If you're looking up the requirements for selling shares of stock in a Philippine corporation, you probably need clear, actionable steps to complete the transfer properly—whether you're exiting a business, bringing in a partner or investor, handling family succession, or a foreign buyer acquiring a stake. Getting it right protects both seller and buyer, ensures the corporation recognizes the new owner for dividends, voting, and other rights, and avoids problems with the BIR or future disputes. This guide covers the full practical process for typical unlisted or private company shares under current Philippine law.

Shares of stock represent ownership interests in a corporation. They are considered personal property and can be sold or transferred, but Philippine law imposes specific formalities so the transfer binds the corporation and third parties. A simple handshake or private agreement is not enough. The corporation only updates its records—and issues a new stock certificate—after strict requirements are met.

Legal Framework for Transferring Shares of Stock

The primary law is the Revised Corporation Code of the Philippines (Republic Act No. 11232, effective 2019). Section 62 provides the core rule:

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

Section 73 requires every stock corporation to maintain a stock and transfer book (STB) at its principal office (or with a licensed transfer agent). Every sale or transfer must be recorded there with full details. Until recorded, the buyer has rights only against the seller, not against the corporation.

Additional rules may apply from the corporation’s articles of incorporation, bylaws, or any shareholders’ agreement (especially right of first refusal or transfer restrictions). These restrictions bind third parties only if they appear on the stock certificate itself or are properly disclosed. For close corporations (those with restrictions on stock transfers and limited to not more than 20 stockholders), even stricter rules under Title XII of the Revised Corporation Code can apply.

Tax rules come from the National Internal Revenue Code (as amended by the TRAIN Law and other laws). Capital gains tax and documentary stamp tax apply to most sales of unlisted shares.

For publicly listed shares traded on the Philippine Stock Exchange, different rules apply (mainly stock transaction tax through brokers and the Securities Regulation Code), but most individuals and SMEs deal with unlisted shares.

Preparing to Sell: Critical Checks Before Signing Anything

Before any sale, both parties should verify key facts to avoid later problems.

Confirm the seller is the registered owner with clear title. Request inspection of the stock and transfer book and the latest General Information Sheet (GIS) filed with the SEC. Stockholders have the right to inspect these records at reasonable hours.
Check for unpaid subscriptions or other claims by the corporation against the shares. Shares with unpaid claims cannot be transferred in the corporate books.
Review the articles of incorporation, bylaws, and any shareholders’ agreement for transfer restrictions, right of first refusal (ROFR), drag-along rights, or board approval requirements. Many family or closely held corporations have ROFR clauses—other shareholders must be offered the shares first on the same terms.
Determine if foreign ownership limits apply. Certain industries are subject to the Foreign Investments Act and the current Foreign Investment Negative List. Exceeding allowed foreign equity can invalidate the transfer or trigger regulatory issues.
Agree on the purchase price and terms. For simple or small transfers, a notarized Deed of Sale of Shares of Stock often suffices. For larger stakes, significant value, or complex deals (warranties, earn-outs, conditions precedent), use a full Stock Purchase Agreement drafted or reviewed by a lawyer.

If the shares are not yet covered by a stock certificate (some corporations issue them only upon full payment or request), a Deed of Assignment plus recording in the STB can work, but a certificate is the norm and strongly preferred.

Step-by-Step Process to Sell and Transfer Shares of Stock

Here is the standard sequence that works in practice for unlisted shares in a private Philippine corporation:

