BUSINESS LAW b. both are true d.

first is true, second is false

Law on Corporation Part 1
6. The by-laws may provide that the holders of a majority of the outstanding capital stock may
1. A subscribed to 1,000 shares of stock of X Corporation. She paid 25% of the said elect
subscription.During all the members of the board of directors.
the stockholders meeting can A vote all her subscribed shares?
a. no because the subscription has not yet been fully paid
That it may also provide that no officer of the corporation shall be required to be a stockholder
b. no because as shares have become delinquent which cannot be voted
a. both statements are true c. first is false, second is true
c. no as to the unpaid percentage of subscription
b. both are false d. first is true, second is false
d. yes because unpaid shares not delinquent can be voted
7. Which of the following is not requisite for a close corporation?
2. X Corporation posted a P1M profits in its realty business and it is real estate has appreciated in
a. the number of stock holders shall not exceed twenty
value to the tune of P4M.
b. that no close corporation is a stockholder thereof owning at 2/3 of the voting stocks
The board then declared dividends to its stockholders computed on the basis of representing
c. there is no restriction in the transfer of shares
profits
d. there is no public offering of shares
and appreciation in value of its real estate. Is the dividend declaration valid?
a. not valid because there was no approval of 2/3 of the outstanding capital stock
8. The declaration of dividends out of the and not surplus profits violation of the doctrine of
b. valid because it was based on profit and increment in the value of the corporate assets.
c. not valid because dividends must be only come from the unrestricted retained earnings. piercing
d.valid if no creditors shall be prejudiced and approved by the required votes of the directors and the veil of corporate fiction
stockholders
When the corporation is used an either ego or conduit to avoid the performance of an obligation
3. A subscribed to 100 shares of X corporation, paying 25% of the amount thereof. The corporation is violation of the trust fund doctrine?
refuses to issue to the former a stock certificate for his subscription despite the demand of A for a. both statements are false c. first is false, second is true
a b. both are true d. first is true, second is false
stock certificates corresponding to 25 shares which he claims have been piad. Meanwhile, the
corporation has become insolvent and A now refuses to pay for his unpaid balance on his 9. Majority of the following must residents of the Philippines except:
subscription. Is the refusal of the corporation to issue the certificate valid? a. members of the board of directors c. incorporators
a. not valid because there can be issued a stock certificate for the number of shares already b. members of the trustees d. officers
paid
b. valid because the stock certificate can only be issued after the full payment of the 10. Stockholders meeting must be in the city or municipality where the principal office is located
subscription while members meeting of non-stock corporation may be outside thereof
c. valid with respect to the unpaid portion of the subscription
d. not valid because the delinquent share maybe denied stock certificate The secretary of the corporations must generally be a citizen and resident of the Philippines
a. both are false c. first is false, second is true
4. Based on the same facts, is A correct in refusing to pay for the remaining shares, the company b. both are true d. first is true, second is false
being already insolvent?
a. no under the trust fund doctrine upon the insolvency of the corporation to which he is still 11. The doctrine of corporate opportunity rests on the unfairness of an officer of a corporation
liable for unpaid subscription taking
b. no because of the doctrine of piercing the veil of corporate fiction advantage of an opportunity for his own personal benefit adverse to the corporation
c. yes his obligation extinguished due to the insolvency of the corporation and his discharge from The by-laws must be filled with the SEC for the corporation to acquire juridical personality
liability by reason thereof a. both statements are true c. first is false, second is true
d. yes because he is denied of his right to receive stock certificate b. both are false d. first is true, second is false

