The stock and transfer book

Published January 22, 2020, 12:00 AM

by manilabulletin_admin

Atty. Jun De Zuñiga
Atty. Jun De Zuñiga

The stock and transfer book, or STB, is the registry of ownership in a corporation. It is the quintessential record of all stockholders and their corresponding stockholdings in the corporation (SEC Opinion dated 03 July 2015). It is the official record of equity ownership, of stockholder status, and of those who are entitled in vote in meetings. It is such an important corporate register that a corporate secretary is required to serve as custodian thereof, to make the proper and necessary entries therein, and to preserve these records.

The significance of the STB in the determination of stockholder status is apparent in Section 50 (now Section 49 of the Revised Corporation Code) which makes it mandatory for the corporation to issue a notice of meeting to stockholders before the date of the meeting. The right to receive notice of meeting is a right afforded only to the stockholders of record. The status of being a stockholder of record is determined by the STB, the best evidence to show the stock ownerships. Compliance with such notice requirement is the function of the corporate secretary. In addition, the corporate secretary is tasked to take the necessary measures to make the STB accessible to the stockholders, including filing a case in court to assume custody of the STB, or have the same reconstituted if appropriate, as in cases where the STB is lost or destroyed (ibid.).

As described in the law, the STB “shall contain a record of all stocks in the names of the stockholders alphabetically arranged; the installments paid and unpaid on all stocks for which subscription has been made, and the date of payment of any installment; a statement of every alienation, sale or transfer of stock made, the date thereof, by and to whom made; and such other entries as the bylaws may prescribe” (Sec. 73, Revised Corporation Code).

The STB is an authoritative reference also for determining compliance with regulatory requirements, like individual or foreign ownership ceilings. For banks, for example, prior approval of the Bangko Sentral is required for transfers of shares involving at least ten percent (10%) of the voting shares. Without such approval, the transfer shall have no legal effect nor shall the same be recognized in the books of the institution (Sec. 25-A, RA No. 7653, as amended by RA No. 11211). The same rule would apply where a transfer would breach a foreign ownership ceiling, such as the 40% for condominium corporations. In these instances, it will be incumbent on the corporate secretary to ensure that transfers of shares for registration in the STB will not violate the law.

While directors and stockholders are given the right to have access to the STB, there is no express provision in the law making it a duty of a corporation to supply any stockholder, upon his request, with a list of its stockholders showing their respective subscriptions. To do so would result to a great inconvenience on the part of the corporation, especially when there are thousands of stockholders. It seems, therefore, unnecessary for a stockholder to request that he be supplied with a list of stockholders inasmuch as he can directly inspect the STB subject, of course, to such limitation as to proper time, place, purpose and conditions of inspection (De Leon, The Corporation Code, p. 627, citing Ballantine, p. 385).

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The above comments are the personal views of the writer. His email address is [email protected]