Typically, these nominees are the trusted officers of the principal stockholder who, since they do not own the company, eventually move on to other employment opportunities, thereby severing their connection with the company.

In such cases, the nominees would execute a deed of assignment of the shares to return them to the principal or to the new nominee who will be taking their place.

Even with the introduction of the Revised Corporation Code which allows for less than five stockholders in a corporation, many companies still prefer to maintain several board seats in their board for various reasons, one of which is for good governance.

Accordingly, transfers of shares of stock from nominees to new nominees are quite common. Oftentimes, the transfer of shares is done by the execution of a deed of assignment by the nominee to the principal or new nominee. However, issues concerning actual consideration for the transfer and the taxes that may be due may arise. Moreover, the relevant laws and regulation provide that before registering a transfer of share to the new shareholder, the corporation’s corporate secretary must satisfy itself that proper taxes have been paid to the Bureau of Internal Revenue (BIR). This is done by the submission of the tax returns and the tax clearance or certificate of authority to register issued by the BIR.

In terms of taxation, currently, the sale of shares of stock is subject to a flat rate of 15 percent on capital gains taxes (CGT). There is also the Documentary Stamp Tax (DST) which is P1.50 for every P200 on the sale or transfers of shares of stocks. It also used to be the practice of the BIR examiners to assess Donor’s Tax on the transaction when the declared consideration for the transfer of shares was below the book or market value.

The taxes that may be imposed could be substantial, as some nominees may hold thousands of shares in their names. This practice is not prohibited nor uncommon, as the only requirement is that the shareholder and director hold at least one share of stock.

Accordingly, are these transfers of shares of stock by nominees back to their principal or to the new nominees subject to the CGT, DST, or Donor’s Taxes ?

The answer is: No.

In a tax ruling dated Nov. 8, 2021, Sun Life of Canada (Philippines), Inc. (Sun Life), requested the BIR for an exemption from the payment of taxes on the transfer of their Manila Polo Club shares.

Sun Life’s shares were registered in the name of and assigned to its officers who were allowed to make use of the facilities of the Polo Club in building their business network. It sought a transfer of the shares to a new set of officers as the previous officers were no longer connected with the company.

The company representatives all executed Declarations of Trust where they declared that Sun Life is the true and beneficial owner of the shares, that the shares were registered in their names because the articles of incorporation of the Manila Polo Club provides that no institutional members shall be admitted as a shareholder, that they have no title, right, claim or interest whatsoever over the shares, and Sun Life may designate another company officer as the new holder and user of the shares.

The BIR confirmed that:

1. The transfer of shares from the nominee-officers to the new nominee-officers were not subject to Capital Gains Taxes 2. The transfers are also not subject to the Documentary Stamp Taxes; 3. The transaction is not a Donation 4. The tax that is due is the Documentary Stamp Taxes on the Deeds of Declaration of Trust

(BIR Ruling No. OT – 0653-2020, November 8, 2021)

Sun Life’s shares of stock in the Manila Polo Club in the name of its nominees were covered by Declarations of Trust executed by the nominees all of whom acknowledged that the transfer did not give them any kind of right, claim or interest whatsoever in the shares and that they are holding only legal ownership of the same where the beneficial ownership belongs to the Company.

It was established that Sun Life was the one who purchased the shares and had registered the same in the officers’ names, who were its nominees, since the Articles of Incorporation and By-laws of the Manila Polo Club provided that only natural persons may become registered members.

Sec. 24 (C) of the National Internal Revenue Code provides that a final tax rate of fifteen percent is imposed upon the net capital gains realized during the taxable year from the sale, barter, exchange, or other disposition of shares of stock in a domestic corporation, except shares sold or disposed of through the stock exchange.

Accordingly, CGT is only imposed upon the “net capital gains” realized during the taxable year which means the tax is on gain or profit from the sale of capital assets.

Since the transfer of the Manila Polo Club shares only involves legal title and not beneficial ownership, which remains with Sun Life, then there is no gain or profit and consequently, no capital gains taxes are due.

The BIR found that no capital gains taxes are due considering that:

(1) the shares are actually owned by Sun Life, and the transferors and transferees are mere nominees and/or trustees of Sun Life who only hold legal title (2) There is no actual transfer of ownership and beneficial title (3) no monetary consideration is involved, no gain or profit resulted in the transfer which is merely by virtue of an assignment as evidenced by the Declaration of Trust.

In the matter of DST, the BIR declared that a mere transfer of a share from one trustee to another, without a change in the beneficial ownership of the share is, therefore not the taxable transaction being contemplated under the Tax Code provision on DST. There being no new conveyance to speak of in this case, there is no new exercise of a privilege upon which DST may be imposed.

DST on trust document

DST is however due on the Declaration of Trust.

Not a donation

There is a lack of any intention on the part of the transferors to donate to the transferee the Manila Polo Club shares. Moreover, the transaction was found to be purely for a legitimate business purpose. Accordingly, there is no donation and no donor’s tax due.

The BIR confirmed that in a trust relationship covered by a declaration of trust, transfers by the nominee of shares of stock held by it back to the principal or to a new a nominee is not subject to CGT and DST. It is also not a donation subject to donor’s taxes.

Lastly, just a final word on trust for our readers.