5. After dissolution but within the three years period for liquidation a corporations term may still 12. Private corporations have the followings attributes, except:
be a. it is created by law as a juridical person
extended by amendment of its articles of incorporation b. it has the right of succession
The dissolution of a corporation shall take place because it has been in continuous non-operation c. its may formed, organized and existing under a special law or charter
for d. it has the powers, attributes and properties expressly authorized by the law or incident to
for five years its existence
a. both statements are true c. first is false, second is true
13. In the three of the following instances, shares with or without voting rights can be voted,
except: 19. The merger or consolidation of corporations becomes effective upon approval by the
a. increase or decrease of capital stock constituent corporations
b. dissolution of the corporation
of the plan merger or consolidation as the case may be.
c. election of directors or trustee
d. merger or consolidation with other corporation
After the merger, the absorbed corporation must undertake dissolution and winding up
14. One of the following does not have voting rights: procedures
a. preferred shares c. treasury shares a. both statements are false c. first is false, second is true
b. redeemable shares d.common shares b. both are true d. first is true, second is false

15. The executive committee cannot act on this matter except:
a. filling of vacancy in the board of directors
b. cash dividend declaration
c. board resolution on despository bank of the corporation
d. stock dividend declaration
16. At the annual meeting of ABC Corporation for the election of five directors,A,B,C,D,E,F and G
were nominated.A,B,C,D and E received the highest number of votes and proclaimed elected.F
received ten votes less than E.Subsequently,E sold his shares to F.Who between E and F has
the
right to attend as director in the board meeting?The transfer of shares having been registered
with the corporation
a. e is the director because his term is one year until his successor is elected and qualified
b. f is the director for he has acquired all the shares of e
c. either of them shall be director
d. neither of them shall be director
20. Juan was a stockholder of X Corporation who sold his shares too Pedro and delivered properly
indorsed
the Stock Certificate No.1001 to the latter. The following day, Juan went to the offices of the
corporation
and claimed the loss of his stock certificate .The formalities prescribed by law having been
complied with,
the corporation issued Stock Certificate No.2002 in substitution of the lost certificate .Juan for
with
transferred for valuable consideration the new certificate to Jose who knew nothing of the prior
sale to
Pedro .Whom shall the corporation recognize as rightful stockholder?
a. both pedro and jose are rightful stockholders
b. pedro shall be the rightful stockholder being the first buyer in good faith
c. jose shall be the rightful owner being indorsee of the most recent stock certificate
d. pedro shall be the rightful stockholder because the stock certificate delivered to jose was
null and void

17. ABC Corporation has an authorized capital stock of P1M divided into 50,000 common shares 21. When the preferred shares are issued by a corporation with a fixed interest on the face
and preferred shares. At its inception, the Corporation offered subscription all the common thereof, the effect is:
shares.However, only 40,000 shares were subscribed.Recently, the directors thought of raising a. the contract of subscription subsists
additional capital and decided to offer to the public all the authorized shares of the corporation b. the said stockholder is a creditor of the corporation
c. the said shares of stocks becomes negotiable instruments
at their market value. Would Mr. X a stockholder holding 4,000 shares have the pre-emptive d. the stockholder is a plain investor who may benefit or suffer with a financial success or
rights to the remaining 10,000 shares? failure of the
a. yes because all stockholders have pre-emptive rights to all issues or dispositions of share of corporation.
any class
in proportion to shareholding 22. Three of the following are not authorized to issue no par value shares. Which one of the
b. no because he did not subscribe to them when offered at incorporation exception?
c. yes if approved by 2/3 of the outstanding capital stock a. industrial companies c. trust companies
d. no because there is no pre-emptive right applies only in case of increase in the capital stock b. insurance companies d.public utilities

