What is a Stock and Transfer Book?

A Stock and Transfer Book (STB) is an official ledger possessing significant information involving vote entitlement of a stockholder, their status, and their equity ownership. It is a notable entry book kept by the Corporate Secretary to continuously ensure the constant update of information involving stockholder status and their shares. Furthermore, being preserved under the Secretary’s care, it is kept with due diligence to verify the equity shares recorded for the purpose of providing quintessential and substantive evidence for reference – as the ledger is the overall record necessary to assist with its corporation stock activities.

Why do we need it?

A Stock and Transfer Book (STB) serves as both a registry of ownership and a copy of stockholdings of a corporation and its stockholders. Significantly, it serves as a testimonial document acting as a determinant towards stockholder status and activity consistency.

Pursuant toSection 73 of the Revised Corporation Code(RCC) of the Philippines, it is with utmost importance to keep a record of all business transactions involving stockholders and the board of trustees. Moreover, stock corporations are required to keep a Stock and Transfer Book for the purpose of recording all past, present and future transactions of their stockholders – such as installment subscriptions, alienation and the sale or transfer of stock accounts under discussion.

“Sec. 73. Books to be kept; stock transfer agent.

Every corporation shall keep and carefully preserve at its principal office all information relating to the corporation including, but not limited to: 

(a) The articles of incorporation and bylaws of the corporation and all their amendments; 

(b) The current ownership structure and voting rights of the corporation, including lists of stockholders or members, group structures, intra-group relations, ownership data, and beneficial ownership; 

(c) The names and addresses of all the members of the board of directors or trustees and the executive officers; (d) A record of all business transactions; 

(e) A record of the resolutions of the board of directors or trustees and of the stockholders or members; 

(f) Copies of the latest reportorial requirements submitted to the Commission; and 

(g) The minutes of all meetings of stockholders or members, or of the board of directors or trustees.

Such minutes shall set forth in detail, among others: the time and place of the meeting held, how it was authorized, the notice given, the agenda therefor, whether the meeting was regular or special, its object if special, those present and absent, and every act done or ordered done at the meeting…

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… Stock corporationsmust also keep a stock and transfer book, which 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. The stock and transfer book shall be kept in the principal office of the corporation or in the office of its stock transfer agent and shall be open for inspection by any director or stockholder of the corporation at reasonable hours on business days… ” (Sec. 73, RCC)

Its gravity is equal to mandatory, as the book becomes a primary source of data  essentiality. This is to guarantee existing and valid information as to the issuance of a notice-to-meeting for stockholders of record. This is in accordance withSection 49 of the Revised Corporation Code(RCC) of the Philippines, where it explicitly states the need to commence stockholder meetings by reason of stockholding status updates.

“Sec. 49. Regular and Special Meetings of Stockholders or Members.

Regular meetings of stockholders or members shall be held annually on a date fixed in the bylaws, or if not so fixed, on any date after April 15 of every year as determined by the board of directors or trustees: Provided, That written notice of regular meetings shall be sent to all stockholders or members of record at least twenty-one (21) days prior to the meeting, unless a different period is required in the bylaws, law, or regulation: Provided, further, That written notice of regular meetings may be sent to all stockholders or members of record through electronic mail or such other manner as the Commission shall allow under its guidelines…

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…Special meetings of stockholders or members shall be held at any time deemed necessary or as provided in the bylaws: Provided, however, That at least one (1) week written notice shall be sent to all stockholders or members, unless a different period is provided in the bylaws, law or regulation… ” (Sec. 49, RCC)

To boot, this book functions as an authentic reference with respect to the ongoing compliance with the regulatory requirements necessary for transactions (i.e. transfer of shares). Likewise, in order for a stockholder to gain the title of “stockholder on record”, they must be officially stated in writing onto this book as proof of their share in stock ownerships. The Board of Directors or Trustees and the involved stockholders may receive the right to access information recorded in the STB; Provided that such request does not result in a significant inconvenience; Unless corporate by-laws provide otherwise as to the limitation of its release.

Everytime a share of stock has been transferred, a BIR CAR is processed. The process for the transfer of shares of stock that is not publicly traded can be seen in this blog. However, after securing the BIR CAR, it is recommended that you inform your Corporate Secretary of the transfer of shares of stock, so that he may update the corporation’s STB and General Information Sheet. Failure to record properly, third parties may not recognize your claim of ownership over the shares of stock. 

Should you need help or assistance in the transferring of shares of stock not publicly traded, you may contact us at info@filedocsphil.com or +63.977.241.5709.