A trust is a legal relationship where one person has equitable ownership of property and another person owns the legal title to the property. Trusts are distinguished by the separation of legal title and equitable ownership of the property, with the fiduciary (trustee) holding legal title and the trustor holding equitable title. (Soledad Caezo vs. Rojas, G.R. No. 148788, November 23, 2007)

A trust may be expressed or implied. In this case, the Declaration of Trust referred to in BIR Ruling No. OT – 0653-2020 is an express trust. It is a document whereby a person acknowledges that they hold the property title for the use of another.

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(The author, Atty. John Philip C. Siao, is a practicing lawyer and founding Partner of Tiongco Siao Bello & Associates Law Offices, teaches law at the MLQU School of Law, and an Arbitrator of the Construction Industry Arbitration Commission of the Philippines. He may be contacted at [email protected] . The views expressed in this article belong to the author alone.)

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Deed of Assignment of Stock Subscription

Choose whether the seller is an individual person, partnership, or corporation. The seller is the one transferring the shares.

Select " Corporation " if the employer is registered as a corporation whether stock or non-stock, or one-person corporation, or any other type of corporation with the Securities and Exchange Commission.

Select " Partnership " if the employer is a partnership that may be registered with the Securities and Exchange Commission.

Select " Individual person " if the employer is a natural person such as a sole proprietorship.

DEED OF ASSIGNMENT

KNOW ALL MEN BY THESE PRESENTS:

________ , of legal age, Filipino , residing at ________ hereinafter referred to as the ASSIGNOR

________ , of legal age, Filipino , residing at ________ , hereinafter referred to as the ASSIGNEE

WITNESSETH:

WHEREAS, ________ is a corporation organized and existing under and by virtue of the laws of the Philippines with principal address at ________ ;

WHEREAS, the ASSIGNOR is the legal and beneficial owner and holder of Stock Certificate No. ________ (the "Stock Certificate") representing ________ ( ________ ) Shares (the "Shares"), with a par value of ________ (Php________) per share, of ________ ;

WHEREAS, the ASSIGNOR has fully paid their total subscription of ________ (Php________);

WHEREAS, the ASSIGNOR desires to assign and convey ________ ( ________ ) Shares (the "Conveyed Shares") to the ASSIGNEE;

WHEREAS, the ASSIGNEE is willing to accept ASSIGNOR's aforementioned shares;

NOW, THEREFORE, for and in consideration of the foregoing premises and the sum of ________ (Php________), the receipt of which is hereby acknowledged by the ASSIGNOR in full, the ASSIGNOR hereby absolutely cedes, transfers, and conveys all the rights and title to and in the aforementioned ________ ( ________ ) Shares of ________ in favor of the ASSIGNEE and the ASSSIGNEE hereby accepts the same.

ASSIGNOR shall indorse, if necessary, and deliver all available documents necessary for the registration of the Shares in the name of the ASSIGNEE upon the signing of this Agreement. All other documents shall be delivered with any necessary indorsements within Five (5) Days from their availability.

ASSIGNOR shall file and pay the Documentary Stamp Tax ("DST") within Five (5) Days after the the close of the month when the Shares were transferred. For purposes of this Agreement, the Shares shall be considered transferred upon the indorsement of the Stock Certificate.

The ASSIGNOR hereby represents and warrants that:

1. the ASSIGNOR is the sole legal and beneficial owner of the Conveyed Shares;

2. 252 82282225 555528 88 2522 525 88255 22 522 525 588 885828, 88228, 8555228, 525 228528552828; 525

3. the ASSIGNOR has the full power and authority to assign, sell, cede, transfer, and convey the Conveyed Shares

IN WITNESS WHEREOF, we have hereunto set our hands this ____________________, in the City/Municipality of ____________________, Province of ____________________, Republic of the Philippines.

________ Assignor TIN - ________

________ Assignee TIN - ________

Signed in the presence of:

____________________

ACKNOWLEDGEMENT

REPUBLIC OF THE PHILIPPINES ) PROVINCE OF ________________________ ) CITY OR MUNICIPALITY OF ________________________ )S.S.

BEFORE ME, a Notary Public, for and in the CITY OR MUNICIPALITY OF ________________________, ________________________, this _______ day of ________________________, 20______, personally appeared the following persons:

1. ________ , with the following competent proof of identification: Driver's License with number ________ which expires on ________

2. ________ , with the following competent proof of identification: Driver's License with number ________ which expires on ________

all known to me 525 22 22 22282 22 82 252 8522 2258228 852 25285225 252 225222822 8225 22 8888222222 822828252822 22 _________ 25228, 828855822 2588 2522 85252 252 882228825222222 88 8582222, 525 2522 582228825225 22 22 2552 252 8522 88 25285 2522 525 828522552 582 525 5225.

WITNESS MY HAND AND SEAL on the day and place first written above.

Doc No. ________; Page No. ________; Book No. ________; Series of ________.

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Legal & Tax Updates [Back to list]

Sec opinion 21-03: deed of trust and assignment over share of stock.

In SEC-OGC Opinion No. 21-03 dated February 18, 2021, the Securities and Exchange Commission ( “SEC” ) resolved the following issues:

• Whether a company with nominee shareholder can register in its Stock and Transfer Book ( “STB” ) and General Information Sheet ( “GIS” ) the changes in nominee shareholders pursuant to an existing Deed of Trust and Assignment without the need of an actual sale; and
• Whether there is a need to report to the SEC, through the company’s GIS, the said new nominee director.

