Multiple Choices

Question 1

A corporation organized for religious purposes.

a. Corporation aggregate
b. Close corporation
c. Lay corporation
d. Ecclesiastical corporation

Answer 1

Ecclesiastical corporation

Question 2

A class of stock entitling the holder to vote on corporate matters, to receive dividends after other claims and dividends have been paid (specially to preferred shareholders), and to share in assets upon liquidation.

a. Common stock
b. Watered stock
c. Preferred stock
d. Treasury stock

Answer 2

Common stock

Question 3

A contract of the corporation with one or more of its directors or trustees or officers.

a. Doctrine of corporate opportunity
b. Doctrine of double compensation
c. Doctrine of self-dealing board of directors.
d. Doctrine of trust fund

Answer 3

Doctrine of self-dealing board of directors.

Question 4

A corporation created in strict or substantial conformity with the mandatory statutory requirements for incorporation and the right of which to exist as a corporation cannot be successfully attacked or questioned by any party even in a direct proceeding for that purpose by the state.

a. De facto corporation
b. Government- owned or controlled corporation
c. Quasi- public corporation
d. De jure corporation

Answer 4

De jure corporation

Question 5

It constitutes charter or fundamental law of the corporation.

a. Articles of incorporation
b. By-laws
c. Rules, regulation and discipline
d. None of the above

Answer 5

By-laws

Question 6

It is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incidental to its existence.

a. Sole Proprietorship
b. Corporation Sole
c. Corporation
d. Partnership

Answer 6

Corporation

Question 7

A corporation incorporated under the laws of the Philippines.

a. Corporation by prescription
b. Domestic Corporation
c. Foreign Corporation
d. Corporation by estoppel

Answer 7

Domestic Corporation

Question 8

A person shall be disqualified from being a director, trustee or officer of any corporation if, within 5 years prior to the election or appointment as such, the person was:

a. Found administratively liable for any offense involving fraudulent acts.
b. Convicted by final judgment of an offense punishable by imprisonment for a period exceeding 6 years.
c. Found by a foreign court or equivalent foreign regulatory authority for acts, violations or misconduct.
d. All of the above.

Answer 8

All of the above.

Question 9

Subscriptions to the capital stock of a corporation constitute a fund to which the creditors have a right to look for the satisfaction of their claims.

a. Doctrine of corporate opportunity
b. Trust funds doctrine
c. Doctrine of indivisibility
d. None of the above

Answer 9

Trust funds doctrine

Question 10

It is a body created by- laws and composed of not less than three members of the board which, subject to the statutory limitations, has all the authority of the board of directors to the extent provided in the by-laws.

a. Officers committee
b. Trust committee
c. Board of committee
d. Executive committee

Answer 10

Executive committee

Question 11

It is one where no part of its income is distributable as dividends to its members, trustees, or officers.

a. Non-stock corporation
b. Stock corporation
c. Corporation by prescription
d. Corporation aggregate

Answer 11

Non-stock corporation

Question 12

Are shares of stock which have been issued and fully paid for, but subsequently reacquired by the issuing corporation by purchase, redemption, donation or through some other lawful means.

a. Redeemable share
b. Treasury stock
c. Convertible share
d. Founder`s share

Answer 12

Treasury stock

Question 13

A written contract to purchase newly issued shares of stock.

a. Purchase contract
b. Sales contract
c. Redemption contract
d. Subscription contract

Answer 13

Subscription contract

Question 14

Is the book which records the names and addresses of all stockholders arranged alphabetically, the installment paid and unpaid on all stock for which subscription has been made, and the date of payment thereof.

a. Ledgers
b. Journals
c. Check book
d. Stock and transfer book

Answer 14

Stock and transfer book

Question 15

Refers to the continuation of a corporation`s legal status despite changes in ownership or management.

a. Succession
b. Dissolution
c. Inheritance
d. Liquidation

Answer 15

Succession

Question 16

It is a person who, apart from shareholdings and fees received from the corporation, is independent of management and free from any business or other relationship which could, or could reasonably be perceived to materially interfere with the exercise of independent judgement in carrying out the responsibilities as a director.

a. Dependent director
b. Independent director
c. Authorized director
d. Outstanding director

Answer 16

Independent director

Question 17

The following are the characteristics of a corporation, except?

a. It has the powers, attributes and properties expressly authorized by Law or incident to its existence
b. It is an artificial being
c. It has the right of succession
d. Created by meeting of the minds

Answer 17

Created by meeting of the minds

Question 18

It is the preferential right of all stockholders of a stock corporation to subscribe to all issues or disposition of shares of any class, in proportion to their respective shareholdings.

a. Right to vote
b. Voting right
c. Pre-emptive right
d. Appraisal right

Answer 18

Pre-emptive right

Question 19

It means that a stockholder who dissented and voted against the proposed corporate action, may choose to get out of the corporation by demanding payment of the fair market value of his shares.

a. Stockholders right
b. Right to liquidation
c. Pre-emptive right
d. Appraisal right

Answer 19

Appraisal right

Question 20

The requisites for a contract of the corporation with one or more of its directors or trustees of officers to be validated the following except:

a. That in case of an officer, the contract has been previously authorized by the stockholders.
b. That the vote of such director or trustee was not necessary for the approval of the contract.
c. That the presence of such director or trustee in the board meeting in which the contract was approved was not necessary to constitute a quorum for such meeting.
d. That the contract is fair and reasonable under the circumstances.

