Among the books a stock corporation is required to keep is the stock and transfer book. The stock and transfer book shall contain the following items:
- A record of all stocks in the names of the stockholders alphabetically arranged;
- The installments paid and unpaid on all stocks for which subscription has been made, and the date of payment of any installment;
- A statement of every alienation, sale or transfer of stock made, the date thereof, by and to whom made; and
- Such other entries as the by-laws may prescribed.
The law requires that the stock and transfer book be kept in the principal office of the corporation or in the office of its stock transfer agent. It shall be open for inspection by any director or stockholder of the corporation at reasonable hours on business days.
The importance of a stock and transfer book cannot be overemphasized. Until and unless the transfer of the shares of stock is duly recorded in the stock and transfer book of the corporation, it is not binding upon the corporation. As such, the transferee cannot as yet exercise the rights of a stockholder.
Remedy of Madamus
Should the corporation refuse to record the transfer in its stock and transfer book, may the transferee institute an action for mandamus to compel the corporation? This was addressed by the Supreme Court in the case of Andaya v. Rural Bank of Cabadbaran.
Andaya v. Rural Bak of Cabadbaran; G.R. No. 188769; 03 August 2016
It is already settled jurisprudence that the registration of a transfer of shares of stock is a ministerial duty on the part of the corporation. Aggrieved parties may then resort to the remedy of mandamus to compel corporations that wrongfully or unjustifiably refuse to record the transfer or to issue new certificates of stock. This remedy is available even upon the instance of a bona fide transferee who is able to establish a clear legal right to the registration of the transfer. This legal right inherently flows from the transferee’s established ownership of the stocks, a right that has been recognized by this Court as early as in Price v. Martin.