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ADDITIONAL MCQS corporation law

1. A corporation has a separate personality distinct from the stockholders or members.


a. This is merely legal fiction.
b. This is the reality in the corporate world.
c. This makes a corporation similar to a natural person for legal purposes.
d. This allows a corporation to acquire real property in its own name.
2. The basic law in the Philippines on private corporations is found in:
a. The Civil code provisions on juridical persons
b. B.P. 68 (The Corporation Code of the Philippines)
c. Act 1459 (The Corporation Law of the Philippines)
d. The Code of Commerce provisions on sociedad anonimas
3. Which one of the following best describes a corporation organized under Philippine law but owned 100% by
New York-based Americans?
a. A Philippine domestic corporations
b. A foreign corporation with residence in the Philippines
c. A New York Corporation allowed to do business in the Philippines
d. A foreign corporation licensed in the Philippines
4. George subscribed to 1,000 shares of stock in ABC Corp. at P10.00 per share. He only paid P5,000.00 and
promised to pay the balance after 60 days. Despite the lapse of the 60-day period and an additional 30-day grace
period given by the corporation, George still failed to pay. How many of the shares subscribed by George can be
declared as delinquent?
a. 500 shares, representing the shares for which no payment was made
b. All of the 1,000 shares he subscribed to
c. All of the 1,000 shares he subscribe to, provided, however, that the corporation grants him the primary
right to buy the shares during the delinquency sale.
d. 500 shares only, provided, he relinquishes his right subscribe to the other 500 shares.
5. Which of the following best describes appraisal right?
a. Right to dissent and demand payment of not less than the par value of a stockholders shares in instances
allowed by the Corporation Code.
b. Right to dissent and demand payment of the fair value of a stockholders shares in instances allowed by
the Corporation Code.
c. Right to dissent and demand payment of the book value of a stockholders shares in instances allowed by
the Corporation Code.
d. Right to dissent and demand payment of the appraised value of a stockholders shares in instances
allowed by the Corporation Code.
6. Can the SEC refuse to register a corporation on the ground that it is owned and controlled by a single
stockholder and the rest of the stockholders are mere nominees?
a. Yes, because it will not be consistent with the principle that a corporation has a personality separate and
distinct from its stockholders.
b. No, because a corporation has a personality separate and distinct from its stockholders.
c. No, because there are nominees appointed.
d. Yes, because under PD No. 902-A, as amended, the SEC is empowered to regulate all private corporations.
7. What vote is necessary to approve an ordinary corporate act?
a. The affirmative vote of the majority of the directors as fixed in the Articles of Incorporation.
b. The affirmative vote of the quorum present in the Board meeting.
c. The affirmative vote of the stockholders representing a majority of the outstanding capital stock.
d. The affirmative vote of the stockholders representing 2/3 of the outstanding capital stock.
8. What vote is necessary to elect the officers of a corporation?
a. The affirmative vote of the majority of the directors as fixed in the Articles of Incorporation
b. The affirmative vote of the quorum present in the Board meeting
c. The affirmative vote of the stockholders representing a majority of the outstanding capital stock
d. The affirmative vote of the stockholders representing 2/3 of the outstanding capital stock

9. What vote is necessary to approve an ordinary corporate act by the Executive Committee within its powers?
a. The affirmative vote of a majority of the quorum present
b. The affirmative vote of all its members
c. The affirmative vote of the directors who are members of the Executive committee
d. The unanimous vote of the Executive Committee members present
10. The vote necessary to amend, repeal, or adopt new By-Laws of a stock corporation is:
a. Majority vote of the Board and majority of the corporations members
b. Majority vote of the Board and 2/3 vote of the outstanding capital stock
c. Majority vote of the Board and majority vote of the outstanding capital stock
d. Majority vote of the Board and 2/3 vote of the corporations members
11. The vote necessary to delegate to the Board the power to amend, repeal By-laws or adopt new By-laws of a
stock corporation is:
a. The vote of 2/3 of the outstanding capital stock
b. The vote of majority of the corporations members
c. The vote of 2/3 of the corporations members
d. The vote of majority of the outstanding capital stock
12. The vote necessary to revoke the power delegated to the Board to amend, repeal By-laws or adopt new By-
laws of a non-stock corporation is:
a. The vote of 2/3 of the outstanding capital stock
b. The vote of majority of the corporations members
c. The vote of 2/3 of the corporations members
d. The vote of majority of the outstanding capital stock
13. The vote necessary to conclude a management contract with another corporation, both of which are stock
corporations without interlocking directors.