Sysmex Philippines, Inc. ( “Sysmex” ) has five (5) nominee shareholders who also constitute the Board of Directors. One nominee shareholder/director is no longer connected with Sysmex; thus, the latter intends to appoint a new shareholder/director. However, Sysmex is in quandary on whether to execute a Deed of Trust and Assignment or Deed of Absolute Sale to effect such change. 

Since the contemplated transfer of share/s to the new nominee shareholder is for purposes of qualifying the said nominee shareholder to be a member of the Board, and to complete the number of directors composing the same, the SEC cited its previous opinions where it held that:

“ For purposes of complying with the statutory minimum number of stockholders/directors, the owner may transfer one (1) qualifying share to each nominee stockholders for purposes of qualifying them to become members of the Board, without giving them the beneficial ownership of the shares. Said transfer would be more of a “trust” and not a transfer of “ownership,” hence, the beneficial interest in such shares will remain with the assignor while the assignee will hold only the legal title to the stock.  In such case, the transferee should be described in the Deed of Assignment, corporate books and certificate of stock merely as a qualifying shareholder or nominee of the transferor. The fact that the stock standing on the corporate books is in the name of the person only as a qualifying shareholder or that the holder of the stock certificate is described merely as a nominee serves as a notice to the corporation and third parties that the holder thereof does not hold the share in his own right but holds it only as a nominee for the benefit of the real owner.”  [emphasis supplied]

Thus, the SEC opined that Sysmex can validly report in its GIS changes in nominee shareholders pursuant to a validly executed Deed of Trust and Assignment.

With respect to the second issue, the SEC held that Section 25 of the Revised Corporation Code (“ RCC ”), which categorically mandates the submission of information relating to the election of directors, trustees and officers, is intended to timely apprise the SEC of any relevant changes in the submitted information on file with the latter as they arise. Section 25 of the RCC thus provides:

“Section 25. Within thirty (30) days after the election of the directors, trustees and officers of the corporation, the secretary , or any other officer of the corporation, shall submit to the Commission, the names, nationalities, shareholdings, and residence addresses of the directors, trustees, and officers elected. x x x” [Emphasis supplied]

The election or appointment of a new director is a circumstance of Sysmex’s governance structure that needs to be reported to the SEC through its GIS as it involves a material change in the Board’s composition.

Philippine Legal Resources

Philippine Legal Forms and Resources: Affidavit, Deed, Contract, Memorandum

Monday, July 13, 2020

• Deed of Assignment and Transfer of Rights

DEED OF ASSIGNMENT AND TRANSFER OF RIGHTS

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Deed of Assignment (for Intellectual Property)

In the realm of intellectual property, a Deed of Assignment is a formal legal document used to transfer all rights, title, and interest in intellectual property from the assignor (original owner) to the assignee (new owner). This is crucial for the correct transfer of patents, copyrights, trademarks, and other IP rights. The deed typically requires specific legal formalities, sometimes notarization, to ensure it is legally enforceable.

To be legally effective a deed of assignment must contain:

• Title of the Document : It should clearly be labeled as a "Deed of Assignment" to identify the nature of the document.
• Date : The date on which the deed is executed should be clearly mentioned.
• Parties Involved : Full names and addresses of both the assignor (the party transferring the rights) and the assignee (the party receiving the rights). This identifies the parties to the agreement.
• Recitals : This section provides the background of the transaction. It typically includes details about the ownership of the assignor and the intention behind the assignment.
• Definition and Interpretation : Any terms used within the deed that have specific meanings should be clearly defined in this section.
• Description of the Property or Rights : A detailed description of the property or rights being assigned. For intellectual property, this would include details like patent numbers, trademark registrations , or descriptions of the copyrighted material.
• Terms of Assignment : This should include the extent of the rights being transferred, any conditions or limitations on the assignment, and any obligations the assignor or assignee must fulfill as part of the agreement.
• Warranties and Representations : The assignor typically makes certain warranties regarding their ownership of the property and the absence of encumbrances or third-party claims against it.
• Governing Law : The deed should specify which jurisdiction's laws govern the interpretation and enforcement of the agreement.
• Execution and Witnesses : The deed must be signed by both parties, and depending on jurisdictional requirements, it may also need to be witnessed and possibly notarized.
• Schedules or Annexures : If there are detailed lists or descriptions (like a list of patent numbers or property descriptions), these are often attached as schedules to the main body of the deed.

Letter of Assignment (for Trademarks and Patents)

This is a less formal document compared to the Deed of Assignment and is often used to record the assignment of rights or licensing of intellectual property on a temporary or limited basis. While it can outline the terms of the assignment, it may not be sufficient for the full transfer of legal title of IP rights. It's more commonly used in situations like assigning the rights to use a copyrighted work or a trademark license.

For example, company X allows company Y to use their trademark for specific products in a specific country for a specific period.  

At the same time, company X can use a Letter of Assignment to transfer a trademark to someone. In this case, it will be similar to the Deed of Assignment. 

Intellectual Property Sales Agreement

An IP Sales Agreement is a detailed contract that stipulates the terms and conditions of the sale of intellectual property. It covers aspects such as the specific rights being sold, payment terms, warranties regarding the ownership and validity of the IP, and any limitations or conditions on the use of the IP. This document is essential in transactions involving the sale of IP assets.

However, clients usually prefer to keep this document confidential and prepare special deeds of assignment or letter of assignment for different countries.

