If you own shares of stock, then you are considered a part-owner of a corporation. As such, you are entitled to a proportion of its assets and profits. Interestingly, if you are the sole stockholder of your One Person Corporation (OPC), then you own the entirety of the corporation.
In the Philippines, personal property can be sold, assigned, transferred, or conveyed to another person or entity through legal agreements. While shares of stock are regarded as personal property under corporate law and represent ownership, they can be transferred or acquired by the same means, thus allowing for a change in the ownership of a corporation.
This article delves into the requirements, process, and amendments to the Articles of Incorporation (AOI) for the transfer of corporate ownership, specifically of a One Person Corporation (OPC) in the Philippines. Read on and tell us in the comments how our services can help you with your corporate needs.
How to Transfer Ownership of a Corporation (OPC) in the Philippines (General Process)
Similar to that of an ordinary stock corporation (OSC), the stocks of the sole stockholder of an OPC can be transferred to another person or entity, leading to the transfer of corporate ownership. To do this:
1. Prepare and Execute a Deed of Assignment or Transfer of Stock.
Before filing with any government agency, you must first settle the sale or transfer of stocks with the new owner through a Deed of Assignment or Transfer of Stock. The deed must provide all the necessary information about the transaction, including the number of shares and the amount of the agreed valuation.
2. Pay the Capital Gains and Documentary Stamp Taxes.
Once the sale or transfer is finalized, you must pay the tax obligations associated with the transaction—capital gains and documentary stamp taxes—within thirty (30) days. The CGT, which is currently at a rate of fifteen percent (15%), is the tax on the gains presumed to have been realized from the sale of stocks.
3. Secure the BIR Electronic Certificate Authorizing Registration (eCAR).
You will then be issued a BIR Electronic Certificate Authorizing Registration (eCAR), a tax clearance certificate that certifies your full payment of all the taxes incurred in the sale of stocks. The estimated timeline for the processing of this certificate is at least three (3) months.
4. Register the Transfer in the Books and Issue a Certificate.
After claiming the BIR eCAR, you may already register the transfer of stocks in the books of the corporation and issue a Certificate of Stocks to the new owner. As the law provides, the owner cannot protect his rights and is not recognized as the owner if the shares are not in his name.
5. File the Amended AOI and Other Documents with the SEC.
To finalize the legal transfer of ownership, you must file the necessary documentation, including the amended Articles of Incorporation (AOI) with the Securities and Exchange Commission (SEC). Follow the step-by-step guide provided below.
SEC Requirements for AOI Amendment (Transfer of Corporate Ownership)
To amend the corporation’s Articles of Incorporation (AOI) for the transfer of ownership and make the necessary filing with the SEC, you need to draft and gather the following documentary requirements:
- Cover Sheet for Amendment (System-Generated);
- Amended Articles of Incorporation (AOI) to be signed by the new single stockholder and treasurer (must be notarized again);
- OPC Resolution (Please see the sample form found in letter H of this link);
- Deed of Assignment;
- BIR Electronic Certificate Authorizing Registration (eCAR);
- CMD Monitoring Clearance (Proof of Registration of Stock and Transfer/Membership Book (page with SEC stamp) must be submitted for the clearance);
- Clearances from Other SEC Departments (if applicable); and,
- Endorsements from Other Government Agencies (if applicable).
In the event that the CMD Monitoring Clearance is not yet available, an Affidavit of Undertaking may be submitted (System-Generated) in lieu thereof. A Sole Owner’s Resolution for the submission of this affidavit must be attached. The corporation must still ensure compliance with securing the monitoring clearance. Based on experience, newly signed letters of acceptance of the nominee and alternate nominee are also submitted.
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How to Amend AOI for Transfer of Ownership of a Corporation (OPC) (Step-By-Step Process)
Your amendment of the Articles of Incorporation (AOI) for the transfer of ownership falls under regular applications, which can now be filed online through the SEC Electronic Application for Modification of Entry Data (eAMEND Portal) and which are subject to the issuance of an original Certificate of Filing of Amended Articles of Incorporation.
1. Draft and Gather the Documentary Requirements.
You must first settle the transfer of ownership, pay the applicable taxes, and secure the BIR eCAR before you proceed to filing with the SEC. Prepare also all documentary requirements, as listed above, together with additional clearances and endorsements from other government agencies, if applicable.
2. Create an Application and Generate the Amendment Form on eAMEND.
Log in to the eAMEND Portal at https://eamend.sec.gov.ph/login, select the appropriate options, and enter your company’s SEC registration number to create an application.
3. Sign and Notarize the Documents.
You need to secure the wet signatures of the authorized representatives, such as the single stockholder, corporate secretary, and treasurer. Also, ensure that the documents are duly notarized as required by the SEC.
4. Upload the Finalized Documents to the eAMEND Portal.
Go back to the eAMEND Portal and upload the documents. If applicable, upload also the latest CMD Monitoring Clearance from the SEC or check the box for the Affidavit of Undertaking if the clearance is unavailable and download the SEC-generated template. Attach the Sole Owner’s Resolution authorizing submission of the Affidavit of Undertaking.
5. Wait for the Review of SEC Evaluator.
Check the status of your application and wait for approval by the SEC. The review may take several weeks or months. Afterwards, a new status update will be reflected in the eAMEND portal.
6. Generate the Payment Assessment Form (PAF) and Settle the Fees.
You will receive an email notification with a “For Payment” status once the SEC Assigned Processor has reviewed and pre-approved your application. Follow the instructions provided to download the Payment Assessment Form (PAF) and proceed to payment.
7. Wait for the Post-Audit and Submit Hard Copies of the Documents.
After making the payment, a post-audit shall be conducted. Once completed, prepare four (4) sets of the signed and notarized hard copies, including the payment receipt, and submit them to the SEC Processing Office. One set should be the original notarized copy, with the remaining sets as photocopies to reduce costs.
8. Receive the Amendment Certificate.
After submission of the physical copies of the documents, the application status will be changed to “For Releasing of Certificate”. Once this status update is reflected, SEC will issue the Certificate of Filing of Amended Articles of Incorporation, which supersedes the original incorporation document.
In summary, transferring ownership of a corporation in the Philippines involves several important steps, including preparation of legal documents, payment of taxes, and filing an amended AOI with the SEC. By following the guide and consulting with experts, you can ensure that the transfer meets the required documentation and complies with the law.
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