18. Based on the same facts, would Mr. have pre-emptive rights to the 50,000 preferred shares? 23. The corporation has a nine member board .Two of the members have sold their shares while
a. yes because all stockholders have pre-emptive rights to all issues or dispositions of shares of two others are
any class abroad. To have a quorum .The number required is:
a. seven c. three
in proportion to shareholding
b. five d. four
b. no because he did not subscribed to them when offered at incorporation
24. A majority of the directors or trustee of all corporations organized in the Philippines must be
c. yes, if approved by 2/3 of the outstanding capital stock citizen of
d. no because pre-emptive rights apply only in increase of capital stock the Philippines.
 Any two or more positions may be held concurrently by the same person, except that no one b. to delegate to the board of directors the power to amend, repeal or adopt new bylaws, 2/3
shall acts as of the
president and secretary or as secretary and treasurer at the same time. outstanding capital stock
a. both statements are false c. only second statement is true c. to revoke the power delegated to the board to amend, repeal or adopt new bylaws, 2/3 of
b. both are true d. both are true the
outstanding capital stock
25. When a par value shares issued above par, the premium or excess is to be considered as part d. to amend, to repeal or adopt new by laws, majority of the outstanding capital stock
of the legal
capital. 32. The power to deny pre-emptive rights to stockholders is:
a. incidental power c. implied power
Shares issued without par value shall be deemed fully paid and non-assessable and the holder b. express power d. discretionary power
of such
shares shall not be liable to the corporation or its creditors in respect thereto. 33. As regards treasury shares, which is not correct?
a. both statements are false c. first is true, second is false a. they have no voting rights while in the treasury
b. both are true d. first is false, second is true b. they may be distributed as property dividend if there surplus profit
c. they are not entitled to dividends
26. Which of the following corporate acts requires the approval of the majority of the outstanding d. they are considered part of the earned or surplus profits thus distributable as dividends
capital stock?
or the members 34. This is the equitable right of the stockholders to subscribe to all issues of shares in proportion
a. to invest corporate funds in another corporation or business to their
b. to adopt, amend or repeal by laws shareholdings to maintain their equity participation in the corporation
c. to dissolve the incorporation a. right of firm refusal in close corporation
d. to amend the articles of incorporation b. right to dividends date entity
c. pre-emptive right
27. A distribution by a corporation is: d. appraisal right of dissenting stockholder
a. stock dividend c. sale of the treasury stock
b. sale of capital assets d. property dividend 35. In the matter of management of the corporation, this is supreme
a. majority of the stockholders c. board of directors
28. They are issued to those who helped in incorporating the corporation or for services rendered b. 2/3 of the stockholders d. officers of the corporation
in launching
the welfare of the same 36. This is the written acknowledgement of the interest of the stockholder in the corporation
a. preferred shares a. proxy c. voting trust agreement
b. stock in escrow b. share of stock d. certificate of stock
c. founders shares
d. promotion stock 37. These are the persons who sign the articles of incorporation and therefore must be subscribers
of shares
29. A director of a corporation may be removed from the office by a vote of the stockholders a. incorporators c. stockholders
holding representing: b. directors d. corporate officers
a. majority of the outstanding capital stock 38. The minimum requirement for incorporation:
b. 2/3 of the stockholder Authorized Capital Stock Subscribed Capital Paid up Capital
c. 2/3 o the outstanding capital stock a. P100, 000.000 P20, 000.000 P5, 000.000
d. majority of the stockholder b. P100, 000.000 P20, 000.000 P6, 250.000
c. P100, 000.000 P25, 000.000 P5, 000.000
30. Three of the following are attributes of a corporation. Which is the exception? d. P100, 000.000 P 25, 000.000 P6, 250.000
a. created by agreement of the incorporators
b. an artificial being 39. They provide and regulate the internal matters of the corporation:
c. has a right of succession a. articles of incorporation c. certificate of incorporation
d. has powers, attributes and property expressly authorized by law or incident to its existence b. by-laws of the corporation d. certificate of filling of by laws

31. As regards the corporate by laws, which of the following is false? 40. This is a public instrument giving authority to vote for stockholder
a. to adopt majority of the outstanding capital stock a. proxy c. stock certificate
 b. voting trust agreement d. voting trust certificate 48. In three of the following corporate acts, dissenting stockholders have appraisal right except
a. merger or consolidation of corporations
b. increase or decrease of capital stock, incurring, creating or increasing bonded indebtedness
c. investment of corporate funds in another business or corporation or for any purpose other
41. A gratuitous reissue of treasury shares will result in: than
a. capital surplus c. watered stock primary purpose
b. stock dividend d. property dividend d. disposition of all or substantially all of the corporate assets

