1. Which of the following cannot be lawfully exercised by a 9.

Which of the following must be contained in a corporation’s

non-stock corporation? Articles of Incorporation?
a. Pay dividend a. Names of stockholders
b. Elect trustees b. Name of temporary treasurer
c. Amend the Articles of Incorporation c. Provisions for issuance of par and no par value
d. Adopt by-laws shares
d. Quorum voting requirement
2. A bond issue to pay-off prior floating indebtedness of the
corporation issuing it is called 10. Shares deposited by the seller or his agent with a bank or
a. Convertible bond third party to be delivered to the buyer or subscriber only
b. Equipment bond upon the fulfillment of the stipulated suspensive condition
c. Collateral bond a. Promotion shares
d. Funding bond b. Founders shares
c. Redeemable shares
3. A bond secured by stocks or other bonds or both which are d. Escrow shares
owned by the debtor, the securities being deposited with a
trustee for the bondholder is called: 11. A corporation cannot be an incorporator in the Philippines
a. Mortgage bond because only natural persons may become incorporators,
b. Collateral trust bond except
c. Equipment bond a. Cooperative as incorporator of rural bank
d. Debenture bond b. Eleemosynary corporations
c. Charitable organizations incorporated under the
4. Involuntary dissolution of the corporation is caused by Philippines laws
a. judicial decree of forfeiture or by order of the SEC. d. Corporation sole
b. legislative enactment.
c. failure to organize formally and commence the 12. Every decision of the directors or trustees shall be valid as
transaction of its business within two years from the a corporate act at which there is quorum by
date of incorporation. a. Majority of all members of the board
d. All of the above. b. Majority of the directors or trustees present
c. 2/3 vote of the members of the board
5. To revoke the power granted to the board to make the by- d. 2/3 vote of the directors or trustees present
laws.
a. Majority vote of the board and of the outstanding 13. The following are expressed powers of a corporation,
capital stock of the members except:
b. 2/3 of the outstanding capital stock of the members. a. To sue and be sued
c. Majority of the quorum of the board and 2/3 of the b. To adopt and use a corporate seal
outstanding capital stock of the members. c. To amend its Corporate Charter
d. Majority of the outstanding capital stock or of the d. None of the above
members.
14. The right of pre-emption shall not apply:
6. A corporate officer or director cannot take advantage their a. When such profit is denied in the corporate charter
personal benefit in business opportunity which the b. To share to be issued in compliance with the laws
corporation is financially able to undertake. requiring stock offering or minimum stock ownership
a. Doctrine of corporate fiction by the public
b. Trust fund doctrine c. To share to be issued in good faith with the approval
c. Doctrine of corporate opportunity of the stockholders owning 2/3 of the outstanding
d. Doctrine of limited capacity capital stock in exchange for property needed for
corporate purpose of a previously contracted debt
7. One of the following does not require stockholder’s d. All of the above
approval.
a. Merger or consolidation 15. Ultra vires act
b. Change of corporate name a. Acts which are beyond the powers expressly or
c. Investment of corporate funds for a purpose outside impliedly conferred upon the corporation
of the main purpose of the corporation b. Unenforceable
d. Declaration of cash dividend c. May be ratified by the stockholders
d. All of the above
8. The required minimum authorized capital stock for stock
corporation is: 16. The difference of a proxy and a voting trust agreement is
a. Not less than P5,000 a. Proxy is required to be notarized
b. 25% must be subscribed and 25% must be paid b. Voting trust agreement is not required to be
c. At least 25% must be subscribed and at least 25% notarized
must be paid and in no case shall it be less than c. Presence of the stockholder in the meeting where
P5,000 the proxy is given automatically cancels the proxy
d. None d. Voting trust must only be written
17. A, B, C, D and E organized a corporation. An article of
incorporation was prepared, signed and acknowledge
before a notary public and filed with the SEC. The
corresponding certificate of incorporation was issued. It
turned out, however, that A, B and C are not residing in the
Philippines. What is the status of the corporation?
a. De jure corporation
b. De facto corporation
c. Corporation by estoppel
d. None of the above
18. The SEC may reject the article of incorporation or
disapproved any amendments thereto if
a. The purpose or purposes of the corporation patently
unconstitutional, illegal or immoral
b. The treasurer’s affidavit concerning in the amount of
capital stock subscribed and/or paid is false
c. The required percentage of ownership of the capital
stock to be owned by the citizen of the Philippines
has not been complied with
d. All of the above
19. Incorporators
a. Any number of natural persons not less than 5 but
more than 15
b. Must own or be subscriber to at least 1 share of the
capital stock of the stock corporation to be formed
c. Need not be citizen of the Philippines
d. All of the above.