IP Transfer Declaration

In the context of intellectual property, a Declaration is often used to assert ownership or the originality of an IP asset. For example, inventors may use declarations in patent applications to declare their invention is original, or authors may use it to assert copyright ownership. It's a formal statement, sometimes required by IP offices or courts.

When assigning a trademark, the Declaration can be a valid document to function as a proof of the transfer. For example, a director of company X declares that the company had sold its Intellectual Property to company Y. 

Merger Document

When companies or entities with significant IP assets merge, an IP Merger Document is used. This document outlines how the intellectual property owned by the merging entities will be combined or managed. It includes details about the transfer, integration, or handling of patents, copyrights, trademarks, and any other intellectual property affected by the merger.

In all these cases, the precise drafting of documents is critical to ensure that IP rights are adequately protected and transferred. Legal advice is often necessary to navigate the complexities of intellectual property laws.

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Share Transfer Agreement Template

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This free share transfer agreement template is a sample of the legal standard to make sure a transfer of stocks and shares goes nicely.

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This share transfer Agreement (the “Agreement”) sets out the terms and conditions upon which [Transferor.Name] (the “Transferor”), being a Company duly registered under the laws of state with registered number Registered Number and having its registered address at Registered Address, will transfer certain shares held by him to [Transferee.Name] (the “Transferee”), being a Company duly registered under the laws of state with registered number Registered Number and having its registered address at Registered Address (together, the “Parties”).

WHEREAS, the Transferor is the registered proprietor of those shares or stocks set out in Schedule A (the “Shares”).

WHEREAS, the Transferor is desirous of transferring the Shares to the Transferee on such terms as are set out throughout this share transfer Agreement.

WHEREAS, the Transferee for his part is desirous of acquiring the Shares on such terms as are set out in this share transfer Agreement.

NOW, THEREFORE, IT IS HEREBY AGREED as follows:

• 1.1 the Transferor transfers absolutely all title over the Shares to the Transferee in consideration of that amount set out in clause 2.
• 1.2 the transfer is absolute and includes all rights and obligations connected to the Shares including but not limited to all rights to dividends, capital and voting rights and for avoidance of doubt any dividends which are due but not yet paid will become due and be paid to the Transfe
• 1.3 the transfer is effective on the execution of this share transfer Agreement and payment of the amount set out in clause 2.
• 2. TRANSFER PRICE It is agreed that the Shares shall be transferred for the price of price.
• 3. COST OF TRANSFER It is agreed that the cost of registering the transfer of the Shares (if any) will be borne by the Transferee.
• 4. EFFECT OF LACK OF FORMALITY It is agreed that should the envisaged transfer of shares fail to be effective due to a lack of formality (including but not limited to a failure to register the transfer correctly in the registers of the company or due to a refusal by the directors of the company whose Shares are being transferred) then the effect shall be the transfer of all beneficial interest in the Shares to the Transferee by the creation of a trust in favour of the Transferee as beneficiary in which the Shares comprise the subject, and the Transferor is the trustee.
• 5.1 The Transferor warrants that he is the true owner of the Shares and is absolutely entitled to all of their benefit.
• 5.2 The Transferor warrants that he is not acting as a nominee or trustee and that no other rights exist in connection with the Shares.
• 5.3 The Transferor warrants that no charge or other obligation exists over the shares whether or not registered and they are completely unencumbered (excepting any obligation to payment of capital in the case of part paid shares).
• 5.4 Each Party hereby declares that they have all necessary powers and approvals to enter into this share transfer Agreement.
• 5.5 Each Party hereby declares that they are not aware of any matter within their control which might have any negative or adverse effect upon the performance of their obligations under this share transfer Agreement.
• 5.6 The rights, benefits, liabilities and responsibilities contained within the terms of this share transfer Agreement can be assigned by any Party with the prior written agreement of the other Party.
• 5.7 Any delay or failure to enforce the terms of this share transfer Agreement and any delay to act on a breach of its term by any party does not constitute a waiver of those rights.
• 5.8 Each Party hereby warrants that they will not do any action which might harm, hinder or negatively affect the duties of the other Party set out within this share transfer Agreement.
• 5.9 The Parties hereby irrevocably warrant that they accept the exclusive jurisdiction laws and courts of that jurisdiction set out in clause 8 below.
• 5.10 Except if it is clear from the wording of a clause and with regard to the whole of the share transfer Agreement that a specific clause is intended to mean otherwise than: any words which are in the singular only will be deemed to include the plural (and vice versa) and any words denoted in a specific gender will be deemed to include all genders and any terms which denote any form of person or people shall be deemed to include both legal persons (such as companies) as well as natural person (and vice versa).
• 5.11 The heading titles contained within in this share transfer Agreement are included as an drafting reference only and for ease of reference, they do not comprise part of the share transfer Agreement.
• 5.12 This share transfer Agreement may be executed in more than one language by agreement between the Parties and if there arises some conflict between the various translation of this share transfer Agreement then the English version shall prevail.
• 5.13 In the event that any clause (or any part of any clause) shall be deemed to be illegal or invalid by a competent court or other legal authority then this shall have the effect of invalidity and striking out only that clause (or any part of any clause) only and shall not invalidate this share transfer Agreement in its entirety.
• 5.14 This share transfer Agreement can be executed either in one original or in more than one counterpart.
• 5.15 This share transfer Agreement is binding on both Parties by virtue of the conduct of both parties and in spite of any defect or error in the formality of its execution.
• 5.16 The Transferor hereby irrevocably indemnifies and agrees to keep indemnified and hold harmless the Transferee against any and all losses howsoever caused arising from a breach of the warranties or other terms of this share transfer Agreement.
• 6. VARIATION This share transfer Agreement may be varied and any variation must be made in writing by both Parties.
• 7. NOTICES Notices served pursuant to any term of this share transfer Agreement must be served in writing and will be served only if it handed from one Party to another in person or if delivered to the address for service of the Party in question. Notices may only be served and delivered in English.
• 8.1 This share transfer Agreement is made under the exclusive jurisdiction of the laws of state and country.
• 8.2 Disputes under this share transfer Agreement are subject to the exclusive jurisdiction of the courts of state and country.
• 8.3 Notwithstanding the terms of 8.2 both Parties agree that in the event of a dispute they will enter into arbitration before the International Chamber of Commerce before a single arbitrator whose decision shall be final.

