Every company in the world needs to amend their capital structure at some point. For several reasons, a shareholder may wish to sell his shares or reinforce its position in the company and there is a legal process to reflect those changes properly.
In an evolving economy as the Philippines where foreign investment is increasing and there are several restrictions in the foreign ownership, companies often consult us to guide them through this operation. This process might be more complex than you think.
Here is an overview of the “procedure” to respect in order to transfer shares in the Philippines:
Two different government entities are involved in this process: The Securities and Exchange Commission (SEC) and the Bureau of Internal Revenue (BIR).
Before a share can be transferred and be reflected at the General Information Sheet with SEC, this must first be cleared with BIR that will assess the Documentary Stamp Tax and Capital Gains Tax to be paid.
A certain number of requirements must be prepared in order to fully process this transfer:
• Filing a Deed of Transfer
• Audited Financial Statement
• Stock certificate and other documents that maybe required depending on the Revenue District Office
After the clearance with the BIR, you must file the GIS at the SEC to complete the transfer of the shares. The new shareholder will need to provide the following information:
• Complete name
• TIN number – A foreigner can apply for a one time TIN number with the BIR
• Respective share that this new shareholder will hold
All this process will take approximately 8 weeks to be completed. If you are in need of transferring shares of stock or modifying the shareholding structure, Triple I Consulting can surely assist you in this time consuming process. Do not hesitate to reach us directly for further details.