42. A certificate of stock is not negotiable instrument because it lacks the requirement of: 49. Stockholders with or without voting rights may vote on the following matters except
a. the instrument must be in writing and signed by the maker or drawer a. amendment of the articles of incorporation
b. it must contain an unconditional order or promise to pay a sum certain money b. disolution of the corporation
c. it must be payable to order or to bearer c. election of directors
d. it must be payable on demand or at fixed or determinable future time d. adoption and amendment of by laws

43. The number of trustees in a non-stock corporation may be: 50. The nationanlity of the corporation determined by the nationality of the stockholders in control
a. not less than five years but not more than fifteen of the same
b. not less than five but maybe not more than fifteen is called:
c. not less than five but not more than eleven a. domicile test c.management test
d. maybe than five but not more than fifteen b. incoporation test d. control test

44. Which of the following is a limitation on proxy? 51. Directors and officers who approve illegal or fradulent acts or guilty of gross negligence or
a. the proxy acquires legal titles to the shares of the stockholders bad faith in conducting the affairs of the corporation are liable jointly and severally.
b. the proxy may attend the meeting even in the presence of the stockholder In case of issuance of watered stock , only directors and officers who approved the same are
c. the proxy as a rule for the meeting for the meeting only for which it is issued. liable for the
d. the proxy is not revocable at will of the stockholder water to the corporation and creditors but not the stockholders who received the shares.
a. both statements are true c. only first is false
45. For a de facto corporation to exist, it is necessary that it is issued by the SEC a certificate of b. both are true d. only first is true
incorporation
just like a de jure corporation 52. Directors as a rule are entitled to compensation as directors but not exceeding ten percent of
the net income
In corporation by estoppels, those who represent themselves as forming by a corporation are before tax of the preceding year
liable as
stockholders to third persons All private corporations in the Philippines shall be incorporated under the Corporation Code,
a. first statement is true, second is false c. both are false which is a
b. first is false, second is true d. both are true general law.
a. both statements are true c. only first is true
46. The following are requirements for incorporators. Which is not? b. both are true d. only first is false
a. majority of them must be residents of the Philippines
b. majority of them must be of legal age 53. For the cintract between the corporation and its directors, officers or trustees may not be
c. they must be a natural persons voidable, the
d. they must not less than five nor more then fifteen in numbers following are conditions except
a. the presence of the director or trustee is not necessary for the quorum
47. To elect the officers of the corporation, majority of the directors in a meeting constituting a b. thec ontarct is fair and reasonable under the circumstances
quorum is c. the vote of the director or trustee is not neccessaru for the approval of the contract
sufficient d. ratification by majority of the outstanding capital stock or members
Members of non-stock corporation may all be without voting rights if provided for the in the
articles of 54. Redeemable shares may be taken up or purchased by the corporation even in the absence of
incorporation or by laws surplus profits
a. both statements are true c. only first is false
b. both are true d. only first is true Treasury shares may be reissued for a reasonable price even below par value
a.both statements are false c. only first is true
 b. both are true d. only first is false PART II
QUIZ ON CORPORATION
55. In the case of shares owned in common or by two or more stockholders, the consent of either
is enough to A,B,C,D,E and F, Filipino citizens, X,Y,Z,American citizens , and R and S Japanese citizens agreed to
vote the same. form a domestic corporation with an authorized capital stock of P1,000,000.00 divided into one
hundred thousand (100,000) shares with a par value of P10.00 per share .B subscribed for 2,000
The pledgee or mortgagee shall have the right to vote the shares unless stipulated otherwise shares and he paid 12,000.00. X
a. both statements are false c. only first is true subscribed for 5,000 shares he issued a promissory note in the amount of P30,000.00.F joined
b. both are true d. only first is false the group but he
did not subscribed for any number of shares(This is the basis of Nos. 1-7)
56. Contracts between corporations with interlocking directors shall only be voidable and not void
because of the 1. Can the aforementioned persons validly form a domestic corporation
nominal interest of the director a. yes provided majority of them are resident of the Philippines
b. yes because majority of them are Filipino citizens
Management contracts shall be approved by 2/3 vote fo the directors and stockholders of c. yes provided they will subscribed for at least 25% of the authorized capital stock
both managed d. no beuase foreigners cannot be incorporators of a domestic corporation
and managing corporation.
a. only first statements is false c. both are false 2. How much at least should be subscribed by the incorporators at the time of incorporation?
b. both are true d. only first istrue a. P300,000.00 c. P200,000.00
b. P350,000.00 d. P250,000.00
57. Vacancy in the board of directors can be filled up by the reamining directors in the following
cases except 3. How many shares shall be paid up by the incorporators?
a. increase in the number of directors c. death of director a. P625,000 c. P6,250
b. resignation letter d. none of the above b. P62,500 d. P625