IN WITNESS WHEREOF, each of the Parties has executed this share transfer Agreement:

[Transferor.Name]

MM / DD / YYYY

[Transferee.Name]

Schedule A (the Shares)

The following shall comprise the Shares:

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Deed of Assignment of Stock Subscription

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A Deed of Assignment of Stock Subscription is a written document used to transfer shares of stock of a corporation from the registered owner (the "assignor") to another person (the "assignee"). It should specify the names of the parties , the date of the transfer , the number of the stock certificate that represents the shares to be transferred, and the number of shares that will be transferred.

Only shares that have been fully paid are transferable. This means that if the assignor has not yet paid the full amount of the subscription, then the shares under the subscription cannot be transferred .

In order to transfer the shares, the stock certificate should be indorsed by the owner or any person legally authorized to make the transfer. Indorsement means signing the back of the stock certificate.

Finally, the transfer of shares will only be valid between the parties until it is recorded in the books of the corporation.

How to use this document

This document can be used by the registered owner of shares of stock of a corporation to transfer the shares (or part of the shares) to another person. It assumes that the purchase price for the shares has been fully paid .

The user should complete the document by entering the information required in the document. Once it is completed, the assignor and the assignee should sign the document .

This Deed of Assignment also includes an Acknowledgment. An Acknowledgment is an act of a person before a notary public stating that the signature on a document was voluntarily affixed by him and he executed the document as his free and voluntary act . Acknowledging a document before a notary public turns document into a public document . Public documents are generally self-authenticating, meaning no other evidence will be needed to prove the execution of the document.

The Documentary Stamp Tax ("DST") and other applicable taxes, such as the Capital Gains Tax , should also be paid to the Bureau of Internal Revenue ("BIR") by the assignor or the assignee. The DST is required to be paid for any issuance or transfer of shares. The BIR shall issue a Certificate Authorizing Registration ("CAR") once the DST and other taxes are paid.

The assignor or assignee can then present the document, together with the indorsed stock certificate and the CAR , to the Corporate Secretary so the transfer can be recorded in the books of the corporation .

Applicable law

The Revised Corporation Code and the general laws of contracts and obligations found in the Civil Code govern transfer of shares. However, other laws, their rules and regulations, and SEC rules may affect the conduct and transactions of the Corporation such as but not limited to the 1987 Constitution of the Philippines , the Securities Regulation Code, the Foreign Investment Act, the Republic Act 8179, specifically the Foreign Investment Negative List, the Anti-Money Laundering Act, and the Anti-Dummy Law may affect the ownership requirements of a corporation, depending on the business of the corporation. Tax laws may also affect the transfer of the shares.

How to modify the template

You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.

Guides to help you

• What to do after Creating a Contract?
• When and how to Notarize a Document?

Other names for the document: Deed of Assignment, Deed of Assignment of Shares, Deed of Assignment of Stock, Deed of Assignment of Shares of Stock, Deed of Transfer of Stock Subscription

Country: Philippines

General Business Documents - Other downloadable templates of legal documents

• Acknowledgement Receipt
• Minutes of the Meeting of the Stockholders
• Notice for Non-Renewal of Contract
• Loan Agreement
• Secretary's Certificate
• Minutes of the Meeting of the Board of Directors
• Monetary Demand Letter
• Notice of Meeting
• Letter of Consent of Nominee
• Business Name Change Letter
• Release, Waiver, and Quitclaim (One-Way)
• Notice of Dishonor for Bounced Check
• Withdrawal of Consent of Nominee
• Request to Alter Contract
• Subscription Agreement for Shares of Stock
• Breach of Contract Notice
• Affidavit of Closure of Business
• Debt Assignment and Assumption Agreement
• Notice of Death or Insolvency of a Partner

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Transfer of company: transfer of shares to a member

Verified 01 January 2024 - Legal and Administrative Information Directorate (Prime Minister)

The person from whom you come: parent, grandparent, great-grandparent,...

Child, grandchild, great-grandchild

Amount of money intended to compensate for the damage suffered

Flat-rate or proportional reduction applied on the basis of a tax calculation (income, value of property, etc.)

Property that cannot be moved (e.g. land or apartment) or an object that is an integral part of it (e.g. land fence)

Minimum number of persons present or represented for a vote or decision to be valid

Legal situation that third parties cannot ignore and must respect, even if they are not signatories

Natural persons holding more than 25% of the business' capital and/or voting rights. They may also be persons exercising, by any other means, powers of control over the management, administrative or management bodies of the business or its general meeting.