Answer 20

That in case of an officer, the contract has been previously authorized by the stockholders.

Question 21

The following are the qualifications of a board of directors/trustees, except:

a. The director or trustee must be legal age.
b. The director or trustee must be capacitated.
c. for a stock corporation, ownership of at least 1 share of the capital stock of the corporation in his own name. For a non-stock corporation, only members of the corporation can be elected
d. Majority of the board of directors or trustees must be citizens of the Philippines.

Answer 21

Majority of the board of directors or trustees must be citizens of the Philippines.

Question 22

Stocks issued for a consideration less than the par or issued price thereof or any other than cash valued in excess of its fair value.

a. Optional stock
b. Preferred stock
c. Watered stock
d. Founder`s stock

Answer 22

Watered stock

Question 23

The following are instances when a corporation may acquire its own shares, except:

a. To acquire founder`s shares.
b. To pay dissenting or withdrawing stockholders entitled to payment for their shares under the provision of the corporation code.
c. To collect or compromise an indebtedness to the corporation, arising out of unpaid subscription, in a delinquency sale, and to purchase delinquent shares sold during said sale.
d. To eliminate fractional shares arising out of stock dividends.

Answer 23

To acquire founder`s shares.

Question 24

The factors for the application of the doctrine of piercing the corporate veil are the following except:

a. Stock ownership by one or common ownership of both corporation
b. The manner of keeping corporate books and records
c. Identity of directors and officers
d. Identity of the stockholders

Answer 24

Identity of the stockholders

Question 25

The following are limitations on no par value shares, except;

a. The entire consideration for its issuance constitutes capital so that no part of it should be distributed as dividends.
b. It is deemed fully paid and non-assessable
c. It can be issued for a consideration of at least P 3.00
d. It cannot be issued as preferred shares

Answer 25

It can be issued for a consideration of at least P 3.00

Question 26

The following are the requirements before one can qualify as a de facto corporation, except:

a. The existence of a valid law under which it may be incorporate
b. An attempt in good faith to incorporate
c. None of the above
d. Assumption of corporate powers

Answer 26

None of the above

Question 27

The following are the limitations of an executive committee, except:

a. Amendment or repeal of by-laws or the adoption of new by-laws.
b. Approval of any action for which shareholders’ approval is also required.
c. Filling of vacancies in the board.
d. Amendment or repeal of any resolution of the board

Answer 27

Amendment or repeal of any resolution of the board

Question 28

The following are limitations in the amendment of the articles of incorporation, except:

a. The amendment must be for legitimate purposes and must not be contrary to the corporation code and special laws.
b. The amendment requires the vote or written assent of stockholders representing majority of the outstanding capital stock or majority members if it be a non-stock corporation.
c. The original and amended articles together shall contain all provision required by law to be set out in the articles of incorporation.
d. The amendment must be approved by a majority of the board of directors or board of trustees.

Answer 28

The amendment requires the vote or written assent of stockholders representing majority of the outstanding capital stock or majority members if it be a non-stock corporation.

Question 29

The following are the requisites for the exercise of a corporate power to invest corporate funds in another corporation, except:

a. Ratification by the stockholders representing at least 2/3 of the outstanding capital stock, or by at least 2/3 of the members in the case of non-stock corporations, at a stockholders or members meeting duly called for the purpose.
b. Written notice of the proposed investment and the time and place of the meeting shall be addressed to each stockholders or member by mail or served personally.
c. Approval of the majority of the board of directors or trustees.
d. Any dissenting stockholders shall have pre-emptive right.

Answer 29

Any dissenting stockholders shall have pre-emptive right.

Question 30

They may be purchased or taken up by the corporation upon the expiration of a fixed period, regardless of the existence of unrestricted retained earnings in the books of the corporation, and upon such other terms and conditions must also be stated in the certificate of stock representing said shares.

a. Par Value stock
b. Redeemable stock
c. Class A stock
d. No par value stock

Answer 30

Redeemable stock

Question 31

The purposes of proxies are the following, except:

a. It assures the presence of all.
b. For convenience.
c. It secures voting control.
d. It enables those who do not wish to attend the meeting to protect their interest.

Answer 31

It assures the presence of all.

Question 32

The retained earnings which have not been reserved or set aside by the board of directors for some corporate purpose.

a. Unrestricted retained earnings
b. Restricted retained earnings
c. None of the Above.
d. All of the above

Answer 32

Unrestricted retained earnings

Question 33

The following are the requisites of the corporate power to extend or shorten corporate term:

I. Approval by a 2/3 vote of the board of directors or trustees.
II. Ratification by the stockholders representing at least 2/3 of the outstanding capital stock or by at least 2/3 of the members in case of non-stock corporations.

a. Only I is true
b. Only II is true
c. Both are false
d. Both are true

Answer 33

Only II is true

Question 34

This is the maximum amount fixed in the articles of incorporation that may be subscribed and paid by the stockholders of the corporation.

a. Outstanding capital stock
b. Paid-up capital stock
c. Authorized capital stock
d. None of the above

