A thoughtful gift is something that your loved one will treasure for years to come. Gifting a company’s stock might have crossed your mind since such assets have the potential to grow in value over time.
There are different ways you can possibly gift stocks in the Philippines. Learn all about them below.
1. Transferring ownership of stocks
Transferring stocks to another person can be a complex process. If you already own stocks and wish to gift them, changing ownership is possible, but you may need legal help.
When shares are transferred, the new owner (transferee) acquires all rights associated with those shares, including voting power and dividend entitlements. You, as the previous owner (transferor), will relinquish these rights.
Here’s a quick overview of the requirements under Philippine law:
- Stock certificate for proof of ownership
A stock certificate is a physical document that serves as evidence of share ownership in a company, like a receipt for the purchase of shares.
- Endorsement of the certificate
This validates the transfer in legal terms. An endorsement can be completed by the current owner of the shares or an authorized representative.
It’s important to complete the endorsement before passing the stock certificate to the new owner. Without a proper endorsement, the transfer will not be legally recognized, potentially delaying or invalidating the new owner's rights to the shares.
- Delivery of the endorsed certificate
Once the stock certificate is endorsed, it must be delivered to the recipient and the company's corporate secretary. This dual delivery is crucial to finalize the transfer process.
There are other required documents depending on the nature of the transfer. A deed of sale is necessary if the shares are being sold while a deed of donation is required if the shares are a gift.
The transfer is finalized by sending the endorsed certificate and the relevant deed to the corporate secretary. This ensures that ownership rights are officially transferred to the recipient, and the company's records are updated accordingly.
- Recording the transfer in the corporation’s books
The transfer must be officially recorded in the corporation's books. The record must include the names of both parties, the transfer date, certificate numbers, and the number of shares transferred.
When exploring this route, it’s best to consult a professional to make sure you’ll meet all legal standards.
2. Setting up a brokerage account
If you're considering gifting stocks to your child, opening a trading account in your name, but for their benefit, is possible.
Setting up an "In-Trust-For" (ITF) account with your chosen brokerage firm is a great way to give your child an early start in investing.
An ITF account allows you to invest in stocks and other securities on your child’s behalf, helping them build a strong financial foundation.
You retain control of the account until your child reaches the designated age, at which point they can assume full control.
3. Sending money to their trading account
If your recipient already has a brokerage account, you can directly add money to their investment portfolio. This simple approach allows them to invest in stocks according to their own strategy and risk tolerance.
This method is straightforward, as most brokerage firms like First Metro Securities support online transfers. You’ll only need the recipient’s account details to complete the transaction.
For a more traditional surprise, you can invest through your own account and later convert the returns into a cash gift once you've reached your desired amount.
A cash gift offers the recipient the flexibility to address their unique needs, such as personal goals, emergencies, or items on their wish list they want to pursue.
However, keep in mind the risks associated with investing in volatile assets like stocks. Consider the recipient's preferences and financial goals to ensure your gift choices align with their needs.
_large.jpg)