A social part is a title to part of the capital of the business. This business share gives the partner rights enabling him to participate in the life of the company. Thus, the transfer of shares means for a member (the transferor) to pass on to an acquirer (the transferee) the rights which he holds in the share capital of the company. Regardless of the legal form of the company, this operation must follow a number of steps.

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Authorization of members

The system of approval depends on the social form company and transferee  : spouse (spouse or Civil partnership partner), ascendant or descendant , partner or third party operator.

The shares are freely transferable between partners . In this case, no authorization of the members is required.

However, the articles of association may provide that the transfer of shares between members is subject to the approval of the other members (majority, or even unanimity).

Where the approval of members is necessary, it must be obtained at a general meeting. It has 3 months to answer. In the absence of a written reply within that period, approval shall be granted.

Please note

if you are married under the legal community or under the division, your spouse's consent to the transfer is required . A transfer of shares effected without his agreement may be canceled within a period of 2 years from the date of transfer.

Drafting of the deed of assignment

The contract of assignment must be in writing

• either by authentic instrument (by a notary),
• either by private act (between parties only).

The deed of assignment must count as many copies as parts to the contract.

Each copy must be signed by the parties.

The deed of assignment must contain certain mandatory particulars :

• Name of parties
• Identity of the business
• Number and designation of the shares transferred (if numbered)
• Sale price of the assignment and payment terms (except in the case of a donation)
• Partner Approval Detail

Information for employees

What information.

You must inform employees of your willingness to sell your shares and the possibility for employees of to submit an offer to purchase for the acquisition of those assets where all of the following conditions are met:

• The company includes less than 250 employees  
• The company's annual turnover shall not exceed EUR 50 million
• The sale of shares represents more than 50%   shares in the capital of the business

from 250 employees, no information is required.

When should information be disseminated?

This information must be given to employees at the latest 2 months before the date of conclusion of the contract of sale .

Any purchase offer submitted by one or more employees must be communicated to you without delay. However, this offer does not no priority character compared to other offers.

You are completely free to enter into negotiations with the employees or not. Refusal to consider or accept an offer need not be motivated . You have the right not to answer.

When each employee has made known his decision not to submit an offer, the sale of the shares may take place before the expiry of the 2 months.

How do you disseminate information?

Employees can be informed by any means of such a nature as to make the date of receipt certain:

• During a information meeting : with signature of a attendance register
• By display : with signature of a dated register
• By email : by using a process that can attest to the date of receipt with certainty
• By Delivery in your own hand : with signature or receipt
• By act of a commissioner of justice (former bailiff's act) or lawyer , etc.

What sanctions?

If the company is sold without the employees having been informed, the latter may bring the matter before the civil court to obtain compensation for their loss.

In this case, you may be ordered to pay damages up to 2%   of the amount of the sale .

Furthermore, informed employees are subject to an obligation to discretion .

Failure to comply with the obligation of discretion is a fault which justifies a disciplinary sanction up to and including the dismissal of the employee.

Guarantee of assets and liabilities

Purpose of the guarantee.

Unlike the sale of the business alone, the transfer of shares implies the transfer of the assets, but also liabilities (debts) of the company.

As a assignor, you assign your rights and duties.

The appearance of unknown debts at the time of the sale is a major risk that the buyer must avoid to ensure the company's sustainability.

By the asset-liability guarantee clause , you undertake to guarantee the accuracy of all information provided to the buyer: company activity, social accounts, customers and suppliers, salary costs, possible participation in other businesses, ongoing disputes, etc.

This guarantee clause allows the purchaser to protect himself against:

• The Discovery of a Liability which had not been reported at the time of the assignment (it must be a debt prior to the assignment and disclosed after the assignment)
• Incorrect valuation of the asset whose value is ultimately lower than agreed.

If any of these assumptions is confirmed after the transfer of the shares, the transferee may activate the guarantee to obtain a compensation on your part.

References to the guarantee clause

The asset-liability guarantee clause shall contain the following information:

• Departure Date of the guarantee: the date from which the earlier or later origin of the debt can be assessed.
• Duration of the clause: between 3 and 5 years.
• Calculation of compensation: the percentage of the debt that you are committing to bear. This percentage may decrease over time.
• Floor Amount Warranty: The amount from which the warranty can be activated.
• Ceiling Amount of compensation: the maximum amount to which you are committed. You won't have to pay more than that.
• Implementation arrangements : additional information needed to implement the guarantee (justification of the liability, modalities for sending the claim, etc.).

Recording of assignment

Declaration of assignment, assignment established by an act, assignment not established by an act.

Assignments of social rights established by an act shall be subject to the formality of registration within the period of 1 month from the date of the act.

The deed of assignment must be deposited on the spot or by post, in 2 copies and accompanied by the payment of fees (by check or transfer) to the department in charge of the registration of the domicile of one of the parties or of the residence of the notary if the assignment is made by notarial act.

Who shall I contact

• Registration Tax Service

Assignments of social rights which are not not established by an act must be declared within the 1 month from the date of transfer:

• or by means of the online service available on impots.gouv.fr in your professional area, under Actions > Assignments of social rights

Impots.gouv.fr professional space

• or by means of Form No 2759, to be filed with the registration department on which one of the parties depends.

Assignment of social rights not evidenced by a mandatory instrument to be declared

Payment of registration fees

The acquisition of shares shall give rise to payment by the purchaser a registration fee.

