Listing in GIS not enough to prove stockholder status — SC

Being listed in a company’s General Information Sheet is not enough to prove that someone is a stockholder, the Supreme Court has clarified as it reinstated the election of two companies for new board members.

In a 17-page decision, the SC First Division overturned its own ruling and said that two individuals are not stockholders of the companies despite being listed in the GIS.

“We find that the petitioner failed to satisfactorily establish their status as stockholders by acceptable evidence,” the SC said.

According to the SC, the case stemmed from the special stockholders’ meeting held by two companies to elect new board members. 

The SC said two individuals sent proxies to participate but they were rejected as the two were not registered board members, leading them to challenge the election before the regional trial court (RTC).

The RTC ruled in their favor and relied on the GIS as proof of their stockholder status. However, the Court of Appeals reversed the ruling.

For its part, the SC initially upheld the RTC ruling, finding that the GIS and witness testimonies were sufficient evidence. 

However, in this decision, the SC First Division said that the Stock and Transfer Book is the primary basis for determining the shareholders of a corporation.

“It is only when the transfer of shares has been recorded in the stock and transfer book that corporation may rightfully regard the transferee as one of its stockholders,” it said.

The SC cited the Corporate Code, which stated: “[N]o transfer [of shares] 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.”

According to the Court, the names of the two individuals do not appear as stockholders in the stock and transfer books of the two corporations.

“It is established in jurisprudence that the mere inclusion as shareholder in the GIS of a corporation is by itself insufficient proof that such person is a shareholder. Between the stock and transfer book and the GIS, the former is controlling,” it said.

The decision, penned by Associate Justice Ramon Hernando, was promulgated in April and made public in July. —AOL, GMA Integrated News