58. The following are requisites for de facto corporation except one 4. Can B demand for a certificate of stock of 1,200 shares
a. valid law under which it is incorporated a. no because certificate of stock shall be issued only after payment of the full amount of the
b. actual use of corporate powers subscription
c. attempt in good faith to organize b. no because the 800 shares subscribed by him are already delinquent
d. non-issuance by the SEC of certificate of incorporation c. yes because he can surrender the 800 shares the corporation and limit his subscription to
1,200 shares
59. In open corporation, only in certain case do stockholders have appraisal right of dissenting only
stockholders d. yes because he has paid 12,000.00 representing the fulll value of 1,200 shares
while in close corporation stockholders can at anytime for whatever reason demand payment
of 5. Is the payment of X for his subscription valid
surrendred shares a. yes provided the promissory note is converted into cash on its maturity
b. yes as long as other corporators shall accept his promissory note
In the former , there is no restriction in the transfer of shares while in the,latter there is in the c. no because the actual cash paid to the corporation can be valid payment
form of the d. ne because shares of stock shall not be issued in exchange of promissory note
right of first refusal of the coporation or stockholders
a. both statements is true c. only first is true 6. Can F be an incorporator of the corporation
b. both are false d. only first is false a. yes provided the other incorporators do not object
b. no because an incorporator must have substantial share in the corporation
60. The by laws of a corporation may provide that the stockholders or trustees meeting may be c. yes because as a filipino , he has the right to join the formation of a domestic corporation
outside of the d. no, because he does not ownnat least one share of the capital stock of the corporation
Philipines
7. Assuming that the corporation has been organized , how many shares can B validly vote in the
The code by laws may be filled with the SEC either before or after incorporation election
a. only first is true of the members of the board of directors
b. only first is false a. 1,200 shares because these have been paid
b. 2,000 shares because that is his total subscription
 c. 800 shares because that is the balance of his unpaid subscription 12. The auhtorized capital stock of a proposed corporation is P1,000,000 divided into 10,000
d. any of the above shares with a par
value of P100 each. The minimum amount of subscription that must be paid is
8. Which of the following statement is correct? a. P62,500 or 625 shares c. P75,000 or 750 shares
a. to sell lease, mortgage or otherwise dipose of all or some of the corporate assets, majority b. P50,000 or 500 shares d. P85,500 or 875 shares
vote of
directors or trustees and majority of the outstanding capital stock or to the members is 13.Which of the following will qualify as incorporator in a corporation
needed a. a minor c. partnership
b. to enter into management contract, majority vote of the board of directors and majority of b. a corporation d. foreigner
the outstanding
capital stock or the members is required 14. The Corporation Code requires that
c. to issue dividends , majority vote of the quorum of the board of directors and majority of the a. at least one majority of the directors are residents of the Philippines
outstanding b. all of the directors or trustee are residents of the Philippines
capital stock is required c. all of the directors or trustees are citizen of the Philippines
d. to invest corporate funds in another corporation or business , majority vote of directors or d. majority of the directors are citizens of the Philippines
trustees
and majority of the outstanding capital stock or the members thereof. 15. The voting proportion required to enable a corporation to invest its fund in any other
corporation or
business or for any purpose other than its primary purpose
a. 2/3 vote of the board of directors and ratified by majority of the outstanding capital stock
9. A. It is illeagl to issue watered stocks.However , stock issues without any considerstion at all is b. majority vote of the board of directors and ratified by majority of the outstanding capital
justified stock
c. majority of the vote of board of directors and ratified by 2/3 of the out standing capital
if such issues are bonus shares stock
d. majority of the vote of board of directors and ratified by 2/3 of the stockholders