Answer 34

Authorized capital stock

Question 35

The requirements for board meeting are the following, except:

a. Presence of the required quorum
b. Meeting of the directors or trustees duly assembled as a board
c. Decision of the majority of all the members of the board
d. Meeting at the place, time, and manner provided in the by-laws

Answer 35

Decision of the majority of all the members of the board

Question 36

The requirements for a valid proxy are the following, except:

a. It shall be signed by the corporate secretary
b. It shall be in writing
c. Unless otherwise provided in the proxy, it shall be valid only for the meeting which it is intended.
d. It shall be filed before the scheduled meeting with the corporate secretary

Answer 36

It shall be signed by the corporate secretary

Question 37

The stockholders or members mentioned in the articles of incorporation as originally forming and composing the corporation and who are signatories thereof.

a. Incorporators
b. Corporators
c. Board of directors
d. Board of trustees

Answer 37

Incorporators

Question 38

Where a stockholder or stockholders representing the same interest of both managing and the manage corporations own or control more than 1/3 of the total outstanding capital stock entitled to vote of the managing corporation.

a. Interlocking board of directors
b. Interlocking members
c. None of the above
d. Interlocking Stockholders

Answer 38

Interlocking Stockholders

Question 39

For a valid transfer of stocks, there must be strict compliance with the mode of transfer prescribed by law. The following are the requirements, except;

a. To be valid against third parties, the transfer must be recorded in the SEC.
b. The certificate must be endorsed by the owner or his attorney-in-fact or other persons legally authorized to make the transfer.
c. There must be delivery of the stock certificate.
d. To be valid against third parties, the transfer must be recorded in the books of the corporation.

Answer 39

To be valid against third parties, the transfer must be recorded in the SEC.

Question 40

When the vacancy prevents the remaining directors from constituting a quorum and emergency action is required to prevent grave, substantial, and irreparable loss or damage to the corporation, the vacancy may be temporarily filled from among the officers of the corporation by unanimous vote of the remaining directors or trustees.

a. Emergency board of director
b. Interim board of director
c. Provisional board of director
d. Temporary board of director

Answer 40

Emergency board of director

Question 41

The requirements for the sale of other disposition of assets are the following except;

a. Any dissenting stockholders may exercise his appraisal right.
b. Ratification by the vote of the stockholders representing at least 2/3 of the outstanding capital stock, or in case of non-stock corporation, by the of at least to 2/3 of the members.
c. Approval by the majority vote of its board of directors or trustees.
d. SEC approval is required.

Answer 41

SEC approval is required.

Question 42

It means that a stockholder who dissented and voted against the proposed corporate action, may choose to get out of the corporation by demanding payment of the fair market value of his shares.

a. Voting right
b. Appraisal right
c. Pre-emptive right
d. Management right

Answer 42

Voting right

Question 43

Revocation of proxy may be through the following, except:

a. Formal notice;
b. None of the above
c. Verbal communication;
d. Conduct

Answer 43

None of the above

Question 44

The requisites for removal of directors are the following except:

a. The removal should take place at a regular or special meeting duly called for the purpose.
b. The special meeting of the stockholders or members of a corporation for the purpose of removal must be called by the secretary on order of the president or on the written demand of the stockholders representing or holding at least a majority of the outstanding capital stock or a majority of the members entitled to vote.
c. The must be a previous notice to stockholders or members of the corporation of the intention to propose such removal at the meeting.
d. The director or trustee can only be removed by a vote of the stockholders representing at least majority of the outstanding capital stock or majority of the members entitled to vote in case of non-stock corporation.

Answer 44

The director or trustee can only be removed by a vote of the stockholders representing at least majority of the outstanding capital stock or majority of the members entitled to vote in case of non-stock corporation.

Question 45

A close corporation is one whose articles of incorporation provides the following, except;

a. All the issued stock of all classes shall be subject to 1 or more specified restrictions on transfer.
b. All the corporation`s issued stock of all classes, exclusive of treasury shares, shall be held of record by not more than a
specified number of persons, not exceeding 20;
c. The corporation shall not list in any stock exchange or make any public offering of its stocks of any class.
d. All of the above.

Answer 45

All of the above.

Question 46

A corporation formed for the same purpose as corporation sole. It consists of two or more persons.

a. Corporation aggregate
b. Corporation de facto
c. Close corporation
d. Corporation sole

Answer 46

Corporation aggregate

Question 47

A trust created by an agreement between a group of the stockholders of a corporation and the trustee or by a group of identical agreements between individual stockholders and a common trustee, whereby it is provided that for a term of years, or for a period contingent upon a certain event, or until the agreement is terminated, control over the stock owned by such stockholders, either for certain purposes or for all purposes, is to be lodged in the trustee, either with or without a reservation to the owners, or persons designated by the, of the power to direct how such control shall be used.

a. Management contract
b. Voting trust agreement
c. Proxy
d. Executive committee

Answer 47

Voting trust agreement

Question 48

Bidder who shall offer to pay the full amount of the balance on the subscription together with accrued interest, costs of advertisement and expenses of sale, for the smallest number of shares or fraction of a share.

a. Winning bidder
b. Highest Bidder
c. Losing bidder
d. Lowest bidder

Answer 48

Highest Bidder

Question 49

An action by the directors of a close corporation without a meeting shall not be deemed valid if:

a. The directors are accustomed to take informal action with the express or implied acquiescence of all the stockholders.
b. Before or after such action is taken, written consent thereto is signed by a majority the directors.
c. All the directors have express or implied knowledge of the action in question and none of them makes prompt objection thereto in writing.
d. All the stockholders have actual or implied knowledge of the action and make no prompt objection thereto in writing

Answer 49

Before or after such action is taken, written consent thereto is signed by a majority the directors.

