Tax on Social Media Influencers
September 18, 2021
In SEC-OGC Opinion No.21-03, the Securities and Exchange Commission confirmed that issuance of Deed of Trust and Assignment to a nominee stockholder is sufficient to enable the said stockholder to be elected as a nominee member of the board for purposes of complying with the statutory minimum number of stockholder /directors.
As a brief background of the situation, Symex Philippines, Inc. (“Symex”), is a wholly-owned subsidiary of Symex Asia Pacific, Ltd of Singapore. Symex has five (5) nominee stockholders who are also members of its Board of Directors. However, one of the nominee stockholder/director is no longer connected to Symex. Thus, it is contemplating the execution of a Deed of Trust and Assignment instead of a Deed of Sale to comply with the statutory minimum number of stockholders and directors.
In resolving this issue, the SEC opined as follows:
“A perusal of the facts presented in your letter, indicates that the contemplated transfer of share/s to the new nominee shareholder is for the purpose of qualifying the said nominee shareholder to be a member of the board, and to complete the number of directors composing the same.
In this regard, the Comission has held in previous opinions that:
“For purposes of complying with the statutory minimum number of stockholders/directors, the owner may transfer one (1) qualifying share to each nominee stockholder for purposes of qualifying them to become members of the board, without giving them beneficial ownership of the shares. Said transfer would be more of a “trust” and not transfer of “ownership”, hence, the beneficial interest in such shares will remain with the assignor while the assignee will only hold legal title to the stock.
”In such cases, the transferee should be described in the Deed of Assignment, corporate books and certificate of stock merely as qualifying shareholder or nominee of the transferor. The fact that the stock standing in the corporate books is in the name of the person only as a qualifying stockholder or that the holder of the stock certificate is described merely as nominee serves as notice to the corporation and third parties that the holder thereof does not hold the share in his own right, but holds it only as a nominee for the benefit of the real owner.”
The Commission further opined that under Section 25 of the Revised Corporation Code (RCC), it is required that “within thirty (30) days after the election of directors, trustees and officers, the secretary, or any other officer of the corporation, shall submit to the Commission, the names, nationalities, shareholdings, and residence address of the directors, trustees, and officers elected.”
Based on the foregoing, a Deed of Trust and Assignment is a valid instrument that will allow a nominee stockholder to be elected as a member of the board to comply with the statutory requirement. This fact should be reported in the corporate books and requires the submission of a General Information Sheet to the Commission in order for the said office to be apprised of the relevant change/s in the composition of the board or the election of officers.
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