a. Majority vote of the boards and majority vote of the outstanding capital stock of both managing and
managed corporations
b. Majority vote of the board and 2/3 vote of the outstanding capital stock of the managed corporation
c. Majority vote of the board and majority vote of the outstanding capital stock of the managing corporation
d. Majority vote of the board and 2/3 vote of the outstanding capital stock of the managing corporation
14. One of the attributes of a corporation is that it is an artificial being with a separate personality. As a result of
this attribute, the corporation:
a. Is not liable for torts committed by its officers or agents
b. Is liable for torts committed by its officers or agents
c. Is liable for forts by its stockholders
d. Is liable for torts committed by its stockholders and officers or agents
15. It is basic in Corporation Law that a corporation must have Articles of Incorporation, which may be amended
by the corporation through:
a. A 2/3 vote of its directors/ trustees and written assent of stockholders representing a majority of the
outstanding capital stock or majority of members in non-stock corporations
b. A majority vote of its directors/ trustees and written assent of stockholders representing a majority of the
outstanding capital stock or majority of members of non-stock corporations
c. A majority vote of its directors/ trustees and written assent of stockholders representing a 2/3 of the
outstanding capital stock or 2/3 of members of non-stock corporations
d. A majority vote of its directors or trustees
16. When any ostensible corporation is sued on any transaction entered by it as a corporation, it shall not be
allowed to use as a defense its lack of corporate personality since it is considered a
a. Corporation by estoppels
b. De facto corporation
c. Corporation de jure
d. Special corporation
17. The Articles of Incorporation is a contract between and among at least _____ parties.
a. Three
b. Two
c. Four
d. Five
18. A prohibition in the Articles of Incorporation and By-Laws that none of the directors shall engage in similar
competing or antagonistic business or activity to what the corporation is primarily engaged in
a. Is a valid and reasonable exercise of corporate authority
b. Is not a reasonable exercise of corporate powers
c. Is in consonance with the business judgment rule
d. Is in violation of fair competition in an industry
19. The power to determine whether or not the investment by the corporation is reasonably necessary to
accomplish its primary purpose as stated in its Articles of Incorporation is vested in the
a. Board of Directors
b. President
c. Stockholders representing 2/3 of the outstanding capital stock
d. Majority of Board of Directors and ratified by at least 2/3 of the outstanding capital stock
20. The residence of a corporation is where the
a. Principal place of business is situated as stated in the Articles of Incorporation
b. Head office is located
c. Majority of the incorporators reside
d. Majority stockholder/s reside/s
21. Stock dividend is distinguished from cash dividend in that
a. It is declared only by the board of directors
b. It requires approval of majority of the stockholders
c. It requires approval of 2/3 of the stockholders
d. It increases the authorized capital stock
22. Which of the following statements is true?
a. Redemption of redeemable stock may be done even if the corporation at that time has no unrestricted
earnings
b. The requirement that at least 25% of authorized capital stock must be subscribed applies only to non-