However, the deed of assignment may provide that the payment of the duties is to be borne by the seller or shared between the two parties.

This duty shall be fixed at 3% and calculated on the transfer price less one abatement equal to €23,000 reduced to percentage of the number of shares transferred in social capital.

The rate is 5% for businesses with a predominance of real estate , i.e. businesses where more than half of the assets are made up of buildings not used for his professional purposes.

Registration fee cannot be less than €25 .

You own 50 shares of a SARL whose capital is divided into 400 shares. You sell your shares to the buyer for a value of €50,000 .

The amount of registration fees payable by the purchaser shall be calculated as follows: Transfer price - (23,000 x Number of shares sold ÷ Total shares in the business) x   3% .

Applied to our example, this would result in: 50,000 - (23,000 × 50 ÷ 400) = 47,125 × 3% = €1,414 registration fees.

Amendment of the statutes

A transfer of shares implies a new distribution of shares among the members and therefore an amendment to the articles of association . The statutory amendment shall be made in 3 steps .

1. Convening of a special general meeting

The decision to amend the articles of association must be voted on and approved by the members meeting in special general meeting (AGE)

If the status change is not approved at the first meeting, the partners are consulted again.

SARL incorporated before 4 August 2005

Sarl incorporated after 4 august 2005.

The decision to amend the articles of association of an LLC must be adopted by the members representing at least 3/4 of the shares .

There's no pitch of quorum required , a minimum number of participants present or represented at the AGE is not required.

The general meeting may validly deliberate only if the partners present or represented possess at least 1/4 shares (on first notice) and 1/5 of these (on second notice).

If not, a new meeting must be convened within 2 months.

If the quorum is respected, the amendments must then be decided by a majority of 2/3 of the shares held by the members present or represented .

2. Publishing legal announcements in a media

Any amendment to the articles of association must be published in a legal listing support  of the department in which your business' headquarters are located.

Publication shall take place within 1 month as of the amendment.

The notice of publication must contain the following :

• Name or corporate name
• Share capital
• Social purpose
• Address of the seat
• Place and registration number of SCR : titleContent
• Decision or minutes of the general meeting, dated and signed
• Changes made

This notice must be signed by the manager of the business or by the notary who drafted the document of assignment of shares.

3. Declaration of amendment

Finally, the amendment to the Staff Regulations must be declared within the 1 month , on the website of the company formalities office :

Company Formalities Window

Auto-insert at Bodacc (Official Bulletin of Civil and Commercial Advertisements) will make the change enforceable against third parties .

When reporting, you must submit the supporting documents following:

• Copy of the minutes of the amendment of the statutes
• Copy of the updated articles of association: dated and certified as original by the legal representative
• Certificate of publication of the notice in a legal listing support

If the status change results in a change in beneficial ownership , it must also be declared on the formalities window.

Realization of a capital gain on the sale

During the sale, you can realize a capital gain which is the difference between the sale price and the original value of your business securities.

Capital gains realized on the disposal of the shares may be taxed according to 2 methods of taxation different:

• Flat rate of income tax
• Progressive Income Tax Schedule

In principle, capital gains are taxed to the extent of 12.8% under the flat rate income tax, plus social security contributions at the rate of 17.2% , or a total of 30% on the amount of the capital gain.

You give up for €150,000 the business titles you originally purchased €100,000 . So you realize an added value of €50,000 .

• Calculation of social security contributions: 50,000 x 17.2% = €8,600
• Calculation of income tax amount: 50,000 x 12.8% = €6,400

You will therefore have to pay in total €15,000 on the transfer of its shares.

This flat rate of 12.8% is the default regime , you can opt for the progressive scale .

Progressive scale

You can waive the flat rate of 12.8% to choose to be subject to the progressive scale of income tax .

Its tax rate varies between 0% and 45% according to your personal situation.

Social security contributions shall be applied in the same way to the 17.2% on the amount of the capital gain.

When you opt for progressive taxation, you benefit from a abatement on your capital gains from the sale of the securities acquired or subscribed before 1 er january 2018 .

Warning  

if you acquired the transferred securities after 1 er january 2018 , no allowance may be applied when calculating the amount of tax.

There is an abatement general and an abatement reinforced .

General abatement

L' general allowance is applicable in all situations and is directly related to the length of time the shares are held:

• 50% for securities held between 2 and 8 years
• 65% for securities held since older than 8 years

Reinforced reduction

The enhanced allowance is also linked to the length of time the securities are held, but it is more advantageous from a tax point of view:

• 50% for securities held between 1 and 4 years
• 65% for securities held between 4 and 8 years
• 85% for securities held since older than 8 years

The enhanced allowance shall apply in any of the following :

• You sell the shares of an SME under 10 years of age : this is a company with less than 250 employees and a turnover of less than EUR 50 million.
• You're a company manager and you're retiring : you must have been a continuous manager and have held at least 25% business rights (an SME) during the 5 years prior to assignment. You must cease all activity in the business and assert your retirement rights within 2 years of the transfer.

in addition to the enhanced allowance, capital gains realized by retiring managers of SMEs are fixed abatement of   €500,000 . If the capital gain is greater than this amount, only the surplus is subject to taxation, at the rate of the increased reduction.

The system of approval depends on the social form company and transferee  : spouse (spouse or Civil partnership partner), ascendant or descendant, partner or third party operator.