B. A director is removed from the office by a vote of the stockholders holding at least 2/3 of the
outstanding capital stock .The vacancy occassioned by such removal can be filled by the 16. Wateredstock is a share of stock issued by a corporation for a consideration less than its par or
vote of the issued
majority of the remaining directors if still constituting with quorum value or for a consideration in any form other than cash , valued in excess of its par value.In
a. only letter a is correct c. only letter b is correct this regard
b. both letters are correct d. both letters are wrong a. the agreement that it shall be paid for less than its par value is illegal and void and cannot
be enforced
10. Which of these conditions comply with the minimum requirements of law to corporate b. the issue itself is void
formation- c. the subscriber shall not be liable for full par value
Authorized Subscirbed Paid-up d. answer not given
Capital Capital Capital
a. P64,000 P16,000 P4,000
b. P100,000 P25,000 P12,500 17. Corporate disolution may take place by voluntary inaction which will result in the cessation of
c. P200,000 P10,000 P10,000 its
d. P200,000 P50,000 P10,000 corporate powers and the corporation shall be deemed dissolved.Such voluntary inaction may
result from
11. Which of the following conditions will allow corporate formation and SEC registration a. Inaction of the corporation through its failure to formally organized and commence with the
Authorized Subscirbed Paid-up transcation
Capital Capital Capital or its business or the construction of its work within two(2) years from the date of its
a. P90,000 P12,500 P3,125.00 incorporation
b. P100,000 P20,000 P5,000 b. Failure of the coporation to submit the annual reports by the SECfor a period of five (5)
c. P100,000 P25,000 P5,000 years
d. P60,000 P15,000 P6,000 c. Merger of consolidation with respect to absorbed corporation
d. None of the above
18. One of the following is a ground for the suspension or revocation of the certificate of
incorporation by 24. A stockholder does not approve the action taken by the Board of Directors in proposing to
the SEC amend articles
a. if the corporation fails to commence and start to operate and the failure is due to cause of incorporation is not allowed to withdraw from the corporation in one of the following
beyond its control instances
b. if the corporation has commenced its business transaction afterwards ceased operations a. creating , incurring , increasing or decreasing any bond indebtedness
continously for b. shortening or prolonging corporate existence
for a period of at least 5 years c. investing of corporate funds in another corporation
c. if the corporation has commence its operations and subsequently become continously d. merger or consolidation
inoperative for two
years 25. Which of the following statements is not correct?
d. none of the above a. the sale of delinquent stock at public auction can be stopped if the board of directors stop
the sale
19.The following are corporate acts in which a stockholder of a corporation shall hace the right to for valid reasons
dissent and b. payment of unpaid subscription may not be enforced by applying cash dividends to
demand payment of the fair value of his shares of stock except one delinquent
a. in case of an amendment to the articles of incoporation which has the effect of changing or stockholders
restricting c. in delinquency sale at public auction the highest bidder is one who offers to pay the full
the right of any stockholder amount of the
b. in case of incurring, creating or increasing bonded debts balance of the subscription plus interest and expenses of the sale for the highest number of
c. in case of merger or consolidation shares
d. incase of sale, lease, mortgage or other diposal of all or any corporate assets d. the board of directors shall order , by resolution in the sale of delinquent stock specifying the
amount die
20. Which of the following statements is not correct plus accured interest , the place, the time and the date of sale
a. in case of merger or consolidation
b. in case of incurring , creating, or increasing bonded debts 26. One of the following does not require stockholders approval
c. in case of sale, lease , mortgage, or other disposal of all corporate assets a. change of corporate name
d. in case of an amendment of articles of incorporations which in effect of changing , restricting b. merger or consolidation
the c. declaration of cash dividend
rights of any holder d. investment of corporate funds outside main purpose of the corporation