Question 50

Evidence of the holder`s ownership of the stock and of his right as a shareholder.

a. Treasury stock
b. Certificate stock
c. Par value stock
d. Shares of stock

Answer 50

Certificate stock

Question 51

An impartial person who is neither a stockholder nor a creditor of the corporation or of any subsidiary or affiliate of the corporation, and whose further qualifications, if any, may be determined by the SEC.

a. Provisional director
b. Provisional member
c. Provisional stockholder
d. Provisional trustee

Answer 51

Provisional director

Question 52

As a rule, a corporation that purchases the assets of another will not be liable for the debts of the selling corporation, except when any of the following circumstances is present. Which is the exception?

a. Where the purchasing corporation is merely continuation of the selling corporation.
b. Where the purchaser expressly or impliedly agrees to assume the debts.
c. Where the transaction is validly entered into.
d. Where the transaction amounts to a consolidation or merger of the corporations.

Answer 52

Where the transaction is validly entered into.

Question 53

Any stockholder of a corporation shall have the right to dissent and demand payment of the fair value of hiss hares in the following instances, except;

a. In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all substantially all of the corporate property and assets.
b. In case of increase or decrease of capital stock.
c. In case of merger or consolidation.
d. In case any amendment to the articles of incorporation has the effect of changing or restricting the rights of any stockholder or class of shares, or of authorizing preferences in any respect superior to those of outstanding shares of any class, or of extending or shortening the term of corporate existence.

Answer 53

In case of increase or decrease of capital stock.

Question 54

Consideration for the issuance of stock may be:

a. Property, tangible or intangible, actually received by the corporation and necessary or convenient for its use and lawful purposes at a fair valuation equal to the par or issued value of the stock issued.
b. Previously incurred indebtedness of the corporation.
c. Labor performed for or services to be rendered to the corporation.
d. Actual cash paid to the corporation

Answer 54

Labor performed for or services to be rendered to the corporation

Question 55

It is one where no part of its income is distributable as dividends to its members, trustees, or officers.

a. Close corporation
b. Stock corporation
c. Corporation sole
d. Non-stock corporation

Answer 55

Non-stock corporation

Question 56

In addition to the functions designated by the One Person Corporation,
the corporate secretary shall:

a. Be responsible for maintaining the Minutes book and/or records of the corporation.
b. Notify the SEC of the death of the single stockholder within 5 days from such occurrence and stating in such notice the names, residence addresses, and contact details of all known legal heirs.
c. Notify the nominee or alternate nominee of the death or incapacity of the single stockholder, which notice shall be given no later than 5 days from such occurrence.
d. All of the above

Answer 56

All of the above

Question 57

Is an action brought by minority shareholders in the name of the corporation to redress wrongs committed against it, for which the directors refuse to sue.

a. Class suit
b. Representative suit
c. Derivative suit
d. Individual suit

Answer 57

Derivative suit

Question 58

Is one formed, organized or existing under any laws other than those of the Philippines and whose laws allow Filipino citizens and corporations to do business in its own country or state.

a. Foreign corporation
b. Government owned-and controlled corporation
c. None of the above
d. Domestic corporation

Answer 58

Foreign corporation

Question 59

It is a union whereby one or more existing corporations are absorbed by another corporation that survives and continues the combined business.

a. Business combination
b. Consolidation
c. Merger

Answer 59

Merger

Question 60

It is the union of two or more existing entities to form a new entity called the consolidated corporation.

a. Merger
b. Business combination
c. Acquisition
d. Consolidation

Answer 60

Consolidation

Question 61

Stock corporations must also keep a stock and transfer book, which shall
contain;

a. A statement of every alienation, sale or transfer of stock made, the date thereof, by and to whom made.
b. The installment paid and unpaid on all stocks for which subscription has been made, and the date of payments of any installment.
c. A record of all stocks in the names of the stockholders alphabetically arranged.
d. All of the above

Answer 61

All of the above

Question 62

As a general rule, it is not empowered to engage in business. Moreover, it is prohibited to make income or profits as an incident to its operation.

a. There is non-transferability of membership.
b. It does not have capital stock divided into shares.
c. No part of its income during its existence is distributable as dividends to its members, trustees, or officers.

Question 63

The articles of incorporation of a close corporation may provide, except for.

a. The business of the corporation shall be managed by the stockholders of the corporation rather than by aboard of directors.
b. A lesser quorum or voting requirements in meetings of stockholders or directors.
c. A classification of shares or rights and the qualifications for owning or holding the same and restrictions on their transfer as may be stated therein, subject to the provisions of the following section.
d. A classification of directors into one or more classes, each of whom may be voted for and elected solely by a particular class of stock.

Answer 63

A lesser quorum or voting requirements in meetings of stockholders or directors.