20. Director or trustees who willfully and knowingly vote for or
assent to patently unlawfully act of the corporation or who
are guilty of gross negligence or bad faith in directing the
affairs of the corporation or acquire any personal or
pecuniary interest in conflict with their duty shall be liable
a. As a trustee for the corporation
b. Criminally for violation of the corporation code
c. Jointly and severally liable for the damages suffered
by the corporation
d. None of the above
21. Which of the following is(are) valid consideration for the
purchase of stocks of a corporation?
I. Real estate
II. A negotiable promissory note in money
III. Monetary consideration for services to be
performed
a. I only
b. II only
c. Both I and III
d. Both II and III
22. Suppose “X’ Corporation has an authorized capital stock of
100,000 divided into 1000 shares of stock with par value of
100 each Subscribers:
A – 100 shares and paid 8,000
B – 160 shares and paid 100
C – 250 shares and paid 4,000
D – 50 shares and paid 5,000
E – 200 shares and paid 600
Which of the following subscription will qualify the Pre-
subscription requirement of Incorporation?
a. Combination of A and E
b. Combination of C and D
c. Combination of A and B
d. All of the above
23. Which of the following must be contained in a Corporation’s
Articles of Incorporation?
a. Names of stockholders
b. Name of the temporary treasurer
c. Provisions for issuance of par and no par value
shares
d. Quorum voting requirement
24. Which of the following is a disadvantage of forming a
corporation?
a. The existence of the entity is not affected by the
personal vicissitudes or of the individual
stockholders;
b. Free and ready transferability or ownership of shares
c. Subservience of minority stockholders to the wishes
of the majority subject only to equitable restraints
d. The shareholders are not liable for the debts of the
business.
25. In the matter if managing the business if the corporation,
the exercise if corporate power and handling of corporate
properties, this is supreme:
a. 2/3 approval of the stockholders of the corporation
b. Majority vote of the outstanding capital stockholders
of the corporation
c. Majority vote of the Board of Directors
d. The president of the corporation
26. To adopt by-laws
a. Majority of the outstanding capital stock or of the
members
b. Majority vote of the board and of the outstanding
capital stock or of the members
c. 2/3 of the outstanding stock or of the members
d. Majority vote of the board and 2/3 of the outstanding
capital stock or of the members.
27. In no case shall the total yearly compensation of directors
exceeds.
a. 5% of the net income before income tax during the
preceding year
b. 10% of the net income before income tax during the
preceding year
c. 10% of the net income after income tax during the
preceding year
d. 10% if the net income before income tax during the
current year
28. Directors can attend and vote by proxy at board meetings.
The articles of incorporation may expressly provide that
redeemable shares by a corporation may be purchased
upon the expiration of a fixed period, regardless of the
existence of unrestricted retained earnings in the books of
the corporation.
a. True; True
b. True; False
c. False; False
d. False; True
29. Three of the following statement are true; which is the
exception?
a. Redemption of redeemable stock is required even if
the corporation at that time has no unrestricted
earnings
b. The requirement that at least 25% of authorized
capital must be subscribed applies only to non-stock
corporation
c. Directors are entitled to compensation as a matter of
rights
d. Derivatives suits can be filed only by dissenting
stockholders.
30. Shall constitute a quorum for the transaction of corporate
business
a. 2/3 of the number of directors or trustee
b. Majority of the directors or trustees present
c. Majority of the number of directors or trustee as fixed
in the articles of incorporation
d. ¾ of the number of directors or trustee
31. To issue stock dividends
a. Majority vote of the board and 2/3 of the outstanding
capital stock
b. 2/3 of the outstanding capital stock
c. Majority of the outstanding capital stock
d. Majority of the quorum of the board and 2/3 of the
outstanding capital stock.