21. Subscriber Glow has a total 1,000 delinquent sales atbP10 par value, to be sold at public 27. Which of the following is the disadvantage of forming a corporation?
auction sale. a. the subservience of minority stockholders to the wishes of the majority subject only to
Total amount recoverable includes : total amount of the delinquent shares 10,000 and total equitable
expenses restraints
of the sale P5,000.Who will be declared the highest bidder among the following bidders in the b. the free and ready transferability of ownership
public sale c. the shareholders are not liable for the debts of the business
a. m , who is willing to pay the P15,000 at 920 shares d. the owner of succession the existence of the entirety is not affect by the personal
b. a , who is willing to pay the P15,000 at 950 shares vicissitudes of the
c. n, who is willing to pay the P15,000 at 970 shares individual stockholders
d. g, who is willing to pay the P15,000 at 900 shares
28. In a corporation, two or more positions may be held concurrently by the same person, except
22. The following are ways of enforcing payment of unpaid subscription , which is the exception that no person
a. filing a court action to recover unpaid subscription shall act as
b. sale at a public auction of delinquent stocks a. president and chairman of the board c. secretary and treasurer
c. denying delinquent stock cash dividends b. president and secretary d. treasurer and director
d. denying delinquent stock the right to vote and voted upon
29. The following are qualifications of corporate diretors , except
23.A corporate doctrine which the stockholders are not personally liable for corporate debts a. must own at least one share of stock
a. piercing the veil of corporate fiction c. trust fund and doctrine
b. separate legal entity d. corporate opportunity
 b. must nit be convicted by the final judgement with imprisonment at least 6 years and c. they may participate in the meeting of corporation as voting shares
commited d. they are entitled to dividends
within 5 yrs. prior to election
c. majority are citizens of the Philippines 37. Which of the following is a ground for the suspension or revocation of the certificate of
d. ownership of shares must be recorded in the books of the corporation incorporation by
the SEC
30. The following are requisites except one, for valid declaration and/or issuance of stock a.if the corporation has commenced its business and subsequently become continously
dividend inoperative for two years
a. existence of original & unissued shares b. if the corporation has ceased operations continously for a period of at least five years
b. exisitng unrestricted retained earning c. if the corporation did not commence its business transactions for 2 years
c. dividends declaration by the board of directors and approved by 2/3 vote of the outstanding d. if the corporation did not formally organize after incorporation
capital stock
d. it is issued to increase the authorized capital 38. Watered stocks are shares of stock issued by a corporation for a consideration less than its par
or
31. Purely ultra vires acts of the offersof a corporation to invest corporate funds in another issued value or for a consideration in any form other than cash , valued in excess of its par
business or value .In this
corporation , i.e.,acts no contrary to law , morals , publics policy may be ratified by: regard
a. majority of the vote of all members of the board a. the agreement that it shall be paid for less than its par value is illegal and void cannot be
b. stockholders with of voting power enforced
c. stockholders holding 2/3 of the voting power b. the subscriber or purchaser shall not be liable for the full par value of the shares
d. majority vote of the board present c. the issue itself is void
d. the directors officers and stockholder ar jointly liable
32. Requirement to effect the amendment of the by laws of a corporation
a. majority of the vote of board of directors 39. The distinction between proxy and voting trust is that in voting trust:
b.majority of the outstanding capital a. the trustee has no legal title to the shares of the transferring stockholder
c. vote of 2/3 of the outstanding capital stock b. it is limited to any particular meeting
d. majority vote of the board of directors and majority vote of the outstanding capital stock c. the stock certificate is not cancelled
d. the trustee may attend the stockholders meeting even in the presence of the stockholder
33.The interest or right of the stockholders in the corporations profits or in the net assets of trustor
corporation on
dissolution is: 40. The following defect will prelude the creation of even a de facto corporation
a. shares of stock c. capital a. the incorporators or a certain number of them are not residents of the Philippines
b. dividend d. certificate of stock b. lack of certificate of incorporation from the SEC
c. name of the corporation closely resembles that of a preexisting corporation and may
34. The right of corporation to exist as juridical person during its term as stated in the articles of deceive the public
incorporation d. there is actual use of corporate powers
despite the death of any of its stockholders is:
a. right of existence c. pre-emptive right A subcribed for 1,000 shares form ABC corporation at the cost of 300 per share .He initially paid
b. right of succession d. right of redemption 21,000.00. The
subscription contract is silent as regards the payment of balance .The Board of Directors issued a
35. The following cannot be the incorporator of a corporation call requiring
a. a corporation to organized under philippine laws all the stockholders with unpaid balance to pay 50% of the balance on their subscription on
b. a resident alien before September
c. a married woman without the consent of her husband even if the payment of shares is 15,2006 .X failed to pay on September 15,2006 as required in the call(This is the basis of the
paraphernal question Nos. 41
property to 43)
d. subscirber who pays less than 25% of his subscription
41. After September 15,2006 but before the sale of his share of stock at public auction how much
36. One of the characteristic s of treasury shares is that should X pay
a. they may be issued or sold again to the corporation
b. they have status of outstanding shares a. P4,500 plus interest c. P12,000 plus interest
 b. P9,000 plus interest d. P15,000 plus interest