Negotiate and execute the transfer document. Prepare and sign a Deed of Absolute Sale of Shares of Stock (or a comprehensive Stock Purchase Agreement). Both parties (or their authorized representatives) must sign. Include complete details: names, addresses, TINs, number and class of shares, certificate number(s), purchase price, and payment terms.
Notarize the document. Notarization makes it a public instrument and starts the clock for tax filing deadlines. Have it notarized by a Philippine notary public (or consularized/apostilled if executed abroad).
Endorse the stock certificate. The seller signs the back of the original stock certificate in the required form (typically “For value received, I hereby sell, assign, and transfer unto [Buyer’s full name] [exact number] shares represented by this Certificate…”). Include the date and signature. This, together with delivery of the certificate, transfers ownership between the parties.
Compute, file, and pay taxes.
- Capital Gains Tax (CGT): 15% of the net capital gain (selling price minus acquisition cost and allowable selling expenses). This is a final tax. File BIR Form 1707 (Capital Gains Tax Return for Onerous Transfer of Shares of Stock Not Traded Through the Local Stock Exchange) and pay within 30 days from the date of notarization/sale at an Authorized Agent Bank under the Revenue District Office where the seller is registered.
- Documentary Stamp Tax (DST): ₱1.50 for every ₱200 (or fractional part) of the par value of the shares transferred. File BIR Form 2000-OT. Payment is usually required around the same time as CGT.
Secure the Electronic Certificate Authorizing Registration (eCAR) from the BIR. This is a critical and often overlooked step. Present the notarized deed, endorsed stock certificate (or copy), proof of CGT and DST payment, TINs of seller/buyer/corporation, proof of acquisition cost, and other required documents (sometimes the corporation’s latest audited financial statements for valuation reference) to the appropriate BIR Revenue District Office. Pay the small certification fee. The eCAR confirms tax compliance and is usually required before the corporation will record the transfer.
Submit complete documents to the Corporate Secretary. Deliver the original endorsed stock certificate, notarized deed/SPA, eCAR, valid government-issued IDs (or passports for foreigners), and any other corporate requirements (e.g., board resolution if the seller is a corporate entity) to the corporation’s Corporate Secretary at the principal office.
Recording and issuance of new certificate. The Corporate Secretary cancels the old entry in the stock and transfer book, records the new transfer with full details (parties, date, certificate number, shares transferred), and issues a new stock certificate in the buyer’s name. Only after this recording is the buyer fully recognized as a stockholder by the corporation.

The entire process after notarization can take several weeks to a couple of months, depending on how quickly taxes are paid, the eCAR is issued, and the Corporate Secretary acts. Delays often occur at the BIR or when documents are incomplete.

Taxes on the Sale of Shares: What You Actually Pay

For unlisted shares of a domestic corporation:

Capital Gains Tax — 15% on net capital gain. If you sell at a loss or break even, no CGT is due, but DST still applies.
Documentary Stamp Tax — ₱1.50 per ₱200 (or fraction) of par value of the shares transferred.

The seller is generally liable for these taxes, though parties can agree on who shoulders them. Always compute carefully and keep records of acquisition cost (original subscription price, purchase price from previous transfer, or estate/donation valuation).

Listed shares traded on the PSE are generally subject to stock transaction tax (currently 0.1% or as updated) collected by the broker instead of CGT, with different DST treatment or exemptions.

File returns on time to avoid 25% surcharge, interest, and compromise penalties. The BIR may scrutinize transactions significantly below fair market or book value.

Required Documents (Typical for Unlisted Shares)

Notarized Deed of Sale of Shares of Stock (or Stock Purchase Agreement)
Original stock certificate(s) properly endorsed by the seller
Proof of payment of CGT (BIR Form 1707) and DST (BIR Form 2000-OT or eDST confirmation)
Electronic Certificate Authorizing Registration (eCAR) from the BIR
Valid government-issued IDs or passports of seller and buyer
TIN of seller, buyer, and the issuing corporation
Sometimes: Latest audited financial statements of the corporation, proof of acquisition cost, board resolutions or secretary’s certificates (if seller or buyer is a corporation)

Submit everything to the Corporate Secretary. Keep photocopies of all documents for your records.

Common Pitfalls and Real-Life Scenarios

Many transfers run into trouble because parties skip checks or documentation.

Right of first refusal disputes are very common in family corporations or closely held companies. If the bylaws or shareholders’ agreement require offering shares to existing stockholders first and this is ignored, the transfer can be challenged or unwound.