32. An action brought by a stockholder against the corporation
for direct violation of his contractual rights
a. Representative suit
b. Individual suit
c. Derivative suit
d. Corporate suit
33. To enter into management contracts, as a rule
a. Majority of the quorum of the board and majority of
the outstanding capital stock or of the members of
both the managing and managed corporations
b. Majority of the quorum of the board and 2/3 of the
outstanding capital stock of the managed
corporation
c. Majority vote of the board and majority of the
outstanding capital stock or of the members
d. 2/3 of the outstanding capital stock or of the
members.
34. The corporate powers of a corporation shall be exercised
by the stockholders.
The entire consideration received by the corporation for its
no-par value shares shall be treated as capital and shall not
be available for distribution as dividends.
a. True; True
b. True; False
c. False; False
d. False; True
35. The stockholders or members mentioned in the articles of
incorporation originally forming and composing the
corporation and who are signatories thereof are called
a. Incorporators
b. Promoters
c. Corporators
d. Subscribers
36. Unless the by-laws provide otherwise, written notice of
regular meetings shall be sent to all stockholders or record
a. At least one day prior to the meeting
b. At least two days prior to the meeting
c. At least one week prior to the meeting
d. At least two weeks prior to the meeting
37. Which of the following is true
a. Delinquent stock can be voted
b. Unpaid stock is necessary delinquent
c. Delinquent stock cannot be sold at public auction
d. Unpaid stocks are entitled to payment of cash
dividend
38. A corporation is a citizen of
a. The state of the country where its principal office is
situated
b. The state country where its principal business is
situated
c. The state or country where it is incorporated
d. All of the above
39. The liability of the stockholders for the payment of corporate
debts is limited to the value of the shares.
The entire consideration received by the corporation for its
no-par value share shall be treated as capital and shall not
be available for distribution as dividends.
a. True; True
b. True; False
c. False; False
d. False; True
40. Stocks which has been issued by a corporation as fully paid
up when in fact it is not, because it has been issued as
bonus or otherwise, without any consideration at all, or for
less than par, or for property, labor or services at an
overvaluation.
a. Watered stocks
b. Over issued stocks
c. Treasury stocks
d. Redeemable stocks
41. Which of the following qualifications is necessary in order
that one may be elected secretary of the corporation?
a. He must be a citizen and a resident of the Philippines
b. He must be a director of the corporation
c. He must be a stockholders of the corporation
d. He must be a secretary of any other corporation
42. Three of the following are similarities between a partnership
and corporation. Which is not?
a. The individuals composing both have little voice in
the conduct of the business
b. Both have juridical personality separate and distinct
form that the individuals composing them
c. Like a partnership, a corporation can act only
through agents
d. Both are organizations composed of an aggregate of
individuals
43. The right given to stockholder to dissent and demand
payment of the fair value of their shares is called
a. Right of proxy
b. Appraisal right
c. Pre-emptive right
d. Stock right
44. All of the close corporation’s issued shares shall be held of 51. This class of shares are those issued for no consideration
record by bot more than or inadequate consideration:
a. 10 persons a. Bonus shares
b. 15 persons b. Deferred shares or founders shares
c. 20 persons c. Over issued shares
d. None of the above d. Watered shares

45. A bond which is payable to a particular individual whose 52. The power to deny pre-emptive right as a corporate power
name is entered on the books of the corporation as the is classified as an:
registered owner is called a. Express power
a. Registered bond b. Incidental power
b. Coupon bond c. Implied power
c. Convertible bond d. Discretionary power
d. Guaranteed bond
53. The power to invest corporate funds in another corporation
46. The authorized capital stock of a proposed corporation is or business or for any other purpose as a corporate power
100,000 dividend 1,000 shares with a par value of 100 is classified as an:
each. At least 25,000 or 250 shares was subscribed by 25 a. Express power
subscribers. To meet the minimum amount of subscription b. Incidental power
that must be paid c. Implied power
a. It is enough that 25% of the total subscription is paid, d. Discretionary power
regardless of the amount paid by each individual
subscription 54. The power of conducting commercial contracts (to increase
b. Each and every subscriber must always pay 250 the business) and sponsoring athletic contest for
which is 25% of their individual subscription employees to keep them in good health or maintaining a
c. Seven of the subscribers paid 6,250 and the rest of hospital for the employees is an example of:
the subscribers a. Express power
d. None of the above b. Incidental power
c. Implied power
47. The owners of share in stock corporation are called d. Discretionary power
a. Incorporators
b. Promoters 55. To establish pension, retirement, and other plans for the
c. Members benefits of its directors, trustees, officers and employees is
d. Stockholders an example of:
a. Express power
48. The nationality of a corporation is determined by the law of b. Incidental power
its domicile or place of principal business. The test is known c. Implied power
as: d. Discretionary power
a. The control theory
b. The full absorption theory 56. A religious order is considered as a:
