Shares/Stock + Capital Affairs

Question 1

Any contract for the acquisition of unissued
stock in an existing corporation or corp still to be formed

Answer 1

Subscription Contract

Question 2

Refers to subscription of shares in a corporation still to be formed

Answer 2

Pre-incorporation subscription

Question 3

Pre-incorporation subscription are irrevocable for a period of?

Answer 3

6 months (unless all other subscribers consent to the revocation)

Question 4

What is the minimum subscription and paid-up capital requirement for most corporations?

Answer 4

No minimum subscription and paid-up capital requirement

Question 5

True or False: A corporation can condone subscription receivables due from its SH

Answer 5

False (this will lead to watered stocks, a violation of the trust fund doctrine)

Question 6

It provides that the capital stock, property and
other assets of a corporation are regarded as equity in trust for the payment of corporate creditor

Answer 6

Trust Fund Doctrine

Question 7

These are forms of securities representing equity ownership in a corporation divided into units

Answer 7

Share of Stocks

Question 8

The maximum amount fixed in the AOI to be subscribed and paid by the SH

Answer 8

Authorized Capital Stock

Question 9

The portion of the ACS which is covered by
subscription agreements whether fully paid or not

Answer 9

Subscribed Capital Stock

Question 10

The total shares of stocks issued under binding subscription contracts to
subscribers or stockholders, whether fully or partially paid, except treasury shares

Answer 10

Outstanding Capital Stock

Question 11

The portion of the ACS which has been subscribed and paid by the SH of the corporation

Answer 11

Paid-up Capital Stock

Question 12

A doctrine that states all stocks issued by the corporation are presumed equal, with the same privileges and liabilities, except as
otherwise provided in the AOI and
certificate of stock.

Answer 12

Doctrine of Equality
of Shares

Question 13

The ordinary/basic share of stock of a corporation, usually issued without privileges or advantages except they cannot be denied the right to vote

Answer 13

Common Shares

Question 14

It entitles the holder to some preferences over the holder of common stock as may be
provided in the AOI; may be denied the right to vote

Answer 14

Preferred Shares

Question 15

A share given to incorporators that has certain rights and privilege not given to
owner of other stocks

Answer 15

Founder Shares

Question 16

Shares that may be purchased by the corporation from the holders regardless of unrestricted retained earnings but requires a sinking fund.

Answer 16

Redeemable Shares

Question 17

Shares which have been issued and fully paid for, but subsequently reacquired by the issuing corporation

Answer 17

Treasury Shares

Question 18

True or False: Preferred and Redeemable Shares automatically does not have voting rights

Answer 18

False (It must be stated in the AOI first)

Question 19

True or False: Preferred and Redeemable Shares cannot vote on anything

Answer 19

False

Question 20

True or False: Treasury Shares have voting power

Answer 20

False

Question 21

Enumerate some instances wherein Preferred Shares can still vote

Answer 21

Amendment of the Articles of Incorporation or By-Laws

Example: Change in corporate name, capital structure, etc.

Increase or Decrease of Authorized Capital Stock

Merger or Consolidation of the Corporation

Sale, Lease, Exchange, Mortgage, Pledge or Other Disposition of All or Substantially All of Corporate Assets

Investment of Corporate Funds in Another Business or for a Purpose Other than the Primary Purpose

Dissolution of the Corporation

Question 22

True or False: Subscribers are entitled to Dividends but it is not given to them unless they are fully paid

Answer 22

True

Question 23

True or False: A certificate of stock can be given to subscribers

Answer 23

False (must be paid in full)

Question 24

True or False: Unpaid subscription can be reduced by offsetting Cash dividends to it

Answer 24

True

Question 25

True or False: Subscription contract holders cannot withdraw, as well as the corporation, because of the Trust Fund Doctrine

Answer 25

True

Question 26

True or False: Subscribers can vote and be voted for

Answer 26

True

Question 27

A piece of paper or document which evidences the ownership of shares and a convenient of instrument for the transfer of title

Answer 27

Certificate of Stock

Question 28

What are the requisites for a valid transfer of stock?

Answer 28

1. The certificate of stock must be duly endorsed by thetransferor or his legal representative; 2. There must be delivery of the stock certificate; and 3. To be valid against third parties, the transfer must berecorded in the books of the corporation.

Question 29

Stocks that are: a. Issued without consideration b. Issued as fully paid when in reality the corproration has received less c. Issued for consideration other than actual cash but the FV is lesser than par value d. Issued as stock dividends when there are no sufficient RE

Answer 29

Watered Stocks

Question 29

The registry of ownership in a corporation. It is the quintessential record of all stockholders and their corresponding stockholdings in the corporation

Answer 29

Stock and Transfer Book

Question 31

Who are liable for the issuance of Watered Stocks?

Answer 31

1. The Stockholder Who Received the Watered Stock (unpaid portion) 2. Directors or Officers Who Knowingly Consented to the Issuance (damages suffered by corporation)

Question 32

What type of liability exists for any shareholder, director, or offcers of the corporation that consented with the issuance of watered stocks?

Answer 32

Solidarily Liable

Question 33

True or False: A director that does not give his/her consent to the issuance of watered stocks but did not also challenge or question the decision is also liable.

Answer 33

True