Question 64

The following are instances where a dissenting stockholder who demands payment of his shares is no longer allowed to withdraw from his decision, except:

a. The SEC determines that such stockholder is not entitled to appraisal right.
b. The proposed corporate action is abandoned or rescinded by the corporation.
c. The proposed corporate action is approved by the SEC where its approval is necessary
d. The corporation consents to the withdrawal.

Answer 64

The proposed corporate action is approved by the SEC where its approval is necessary

Question 65

The books and records required to be kept by the corporation are the following except;

a. Minutes of meetings of stockholder or members
b. Daily time record
c. Minutes of all meetings of directors or trustees.
d. Stock and transfer book, in case of stock corporations.

Answer 65

Daily time record

Question 66

The following are corporations that cannot incorporate as a close corporation, except;

a. Mining or oil companies
b. Industrial companies
c. Banks
d. Stock exchanges

Answer 66

Industrial companies

Question 67

The following are the characteristic of a non-stock corporation, except:
a. The right to vote of members may be limited, broadened, or even denied in the articles of incorporation or the by-laws.
b. Non-stock corporation may, through their articles of incorporation or their by-laws designate their governing boards by any name other than as board of trustees.
c. A non-stock corporation is not allowed to distribute any of its assets or any incidental income or profit made by the corporation during its existence.
d. By-laws may provide that the members may hold their meetings at any place even outside the place where the principal office of the corporation is located, even if that such place is outside the Philippines.

Answer 67

By-laws may provide that the members may hold their meetings at any place even outside the place where the principal office of the corporation is located, even if that such place is outside the Philippines.

Question 68

The following, except one, are the exceptional circumstances warranting the disregard of the doctrine of separate personality;

a. When a director or officer has consented to the issuance of watered-down stocks or who, having knowledge thereof, did not forthwith file with the corporate secretary his written objection thereto.
b. When directors and trustee or, in appropriate case, the officers of a corporation vote for or assent to patiently unlawful acts of the corporation.
c. When a director, trustee or officer has contractually agreed or stipulated to hold himself personally and solidarity liable with the corporation.
d. When a director, trustee or officer is made, by specific provision of by-laws. Personally, liable for his corporate action.

Answer 68

When a director, trustee or officer is made, by specific provision of by-laws. Personally, liable for his corporate action.

Question 69

The following are the limitations on the right of inspection by a stockholder, except:

a. The right can be exercised only by the common stockholders.
b. The demand is made in good faith or for a legitimate purpose.
c. The right must be exercised during reasonable hours on business days.
d. The person demanding the right has not improperly used any information obtained through any previous examination of the books and records of the corporation.

Answer 69

The right can be exercised only by the common stockholders

Question 70

The following are the requisites of a derivative suit:

a. He has tried to exhaust intra-corporate remedies, i.e., has made a demand on the board of directors for the appropriate relief but the latter has failed or refused to heed his plea; and
b. The cause of action actually devolves on the corporation, the wrong doing or harm having been, or being caused to the corporation and not to the particular stockholder bringing the suit.
c. The party bringing suit should be a shareholder as of the time of the act or transaction complained of, the number of his shares not being material;
d. All of the above.

Answer 70

All of the above.

Question 71

The following are voluntary modes of dissolution of a corporation, except:

a. By legislative enactment.
b. By expiration of corporate term provided for the articles of incorporation.
c. By the judgement of the SEC after hearing of petition for voluntary dissolution where creditors are affected.
d. By failure to formally organize and commence its business within 5 years form the date of incorporation.

Answer 71

By the judgement of the SEC after hearing of petition for voluntary dissolution where creditors are affected.

Question 72

The following are voluntary modes of dissolution of a corporation, except:

a. By amending the articles of incorporation to shorten the corporate term.
b. In case of a corporation sole, by submitting to the SEC a verified declaration of the dissolution for approval.
c. By legislative enactment.
d. By the vote of the board of directors or trustees and the resolution adopted by the stockholders or members where no creditors are affected.

Answer 72

By legislative enactment

Question 73

The following may be grounds for involuntary dissolution of the corporation:

a. Upon receipt of a lawful court order dissolving the corporation.
b. Non-use of corporate charter.
c. Continuous in operation of a corporation.
d. All of the above.

Answer 73

All of the above.

Question 74

The merger or consolidation shall have the following effects:

a. The surviving or the consolidated corporation shall possess all the rights, privileges, immunities, and powers and shall be subject to all the duties and liabilities of a corporation.
b. The constituent corporations shall become a single corporation.
c. The separate existence of the constituent corporations shall cease.
d. All of the above.

Answer 74

All of the above

Question 75

The three tests of voting trust agreement are the following:

a. That the principal purpose of the grant of voting rights is to acquire voting control of the corporation.
b. That the voting rights granted are intended to be irrevocable for a definite period of time.
c. That the voting rights of the stock are separated from the other attributes of ownership.
d. All of the above.

Answer 75

All of the above.

