What is the Electronic CAR or eCAR?
According to the Bureau of Internal Revenue, the eCAR is “an electronically generated Certificate Authorizing Registration issued by the Commissioner or his duly authorized representative attesting that the transfer and conveyance of land, buildings/improvements or shares of stock arising from sale, barter or exchange have been reported and the taxes due inclusive of the documentary stamp tax, have been fully paid.”
The Bureau of Internal Revenue also defines the Electronic Certificate Authorizing Registration System (eCAR System) as “a stand-alone system developed and owned by the BIR for the automated creation of eCAR which is the basis for transferring the real and personal properties from the transferor to the transferee after payment of the correct taxes and other dues that allows monitoring through audit trails and generated reports.”
The implementation of the eCAR and eCAR System is in accordance with BIR Revenue Memorandum Circular No. 40-2014 and BIR Revenue Regulations No. 3-2019, respectively.
We have discussed the importance of a BIR CAR in this blog.
Shares of stock are personal properties which are covered by the above BIR regulation. While the shares of stock may be transferred, the Revised Corporation Code specifically states that the transfer should be recorded in the books (or stock and transfer book) of the corporation. The revised corporation code state:
“SEC. 62. Certificate of Stock and Transfer of Shares. – The capital stock of corporations shall be divided into shares for which certificates signed by the president or vice president, countersigned by the secretary or assistant secretary, and sealed with the seal of the corporation shall be issued in accordance with the bylaws.
Shares of stock so issued are personal property and may be transferred by delivery of the certificate or certificates endorsed by the owner, his attorney in-fact, or any other person legally authorized to make the transfer. </span 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.
There is, however, an additional task imposed upon the corporate secretary before any recording in the stock and transfer book is made. This is following BIR RR 06-08 and RMC 37-2012, which states that “In order to transfer ownership of shares of stock not traded in the Stock Exchange, it is necessary to secure a CAR pursuant to the process laid down in RMO No. 15-03. The receipts of the payment of the tax should also be filed with and recorded by the secretary of the corporation pursuant to Section 11 of RR No. 06-08.”
By analogy, since CAR is now replaced by the eCAR, to be able to transfer shares of stock, one must then secure an eCAR.
Need further information and assistance regarding the importance of E-CAR shares of stock in the Philippines? Talk to our team at FILEDOCSPHIL to know more about the requirements and process. Call us today at (+632) 8478 5826 or send an email to info@filedocsphil.com for more information.