TSA shall come in as a corporation owning 50% of the outstanding capital stock (issued shares) of Company A.

- There are 3,000 unissued shares out of a total of 10,000 shares. The other party proposed 3 recommendations for the transaction:
A. EXECUTE DEEDS OF ASSIGNMENT OF SHARES IN FAVOR OF TSA TO REFLECT 50% OWNERSHIP, WHILE THE SUBSCRIPTIONS REMAIN AT 7,000 SHARES Procedure Rate of Taxation Requirements Procedure 1. Execution of the Deeds of Assignment 2. Payment of the 5% on the first P100, 000 of Payment of the CGT for Onerous File the Capital Gains Tax return in triplicate Capital Gains Tax net gain, plus 10% in Transfer of Shares of Stocks Not (two copies for the BIR and one copy for the excess thereof Traded Through the Local Stock taxpayer) with the Authorized Agent Bank (CGT) Net gain is difference Exchange are subject to the following: (AAB) in the Revenue District where the seller between the selling or transferor of stocks is registered. price and the In places where there are no AAB, the a. Tax Form (BIR Form 1707 acquisition cost of the return will be filed directly with the Capital Gains Tax Return ) Revenue Collection Officer or Authorized shares If there is a loss on b. Documentary Requirements: City or Municipal Treasurer. the sale of shares of b.1. One original copy and one stock, there is no photocopy of the Notarized CGT Deed of Sale/ Assignment ; b.2. Photocopy of the Deed of Acquisition or proof of cost/ fair market value of the stocks at the time of acquisition; b.3. Photocopy of certificate of shares of stock; b.4. Photocopy of evidences of expenses related to sale b.5. Photocopy of the Audited Financial Statements of issuing corporation nearest the date of sale or transfer; b.6. Duly approved Tax Debit Memo, if applicable Revenue Regulation No. 6-2008

3.

Payment of the

Corporations who sell to

Donors Tax, if applicable

unrelated parties or strangers are subject to donors tax at the fat rate of 30%.

provides that in case the fair market value of the shares of stock sold is greater than the amount of money received by the seller, the excess of the fair market value of the shares of stock sold over the amount of money received as consideration shall be deemed a gift subject to the donors The sale transaction will be subject to both capital gains tax and donors tax DST can be paid either by the seller or the buyer. Generally, the buyer shoulders the documentary stamp tax. Must be paid not later than the 5th day of the month following the date of the transaction. Section 11 of Revenue Regulations No. 6-2008 provides: No sale, exchange, transfer or similar transaction intended to convey ownership of, or title to any share of stock shall be registered in the books of the corporation unless the receipts of payment of the tax herein imposed is filed with and recorded by the stock transfer agent or secretary of the corporation. It shall be the duty of the aforesaid persons to inform the Bureau of Internal Revenue in case of non-payment of tax. X X X. Generally, because the buyer has an interest in seeing to it that the sale of shares is recorded in the books of the corporation as soon as possible, the buyer would usually wish to be responsible for obtaining the CAR. -

4.

Payment of the Documentary Stamp Tax (DST)

Seventy-five centavos (P0.75) on each Two hundred pesos (P200) or fractional part thereof, of the par value of such certificate of stock

Paid by the person making, signing, issuing, accepting or transferring the property, right or obligation.

5.

Certificate Authorizing Registration (CAR) from the BIR

After payment of the relevant taxes, the BIR can issue the CAR. Until a CAR is secured, the transfer cannot be recognized by the corporate secretary even if the stockholder has already provided the receipts proving payment of the required taxes CAR Application and process: a. Capital gains tax return b. BIR Form No. 2000 DST Return c. Certification Fee of P100 d. Legal Document of transfer e.g. Deed of Assignment e. Copy of the Stock Certificate to be transferred f. Copy of the latest Audited financial statements g. Copy of the latest GIS h. Copy of the AOI and by-laws

6.

Registration of the Securities with the SEC (Sec. 8 of the Securities Regulations Code)

Copies of the documents on the previous acquisition of such shares of stock, if applicable Securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the Commission. Prior to such sale, information on the securities, in such form and with such substance as the Commission may prescribe, shall be made available to each prospective purchase.

i.

Registration of the securities shall be through the following: a. Filing by the issuer in the SEC of a sworn registration statement with respect to such securities in the form and with such information and documents as the Commission shall prescribe The registration statement shall include any prospectus required by under Subsections 8.2, 8.3 and 8.4. Payment of a fee of not more than onetenth (1/10) of one per centum (1%) of the maximum aggregate price at which such securities are proposed to be offered Publication of the Notice of the filing of the registration statement in two (2) newspapers of general circulation in the Philippines, once a week for two (2) consecutive weeks Declaration of the the registration statement or is rejected, unless the allowed to amend the statement SEC that is effective applicant is registration

b.

c.

c.

d.