Question 76

Where a stockholder or member is denied the right of inspection, his suit would be individual because the wrong is done to him personally and not to the other stockholders or the corporation.

a. Individual suit
b. Class suit
c. Representative suit
d. Derivative suit

Answer 76

Individual suit

Question 77

Where the wrong is done to a group of stockholders, as where preferred stockholders` right are violated, a class suit will be proper for the protection of all stockholders belonging to the same group.

a. Corporate suit
b. Individual suit
c. Class suit
d. Representative suit

Answer 77

Representative suit

Question 78

STATEMENT I. A delinquent corporation shall have a period of 2 years to resume operations and comply with all requirements that the SEC shall prescribe.
STATEMENT II. Upon compliance by the corporation, the SEC shall issue an order lifting the delinquent status. Failure to comply with the requirements and resume operations within the period given by the SEC shall cause the revocation of the corporation`s certificate of incorporation.

a. Only I is true
b. Both are false
c. Both are true
d. Only II is true

Answer 78

Only II is true

Question 79

STATEMENT I: The act of corporate officers within the scope of their authority are binding on the corporation.
STATEMENT II: Any two or more positions may be held concurrently by the same persons, except that no one shall act as president and secretary or as president and vice president at the same time.

a. Both are false
b. Both are true
c. Only I is true
d. Only II is true

Answer 79

Only I is true

Question 80

STATEMENT I. Any city or municipality in Metro Manila, Metro Cebu, Metro Davao, and other Metropolitan areas shall, for purposes of stockholders` or members meetings, be considered a city or municipality.
STATEMENT II. Notice of meetings shall be sent through the means of communication provided in the bylaws, which notice shall state the time, place and purpose of the meetings.

a. Both are true
b. Only II is true
c. Both are false
d. Only I is true

Answer 80

Both are true

Question 81

STATEMENT I. Any power delegated to the board of directors or trustees to amend or repeal any by-laws or adopt new by-laws shall be considered as revoked whenever stockholders owning or representing 2/3 of the outstanding capital stock or 2/3 of the members in non-stock corporation, shall so vote at a regular or special meeting.
STATEMENT II. Whenever the bylaws are amended or new bylaws are adopted, the corporation shall file with the SEC such amended or new bylaws.

a. Both are false
b. Only II is true
c. Only I is true
d. Both are true

Answer 81

Only II is true

Question 82

STATEMENT I. Bylaws may be adopted and filed prior to incorporation.
STATEMENT II. In all cases, bylaws shall be effective only upon the issuance by the SEC of a certification that the bylaws are in accordance with the revised corporation code.

a. Only I is true
b. Both are false
c. Both are true
d. Only II is true

Answer 82

Both are true

Question 83

STATEMENT I. Directors or trustee who cannot physically attend or vote at board meetings can participate and vote through remote communication such as video conferencing, teleconferencing, or other alternative modes of communication that allow them reasonable opportunities to participate.
STATEMENT II. Directors or trustees can attend or vote by proxy at board meetings.

a. Both are true
b. Only II is true
c. Only I is true
d. Both are false

Answer 83

Only I is true

Question 84

STATEMENT I. Every director must own at least 100 shares of the capital stock of the corporation of which he is a director, which share shall stand in his name on the books of the corporation.
STATEMENT II. Trustees of non-stock corporations must be members thereof.

a. Only II is true
b. Both are false
c. Both are true
d. Only I is true

Answer 84

Only II is true

Question 85

STATEMENT I: Treasury shares shall have no voting right as long as such shares remain in the treasury.
STATEMENT II: Directors or trustees cannot attend or vote by proxy at board meetings but there is no prohibition for them to act as proxies in stockholder`s meetings.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

Answer 85

Both are true

Question 86

STATEMENT I. If a corporation does not formally organize and commence its business within 5 years from the date of its incorporation, its certificate of incorporation shall be deemed revoked.
STATEMENT II. If a corporation has commenced its business but subsequently becomes inoperative for a period of at least 5 consecutive years, the SEC may, after due notice and hearing, place the corporation under delinquent status.

a. Both are false
b. Only II is true
c. Only I is true
d. Both are true

Answer 86

Both are true

Question 87

STATEMENT I. It is the certificate of incorporation that gives juridical personality to a corporation and places it under the jurisdiction of the securities and exchange commission.
STATEMENT II. A corporation commences its corporate existence and juridical personality and is deemed incorporated from the date the DTI issues certificate of incorporation under its official seal.

a. Both are true
b. Both are false
c. Only I is true
d. Only II is true

Answer 87

Only I is true

Question 88

Statement I. Property acquired by a corporation is the property of stockholders or members.
Statement II. A corporation exercises said powers through its board of directors and/or its duly authorized officers and agents.

a. Only I is true
b. Only II is true
c. Both are false
d. Both are true

Answer 88

Only II is true

Question 89

STATEMENT I. Stockholders or members meetings shall be held in the city or municipality where the principal office of the corporation is located.
STATEMENT II. Regular meetings of stockholders or members shall be held annually on a date fixed in the bylaws, or if not so fixed, on any date after April 15 or every year as determined by the board of directors or trustees.

a. Both are true
b. Only II is true
c. Both are false
d. Only I is true

Answer 89

Both are true

Question 90

STATEMENT I. The articles of incorporation of a nonstock corporation may be amended by the vote or written assent of majority of the trustees and at least 2/3 of the members.
STATEMENT II. The amendment of the articles of incorporation shall take effect upon their approval by the SEC or from the date of filing with the SEC if not acted upon within 9months from the date of filing for a cause not attributable to the corporation.