The shares may be transferred between members only with the consent of all partners .

Any clause to the contrary contained in the articles of association shall not be valid. This rule cannot be circumvented by any derogating clause and also concerns donations, exchanges and the liquidation of a community between spouses.

The deed of assignment must count as many copies as parts to the contract. Each copy must be signed by the parties.

• The company includes less than 250 employees
• The company's annual turnover shall not exceed EUR 50 million ,
• By email : by using a method that can be used to certify the date of receipt with certainty.
• By act of a commissioner of justice (formerly bailiff's bill) or lawyer, etc.

Furthermore, informed employees are subject to an obligation to discretion . Failure to comply with the obligation of discretion is a fault which justifies a disciplinary sanction up to and including the dismissal of the employee.

You own 50 shares in an SNC, the capital of which is divided into 400 shares. You sell your shares to the buyer for a value of €50,000 .

A transfer of shares implies a new distribution of shares among the members and therefore an amendment to the articles of association .

The statutory amendment shall be made in 3 steps .

In the case of NCS, any amendment to the statutes shall require the agreement of the unanimity of the members (100%).

However, the statutes may provide for certain decisions to be taken with the agreement of a majority (50 %).

Any amendment to the articles of association must be published in a legal listing support of the department in which your business' headquarters are located.

This flat rate of 12.8% is the default regime However, you can opt for the progressive scale.

You can waive the flat rate of 12.8% to choose to be subject to the progressive scale of income tax . Its tax rate varies between 0% and 45% according to your personal situation.

The system of approval depends on the social form company and transferee  : spouse (spouse or civil partnership partner), ascendant or descendant, partner or third party operator.

In a limited partnership ( SCS ), the shares may be transferred between members, to their ascendants and descendants, or to third parties, only with the consent of all partners .

However, the statutes may to make adjustments .

For example, partners may stipulate in the articles of association the following information:

• The shares of the limited partners (which provide the capital) may be freely transferred between partners .
• The shares of the limited partners may be transferred to third foreigners to the business, provided that the consent of all sponsors (responsible for managing CBS) and the majority in number and capital of the limited partners .
• The shares of a general partner may be transferred in part a limited partner or a third party to the business, provided that the consent of all limited partners and the majority in number and capital of the limited partners is obtained.

‘Third party’ means any natural or legal person not associated on the date of assignment. They may be a former partner, employees or non-associated managers.

You own 50 shares in a CBS, the capital of which is divided into 400 shares. You sell your shares to the buyer for a value of €50,000 .

For SCSs, any changes must be decided with the agreement of all general partners   and the majority (in number and capital) of the limited partners .

• 65% for securities held since older than 8 years .

However, the articles of association may provide that the transfer of shares between members is subject to the approval of the other members (majority or even unanimity).

Where the approval of members is necessary, it must be obtained at a general meeting. It has 6 months to answer. In the absence of a written reply within that period, approval shall be granted.

• The sale of shares represents more than 50%   shares in the capital of the business .
• Departure Date of the guarantee: the date from which the earlier or later origin of the debt can be assessed
• Duration of the clause: between 3 and 5 years
• Floor Amount guarantee: the amount from which the guarantee can be activated
• Implementation arrangements : additional information needed to implement the guarantee (justification of the liability, modalities for sending the claim, etc.)

You own 50 shares in a SCI whose capital is divided into 400 shares. You sell your shares to the buyer for a value of €50,000 .

For ICS, any amendment to the Statutes requires the agreement of the unanimity of the members (100%).

The publication in a legal advertising medium must be done within 1 month as of the amendment.

The capital gains realized on the sale of SCI's shares are taxed differently depending on whether SCI is subject to business tax (IS) or income tax (IR).

Company subject to SI

Company subject to ir.

Capital gains may be taxed according to 2 methods of taxation different:

you give up for an amount of €150,000 the business titles you originally purchased €100,000 . So you realize an added value of €50,000 .

L' increased abatement is also linked to the length of time the securities are held, but it is more advantageous from a tax point of view:

• 85% for securities held since older than 8 years .

Capital gains are taxed at the rate of 19% in respect of income tax to which are added social security contributions of 17.2% , or a total of 36.2% of taxation on the amount of the capital gain.

You can benefit from a abatement in proportion to the length of the shareholding:

• On income tax  : a reduction of 6% of 6 e at 21 e year of detention and 4% 22 e year. After 22 years of holding shares, the capital gain is totally exempt .
• As social security contributions  : a reduction of 1.65% of 6 e at 21 e year of detention, 1.6% 22 e year and 9% after 22 e year. From 30 years of ownership, the capital gain is totally exempt .

when it is greater than €50,000 , the capital gain shall also be subject to the tax on high property gains .

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Statute and miscellaneous references

Commercial Code: Articles L221-1 to 221-17

Commercial Code: Articles L222-1 to L222-12

Commercial Code: Articles L223-1 to L223-43

SARL Scheme

General Tax Code: Articles 151e to 151f B

Tax treatment of capital gains

General Tax Code: Article 726

Registration fees

Online services and forms

Online service

Consult the Official Bulletin of Civil and Commercial Advertisements (bodacc.fr)

How do I post a legal ad?

Additional topics

Transfer of company: transfer of shares to a family member

Transfer of company: transfer of shares to a third party

Tax on high property gains

Ministry of Finance

Transmission of company: tax aspects

Ministry of Economy

Trade and businesses Register