Upon effectivity of the registration, statement of the issuer under oath in every prospectus that all registration requirements have been met and that all information are true and correct

However, if no commission or other remuneration is to be paid, the sale or transfer of the securities exclusively to its own stockholders is exempt from the requirements of registration (Sec. 10 of the SRC) 7. Recording of the transfer and the issuance of the new stock certificates in the Corporate books

B. ISSUE THE REMAINING UNISSUED 3,000 SHARES TO TSA AND ASSIGN 2,000 SHARES MORE FROM EXISTING SHAREHOLDERS; Procedure Rate of Taxation Requirements Procedure 1. Approval of the Issuance of shares out of the Board of Directors unsubscribed shares of authorized regarding the capital stock of the corporation may be issuance of the exercised by the Board of Directors thru unissued 3,000 a Board Resolution without need of shares stockholders' approval. There is no pre-emptive right as to additional issues of originally authorized stock

2.

3.

Payment of the DST on the issuance of the remaining unissued 3,000 shares Registration of the issuance of the remaining 3,000 unissued shares with the SEC (Sec. 8 of the Securities Regulations Code)

One peso (P1.00) on each Two hundred pesos (P200), or fractional part thereof, of the par value, of such shares of stock

DST attaches upon acceptance of the stockholder's subscription in the corporation's capital stock regardless of actual or constructive delivery of the certificates of stock Securities that are offered for distribution within the Philippines shall be subject to a registration statement duly filed with and approved by the Commission. Refer to the procedure of registration above-stated The following are the documents that

4.

Approval

or

confirmation of the SEC for the Issuance of the Unissued 3,000 share

must be submitted to the SEC: a. Cover Sheet; b. Disclosure Letter from the Corporate Secretary; c. Notice of Exemption from the Corporate Secretary, if applicable; d. SEC From 10.1, if applicable; e. Secretarys Certificate; f. Subscription Agreement; and g. Treasurers Affidavit

Assignment of Follow the same procedure provided above on Additional 2,000 the assignment of the shares shares C. INCREASE THE AUTHORIZED CAPITAL STOCK AND SUBSEQUENTLY ISSUE 4,000 UNISSUED SHARES TO TSA TO REFLECT 50% OWNERSHIP Procedure Rate of Taxation Requirements Procedure 1. Vote of the Board of Majority vote of the board of directors Directors and and, at a stockholders meeting duly stockholders called for the purpose, two-thirds (2/3) of the outstanding capital stock shall favor the increase of the capital stock As to the subsequent issuance of the 4,000 unissued shares, pre-emptive rights must be granted to the current stockholders of the Corporation Amendment of the Articles of Incorporation

5.

2.

Approval of the SEC regarding the increase in the authorized capital stock

The following must be submitted to the SEC for its approval of the increase of authorized capital stock: a. Certificate of Increase of Capital Stock; b. Treasurers Affidavit certifying the increase of capital stock, the amount subscribed and the amount received as payment; List of stockholders as of the date of the meeting approving the increase, indicating the

c.

d. e.

f.

g.

nationalities of the subscribers and their respective subscribed and paid-up capital on the existing authorized capital stock, as certified by the corporate secretary; Amended Articles of Incorporation; Notarized directors certificate certifying (a) the amendment of the Articles of Incorporation increasing the authorized capital stock, (b) the votes of the directors and the stockholders, and (c) the date and place of the stockholders meeting, which shall be signed by a majority of the directors and the corporate secretary; and Endorsement/clearance from other government agencies or other SEC Departments, if applicable; and Secretary's Certificate notarized document signed by the corporate secretary certifying that no action or proceeding has been filed or is pending before any Court or tribunal involving an intracorporate dispute or claim by
any person or group against the directors, officers or stockholders of the Corporation

If Increase of capitalization is thru cash, submit the following additional documents:

a. A

report rendered by an independent CPA on the verification of the cash payment on subscription to the increase;

b. Copy of the official receipt, c.

deposit slip, bank statement/passbook Trial balance as of the end of the month immediately preceding the submission of the requirements, which includes the additional capital infusion, certified by the company accountant; Written waiver of pre-emptive rights by non-subscribing stockholders; On site verification

d. e.

Note: Disregard item (b) if payment on subscription is already reflected in the audited financial statements (item 7 of the basic requirements), and said additional capital infusion is reflected in the Cash Flow Statement

3.

Payment of the DST on increase of the authorized capital stock

One peso (P1.00) on each Two hundred pesos (P200), or fractional part thereof, of the par value, of such shares of stock However, if no commission or remuneration is paid or given in connection with the disposition and only when the purpose for the issuance / subscription of the shares is to comply with the requirements of such law as to the percentage of the capital stock of a corporation which should be subscribed for its authorized capital increased, the transaction is exempt from registration (Sec. 10 of the SRC) In case the issuance is exempted as provided above, a written disclosure to the investors should be made containing the following information:

4.

Registration of the Issuance of the 4,000 unissued shares

1.

2.

3.

The provision of Section 10.1 of the Code under which exemption from registration is claimed; Whether the Commissions confirmation that such offer or sale qualifies as an exempt transaction has been obtained; and The following statement in bold face, prominent type: THE SECURITIES BEING OFFERED OR SOLD HEREIN HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES REGULATION CODE. ANY FUTURE OFFER OR SALE THEREOF IS SUBJECT TO REGISTRATION REQUIREMENTS UNDER THE CODE UNLESS SUCH OFFER OR SALE QUALIFIES AS AN EXEMPT TRANSACTION.

For the subsequent issuance of the unissued shares, refer to the procedure above-stated on (B)