a. Both are true
b. Only II is true
c. Only I is true
d. Both are false

Answer 90

Only I is true

Question 91

STATEMENT I. Stockholders and members may vote in person or by proxy in all meetings of stockholders or members.
STATEMENT II. When so authorized in the bylaws or by a majority of the board of directors, the stockholders or members of corporations may also vote directors, the stockholders or members of corporations may also vote through remote communication or in absentia.
STATEMENT III. A stockholder or member who participates through remote communication or in absentia shall be deemed present for purposes of quorum.

a. I, II and III are true
b. Only I is true
c. Only II is true
d. Only III is true

Answer 91

I, II and III are true

Question 92

STATEMENT I. The directors of a corporation shall not receive any compensation for being members of the board of directors, except for reasonable per diems.
STATEMENT II. In no case shall the total yearly compensation of directors, as such directors, exceed 10% of the net income after income tax of the corporation during the preceding year.

a. Only II is true
b. Both are false
c. Only I is true
d. Both are true

Answer 92

Only I is true

Question 93

STATEMENT I. The filing of articles of incorporation and the issuance of the certificate of incorporation are essential for the existence of a de facto corporation.
STATEMENT II. An organization not registered with the SEC cannot be considered a corporation in any concept, not even as a corporation de facto.

a. Both are true
b. Both are false
c. Only II is true
d. Only I is true

Answer 93

Both are true

Question 94

STATEMENT I. The number of directors shall not be more than 15.
STATEMENT II. The number of trustees may be more than 15.

a. Only I is true
b. Only II is true
c. Both are false
d. Both are true

Answer 94

Both are true

Question 95

STATEMENT I: The executive committee may act by 2/3 vote of all its members.
STATEMENT II. The act of a director violating the doctrine of corporate opportunity can be ratified by a vote of the stockholders owning or representing at least majority of the outstanding capital stock.

a. Only II is true
b. Only I is true
c. Both are false
d. Both are true

Answer 95

Both are false

Question 96

STATEMENT I. A foreign corporation licensed to transact business in the Philippines may not be allowed to withdraw from the Philippines.
STATEMENT II. The license of a foreign corporation to transact business in the Philippines maybe revoked or suspended by the SEC.

a. Both are false
b. Both are true
c. Only I is true
d. Only II is true

Answer 96

Only II is true

Question 97

STATEMENT I. A foreign corporation without a license is not ipso facto incapacitated from bringing an action in Philippine courts. A license is necessary only if a foreign corporation is “transacting” or “doing business” in the country.
STATEMENT II. A party is estopped from challenging the personality of a corporation after having acknowledge the same by entering into a contract with it.

a. Only I is true
b. Both are true
c. Both are false
d. Only II is true

Answer 97

Both are true

Question 98

STATEMENT I. A majority of the trustee shall constitute a quorum for the transaction of business.
STATEMENT II. Trustees elected thereafter in educational corporation to fill vacancies caused by expiration of term shall hold office for 3 years.

a. Both are false
b. Only I is true
c. Both are true
d. Only II is true

Answer 98

Only I is true

Question 99

STATEMENT I. A One Person Corporation is a corporation with a single stockholder.
STATEMENT II. Only a natural person, trust, or an estate may form a One Person Corporation.

a. Both are false
b. Only II is true
c. Both are true
d. Only I is true

Answer 99

Both are true

Question 100

STATEMENT I. Any corporation sole may purchase and hold real state and personal property for its church, charitable, benevolent or educational purposes, and may receive bequest or gifts for such purposes.
STATEMENT II. Such corporation sole may sell or mortgage real property held by it by obtaining an order for that purpose from the Regional Trial Court.

a. Only I is true
b. Both are false
c. Both are true
d. Only II is true

Answer 100

Both are true

Question 101

STATEMENT I. As a rule, the doctrine of corporate opportunity is violated where the stocks are issued by the corporation for a consideration which is less that its par value.
STATEMENT II. Subscribers for stock shall pay to the corporation interest on all unpaid subscription from the date of subscription, if so required by, and at the rate of interest fixed in the by-laws.

a. Only II is true
b. Only I is true
c. Both are true
d. Both are false

Answer 101

Only II is true

Question 102

STATEMENT I. As long as the shares are not considered delinquent, stockholders are entitled to all rights granted to it whether or not subscribed
capital stock are fully paid.
STATEMENT II. Shares of stock shall not be issued in exchange for promissory notes or future service.

a. Only II is true
b. Only I is true
c. Both are false
d. Both are true

Answer 102

Both are true

Question 103

STATEMENT I. For a valid merger or consolidation, the approval by the SEC. of the articles of merger or consolidation is required.
STATEMENT II. If upon investigation, the SEC has reason to believe that the proposed merger or consolidation is contrary to the provisions of the Corporation Code or existing laws, it shall set a hearing to give the corporations concerned the opportunity to be heard.

a. Only I is true
b. Both are false
c. Only II is true
d. Both are true

Answer 103

Both are true

Question 104

STATEMENT I. If a foreign corporation does business in the Philippines without license, a Philippine citizen or entity which has contracted with said corporation may be estopped from challenging the foreign corporation’s corporate personality in a suit brought before Philippine courts.
STATEMENT II. If a foreign corporation does business in the Philippines with the required license, it can sue before Philippine courts only on isolated transaction.

a. Both are false
b. Both are true
c. Only II is true
d. Only I is true

Answer 104

Only I is true

Question 105

STATEMENT I. In stock corporation, shareholders may generally transfer their shares.
STATEMENT II. Membership in and all rights arising from a nonstock corporation are transferable.