stock corporation
c. Directors are entitled to compensation as a matter of right
d. Derivative suits can be filed only by dissenting stockholders
23. Which of the following cannot be lawfully exercixed by a non-stock corporation?
a. Declare dividends
b. Elect directors
c. Amend the Articles of Incorporation
d. Adopt new By-laws
24. This share can be acquired by a corporation
a. Redeemable shares
b. Founders share
c. Par value shares
d. No-par value shares
25. Which of the following qualifications is necessary in order that one may be elected president of a corporation?
a. He must be a director of the corporation
b. He must be a citizen and a resident of the Philippines
c. He must not be a stockholder or director of a competitor corporation
d. He must not be a president of any other corporation
26. The holders of non-voting shares shall be entitled to vote on the following matters, except:
a. Election and removal of directors
b. Adoption and amendment of By-laws
c. Merger or consolidation
d. Investment of corporate funds in another corporation
27. Which of the following conditions will allow corporate formation and allow SEC registration?
Authorized Capital Subscribed Capital Paid-up Capital
a. P60,000 15,000 6,000
b. 200,000 50,000 9,500
c. 50,000 12,000 5,000
d. 100,000 49,000 12,000

28. Which of the following is correct regarding corporate officers of a stock corporation?
a. An officer of a corporation is required to own at least one share of the corporations stock
b. an officer may not simultaneously serve as a director
c. Corporate Secretary may or may not be a stockholder of the same corporation
b. Stockholders always have the right to elect corporation officers
29. X subscribed to a total of 1,000 shares of stock. His first subscription was for 600 shares which were fully paid
and he was issued a stock certificate for 600 shares. For his 2
nd
subscription of 400 shares, he only paid 40%. Is X
entitled to vote for the 1,000 shares?
a. Yes, since the unpaid shares have not been declared delinquent
b. No, but X is entitled to vote his 760 shares, corresponding to the total amount he paid
c. No, since X has not paid for the entire subscription
d. Yes, X is entitled to vote his entire subscription for he will be considered a debtor of the corporation for
the unpaid shares
30. A was one of the directors of X Corporation. B obtained a judgment against A and all of As shares of stock in X
Corporation were sold and both A and B appeared in the same meeting, each claiming the right to participate in
the deliberation of the Board. A contended that he had the right to continue as a director until the stockholders
could elect his successor. B, on the other hand, contended that having purchased all of As shares he had the right
to take the latters place in the Board. Under the rule of directorship which of the following is true?
a. Both A and B are disqualified to sit as directors in the Board
b. B can qualify because a corporation as well as the heirs of stockholders of the said corporation can
exercise the right of succession
c. As right as director continues until a successor has been elected
d. A should sit in the Board until his term as director expires
31. ABC Cement Corporation was organized primarily for cement manufacturing. Anticipating substantial profits,
its President proposed that the corporation engage in quarry operation for limestone used in the manufacture of
cement. What corporate approvals or votes are needed for the proposed amendments?
a. Approval by the board of directors
b. Majority of the board and approval by the stockholders representing 2/3 of the outstanding capital stock
c. Majority of the board and ratified by majority of the stockholders
d. 2/3 vote of the Board of Directors
32. One of the following is a process by which all assets of a corporation are converted into liquid assets (cash) in
order to facilitate the payment of obligations to creditors and remaining balance if any to be distributed to the
stockholders.
a. Liquidation
b. Dissolution
c. Winding up
d. Consolidation
33. When the articles of incorporation provide for non-voting shares, the holders of such shares shall nevertheless
be entitled to vote on the following matters, except:
a. Dissolution of the corporation
b. Sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of corporate
property
c. Amendment of the articles of incorporation
d. Incurring, creating, increasing, or assignment of bonded indebtedness
34. The pre-emptive right of a stockholder extends to the right to subscribe:
a. Only to new issues of shares arising out of an increase of the authorized capital stock
b. Only to the issuance of previously unissued portions of the authorized capital stock
c. To all issues of shares or dispositions of shares of any class
d. To all issues or dispositions of shares of any class other than redeemable or treasury shares.
35. A corporation after its dissolution shall continue to operate as a corporate body for three years except:
a. To distribute its assets
b. To dispose and convey its property
c. To prosecute and defend suits by or against it
d. To execute contracts to accomplish the purpose for which it was established.