Lost or destroyed stock certificates require an affidavit of loss, publication of notice in a newspaper of general circulation (usually once a week for three consecutive weeks in some analogous procedures), board approval for replacement, and sometimes a bond. This adds significant time and cost.

Undervalued sales can attract BIR attention. Even in a genuine arm’s-length sale, large discrepancies between selling price and book/fair market value may lead to questions or adjustments.

Foreign buyers or sellers face extra layers. Foreigners must ensure the target corporation’s activities allow the resulting ownership structure under the Negative List. Documents executed abroad generally need apostille. Non-resident sellers still file the same CGT return but may face additional remittance or treaty considerations.

Delays by the Corporate Secretary happen when records are messy, there are internal disputes, or the secretary is unavailable. Stockholders can formally demand inspection and recording in writing; persistent refusal may require SEC assistance or court action.

Unpaid subscriptions or corporate claims block recording until resolved.

Ordinary Filipinos often encounter these issues during generational wealth transfer or when a co-owner wants to exit a small business. Foreign investors or returning OFWs frequently underestimate the documentation and tax steps, leading to months of back-and-forth.

Frequently Asked Questions

Do I need SEC approval to sell my shares in a private corporation?
Generally no for secondary transfers of existing shares in a private (unlisted) corporation. SEC involvement is mainly at incorporation, for amendments, or for public offerings. However, significant changes in ownership or foreign equity may require updates to the GIS or other reports.

Is notarization required for the sale of shares?
Yes. Notarization turns the deed into a public instrument and is the usual starting point for tax deadlines and validity against third parties.

What taxes apply if I sell shares at a loss?
You pay no capital gains tax (since there is no gain), but documentary stamp tax is still due based on par value. Keep good records in case of BIR review.

Can a foreigner buy shares in a Philippine corporation?
Yes, subject to foreign equity restrictions under the Foreign Investments Act and the current Negative List for the corporation’s line of business. The corporation itself must remain compliant with ownership limits (commonly 60% Filipino for many sectors).

How long does the whole share transfer process take?
From signing the deed to receiving the new certificate, it typically takes 4–12 weeks or longer if there are complications with taxes, eCAR issuance, lost certificates, or corporate record issues.

What is the stock and transfer book and why does recording matter?
It is the official corporate record of all stockholders and transfers. Only after proper recording in the STB does the buyer gain full recognition by the corporation for dividends, voting rights, and other stockholder privileges. Unrecorded transfers are valid only between the immediate parties.

Do I still need to do anything after the new certificate is issued?
Usually not immediately for the transfer itself. The corporation may update its GIS (filed annually with the SEC) to reflect changes in directors/officers or substantial ownership if required. For regulated industries, additional notifications may apply.

What if the corporation refuses to record the transfer?
You can send a formal written demand. Persistent refusal may be addressed through the SEC or appropriate court remedies, especially if all legal requirements have been met.

Key Takeaways

A valid transfer of shares in a Philippine corporation requires delivery of the endorsed stock certificate plus recording in the corporation’s stock and transfer book under Section 62 of the Revised Corporation Code.
Complete the tax steps first: file and pay CGT (15% on net gain via BIR Form 1707) and DST (₱1.50 per ₱200 par value via Form 2000-OT), then secure the BIR eCAR before submitting documents to the Corporate Secretary.
Always check for transfer restrictions, right of first refusal, unpaid claims, and foreign ownership limits before proceeding.
Proper documentation and following the sequence protects both parties and makes the buyer a fully recognized stockholder.
Timelines and requirements can vary with lost certificates, complex deals, or regulatory industries—professional assistance from a lawyer or accountant familiar with corporate and tax practice is often the most practical route for anything beyond the simplest transfers.
Keep complete records of every step; they protect you in case of future disputes, audits, or when proving ownership to banks, regulators, or other parties.

Following these requirements gives you a clean, enforceable transfer that stands up under Philippine law.