42. How many shares shall be offered for sale at the delinquency sale
a. 1,000 shares c. 500 shares
b. 700 shares d. 300 shares

43.Assuming that the amount due to the corporation is P9,750 and the following are the bids in the
delinquency
sale, who is the highest bidder
a. P- P 9,500 for 700 shares c. S-P 9,750 for 648 shares
b. R- P 9,750 for 600 shares d. T- P 9,680 for shares

44. (1) The meetings of the Board of Directors of a stock corporation may be held anyhwere in the
world.
(2) The meetings of the members of a non-stock corporation may be held anywhere within the
Philippines
a. (1) is true but (2) is false; c. both are false
b. (1) is false but (2) is true d. both are true

45. The holders of non-voting shares shall nevertheless be entitled to vote on the following matter
a. increase or decrease of capital stock c. dissolution of the corporation
b. adoption or amendment of by laws d. dividend declaration

46. (1) Appraisal right means that whenever the capital stock of a corporation is increased and
new shares
of stock are issued , the new issue must be first be offered to the stockholders in proportion to
their existing
shareholdings before subscription are received from the general public
(2) Ultra vires acts are illegal and therefore void
(3) Certificate of incorporation is the document prepared by the persons establishing the
corporation and
filed with the SEC containing the matter required by the Corporation Code
a. only (1) is true c. all are false
b. only (2) is false d. all are true

47. (1) A foreign corporation doing business in the Philippines without a license may be sued but it
cannot sue.
(2) A written demand for payment of the fair value of the shares made in the exercise of the
appraisal right
will suspend the stockholders rights
a.(1) is false but (2) is true c. both are true
b. (1) is true but (2) is false d. both are true
 b. (1) is correct but (2) is wrong d. both statements are wrong
48. An individual or a domestic corporation designated in a written power of attorney ,by a
foreign
corporation authorized to transact business in the Philippines , on whom any summons and 50. Which of the following statement is correct
other legal a. eleemosynary corporation is one established for business or profit
processes may be served in all actions or other legal proceeding against such corporation is b. corporaiton aggregate is one established for religious purposes
called c. civil corporation is one established under the laws of the Philippines
a. resident director c. receiver d. Lay corporation is one estalished for purposes other than religious
b. resident agent d. trustee

49. (1) Corporators are incoporators (2) Incorporators are corporators

a. (1) is wrong but (2) is correct c. both statements are correct