c. The incorporation theory a. Corporation by prescription
d. The management theory b. Public corporation
c. Corporation sole
49. This is unincorporated business organization created by an d. None of them.
instrument by which property is to be held and managed by
trustees for the benefit and profit of such person as may be 57. Place of residence of a corporation shall be its:
or become the holders of transferable certificates a. Place of incorporation
evidencing the beneficial interests in the estate b. Place of residence of majority of stockholders
a. Business Trust c. Place where the principal office is established
b. Close Corporation d. None of them
c. Condominium Corporation
d. Joint Stock Company 58. This shall constitute a quorum for transaction of corporate
business:
50. When preferred shares are issued by a corporation with a a. Majority of the members
fixed annual interest on the face thereof, the effect is: b. Majority of the stockholders
a. The contract of subscription is between the c. Majority of the directors
corporation and the stockholder subsists d. All of them
b. The stockholder is a plain investor who may rise or
fall with the financial success or failure of the 59. Juridical personality of a corporation begins:
corporation. a. From the date of issuance of certificate of
c. The stockholder is a creditor of the corporation incorporation
d. The shares of stock are negotiable instruments b. By agreement of the parties
under the Negotiable Instruments Law c. Acknowledgement before a Notary Public
d. None of them
60. Right which the existing stockholders of corporation cannot
be deprived without the consent is their right to subscribe or
to purchase new stock issued by the corporation; or
unissued original stock, in proportion to their holdings
before it can be offered to others:
a. Right of redemption
b. Pre-emptive right
c. Right to purchase
d. None of them
61. A private corporation organized under the corporation law
commences to have corporate existence and juridical
personality and is deemed incorporated from:
a. The date when the articles of incorporation is signed
by the incorporators
b. When the articles of incorporation and by laws are
presented and received by the Securities and
Exchange Commission and the filing fee is paid
c. From the date the SEC issues a certificate of
incorporation under its official seal
d. When the Articles of Incorporation is notarized by a
Notary Public
62. The following are the qualifications of incorporators .
Choose the exemption:
a. Majority of whom must be Filipinos
b. Majority of whom are residents of the Philippines
c. All are of legal age
d. Natural persons, not less than five but not more than
15.
63. These are the shares of stock which have been issued and
fully paid for, but subsequently reacquired by the issuing
corporation:
a. Redeemable shares
b. Treasury shares
c. Founder’s share
d. None of the three
64. In the amendment of the Articles of Incorporation of a stock
corporation, the following is necessary:
a. Amendment by the majority vote of the Board of
Directors plus a vote or written assent of the
stockholders representing at least 2/3 of the
outstanding capital stock.
b. Amendment by a vote of 2/3 of the stockholders
c. Amendment by the majority vote of the Board of
Directors
d. None of the three
65. Corporation governed by special laws, aside from the
requirements specified under the corporation laws, in order
that their articles of incorporation may be approved or
accepted, must present before the Security and Exchange
Commission:
a. A favorable recommendation from the Ministry of
Finance
b. A copy of previous income tax return and a
statement of assets, liabilities and net worth
c. A favorable recommendation of the appropriate
government agency to the effect that such articles or
amendment is in accordance with law.