a. Both are true
b. Only II is true
c. Only I is true
d. Both are false

Answer 105

Only I is true

Question 106

STATEMENT I. Membership in and all rights arising from a nonstock corporation are personal and non-transferable.
STATEMENT II. Unless otherwise provided in the articles of incorporation or the by-laws, a member may not vote by proxy.

a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

Answer 106

Only I is true

Question 107

STATEMENT I. No person shall be elected as trustee unless he is a member of the corporation.
STATEMENT II. Unless otherwise provided in the articles of incorporation or the by-laws, officers of a non-stock corporation may be directly elected by the members.

a. Only II is true
b. Both are false
c. Both are true
d. Only I is true

Answer 107

Both are true

Question 108

STATEMENT I. Stocks shall not be issued for a consideration less than the par or issued price thereof.
STATEMENT II. Where the consideration is other that actual cash, or consists of intangible property such as patents of copyrights, the valuation thereof shall initially be determined by the incorporators or the board of directors, subject to approval of the SEC.

a. Both are false
b. Only II is true
c. Only I is true
d. Both are true

Answer 108

Both are true

Question 109

STATEMENT I. The board of trustees shall, as soon as organized, so classify themselves that the term of office 1/5 of their number shall expire every year.
STATEMENT II. Religious corporations may be incorporated by one or more persons. Such corporations may be classified into Corporations sole and religious societies.

a. Both are true
b. Only II is true
c. Only I is true
d. Both are false

Answer 109

Both are true

Question 110

STATEMENT I. The corporation shall bear the costs of appraisal, as a rule.
STATEMENT II. Clearly, the right of appraisal may be exercised when there is a minor change in the charter or articles of incorporation substantially prejudicing the rights of the stockholders.

a. Both are false
b. Only I is true
c. Only II is true
d. Both are true

Answer 110

Only I is true

Question 111

STATEMENT I. The merger shall only be effective upon the issuance of a certificate of merger by the SEC.
STATEMENTII. Consolidation becomes effective not upon mere agreement of the members but only upon issuance of the certificate of consolidation by the SEC.

a. Both are false
b. Only I is true
c. Only II is true
d. Both are true

Answer 111

Both are true

Question 112

STATEMENT I. The One Person Corporation shall appoint a treasurer, corporate secretary, and other officers as it may deem necessary.
STATEMENT II. The single stockholder may be appointed as the corporate secretary.

a. Both are false
b. Both are true
c. Only I is true
d. Only II is true

Answer 112

Only I is true

Question 113

STATEMENT I. The pre-emptive right of stockholders in close corporations shall extend to all stock to be issued, excluding reissuance of treasury shares.
STATEMENT II. A close corporation may, at its option, refuse to register the transfer of stock in the name of the transferee if the person is not qualified to be a stockholder and has notice thereof.

a. Only II is true
b. Both are true
c. Only I is true
d. Both are false

Answer 113

Only II is true

Question 114

STATEMENT I. The principles of piercing the corporate veil applies with equal force to One Person Corporations as with other corporations.
STATEMENT II. The commission may place the corporation under delinquent status should the corporation fail to submit the reportorial requirements 3 times, consecutively or Intermittently, within a period of 5 years.

a. Both are true
b. Only I is true
c. Only II is true
d. Both are false

Answer 114

Both are true

Question 115

STATEMENT I. The proper custodian of the books, minutes and official records of a corporation is usually the corporate treasurer.
STATEMENT II. The signature of the corporate president gives the minutes of the meeting probative value and credibility.

a. Both are false
b. Only II is true
c. Both are true
d. Only I is true

Answer 115

Both are false

Question 116

STATEMENT I. The rule is that the endorsement of the certificate of stock by the owner or his attorney-in-fact or any other person legally authorized to make the transfer shall be sufficient to effect the transfer of shares only if the same is coupled with delivery.
STATEMENT II. The delivery of the stock certificate duly endorsed by the owner is the operative act of transfer of shares from the lawful owner to the new transferee.

a. Both are false
b. Only II is true
c. Both are true
d. Only I is true

Answer 116

Both are true

Question 117

STATEMENT I. Trustees of educational institutions organized as nonstock corporations shall not be less than 5 nor more than 15.
STATEMENT II. The number of trustees shall be in multiple of 5.

a. Both are true
b. Both are false
c. Only I is true
d. Only II is true

Answer 117

Both are true

Question 118

STATEMENT I. When the SEC is satisfied that the consolidation of the corporations is not inconsistent with the provisions of the corporation code and existing laws, it issues a certificate of consolidation which makes the reorganized official.
STATEMENT II. Since there is a dissolution of the absorbed corporations, there is winding up of their affairs or liquidation of their assets.

a. Only I is true
b. Only II is true
c. Both are false
d. Both are true

Answer 118

Only I is true

Question 119

The effect of transfer or dissenting shares are the following:
STATEMENT I. The rights of the transferor as a dissenting stockholder shall cease and the transferee shall have all the rights of a regular stockholder.
STATEMENT II. All dividend distributions which would have accrued on such shares shall be paid to the transferee.

a. Only II is true
b. Both are true
c. Only I is true
d. Both are false

Answer 119

Both are true