d. An undertaking to change the name of the
corporation if found that there is already registered
with the SEC a name or a name similar to the name
of this corporation
66. The following are some of the requisites of a de facto
corporation. Choose the exception:
a. Valid law under which it is incorporated
b. Attempt to incorporate
c. Assumption of corporation power
d. None of the above
67. The following are the qualifications of director in a
corporation. Choose the exemption:
a. Majority of the directors must be Filipino citizens
b. He must own at least one share of the stock in his
name
c. Majority of the corporate directors must be residents
of the Philippines
d. He must not have convicted by final judgment of an
offense carrying an imprisonment exceeding 6 years
or an offense constituting a violation of the
Corporation Code
68. The secretary of a stock corporation shall be:
a. A director of the corporation
b. An incorporator of the corporation
c. A resident and citizen of the Philippines
d. Of legal age and citizen of the Philippines
69. Directors or trustees who willfully and knowingly vote or
assent to patently unlawful act of the corporation or who are
guilty of gross negligence or had faith in directing the affairs
of the corporation or acquire any personal or pecuniary
interest in conflict with their duty shall be liable:
a. As trustee for the corporation
b. Criminally for violation of the corporation code
c. Jointly and severally for the damages suffered by the
corporation
d. None of the above
70. The following are methods of dissolving a corporation:
a. Expiration of the term
b. Failure to organize and commence business within
two (2) years from date of issuance of certificate of
incorporation
c. Shortening of the corporate term
d. All of the above
71. Three of the following enumeration are not authorized to
issue no par value shares of stock. Which is the exception?
a. Insurance companies
b. Industrial companies
c. Public utilities
d. Trust companies
72. Any stockholder of a corporation shall have the right to
dissent and demand payment of the fair value of his share/s
in three of the following corporate acts. Which is the
exception?
a. In case of any amendment to the articles of
incorporation which has the effect of changing or
restricting the rights of any stockholder or class of
shares.
b. In case of merger or consolidation
c. In case of sale, lease, exchange, transfer, mortgage,
pledge or other disposition of all or substantially all
of the corporate assets and property of the
corporation.
d. In case of incurring, creating or increasing bonded
indebtedness
73. The authorized capital stock of a proposed corporation is 82. Three (3) of the following are similarities between a
P100,000 divided into 1,000 shares with a par value of partnership and a corporation. Which is not?
P100.00 each. The minimum amount of subscription that a. The individuals composing both have title voice in
must be paid is: the conduct of the business
a. P8,750 or 87.5 shares b. Both have juridical personality separate and distinct
b. P5,000 or 50 shares from that of the individuals composing them
c. P6,250 or 62.5 shares c. Like a partnership, a corporation can act only
d. P7,500 or 75 shares through agents
d. Both are organizations composed of an aggregate if
74. In the matter of management of the business affairs of a individuals
corporation, this is supreme:
a. Majority of the stockholders 83. One of the following is the limitation on proxies. Which is?
b. 2/3 of the stockholders a. Proxy acquires legal title to the shares of the stock
c. Board of Directors b. A proxy votes even in the presence of the
d. President of the corporation stockholder
c. The proxy is voted only for the meeting for which it
75. This is the equitable right of stockholders to subscribe to was intended
newly issued shares of the corporation in proportion to their d. A proxy is revocable at any time
present shares in order to maintain their equity in the
corporation. 84. The number of the Board of Trustees in a non-stock
a. Right of redemption corporation:
b. Concept of corporation entity a. Shall not be less than five but not more than eleven
c. Right to sue and be sued b. May be more than fifteen upon its organization
d. Pre-emptive right c. May be less than five upon its organization
d. Shall not be less than five but not more than fifteen
76. This is a written acknowledgement of an interest of a
stockholder in the corporation. 85. One of the following is a ground for the suspension or
a. A. Proxy revocation of the certificate of incorporation by the
b. Certificate of Stock Securities and Exchange Commission.
c. Share of stock a. If the corporation has commenced its business
d. Capital Stock transactions and afterwards ceased operation
continuously for a period of at least five (5) years
77. These are the persons who sign the Articles of b. If the corporation fails to commence and start to
Incorporation, who may or may not be subscribers of shares operate and the failure is due to causes beyond the
a. Incorporators control of the Corporation
b. Directors c. If the corporation does not formally commence its
c. Trustees business transaction and subsequently become
d. Promoters continuously inoperative for a period of two (2) years
d. None of the above
78. Choose the minimum requirement of the Corporation Law
to corporate formation: 86. Right of the corporation to continue as a juridical entity for
the term stated in the articles of incorporation despite the
Authorized Capital Subscribed Capital Paid-In Capital
death of any stockholder.
a. P100,000 P20,000 P5,000 a. Juridical personality
b. 100,000 20,000 4,000 b. Right of succession
c. 100,000 25,000 5,000 c. Pre-emptive right
d. 100,000 25,000 6,250 d. Right of existence

79. They provide and regulate the internal matters of the 87. Original signatories in the articles of incorporation are
corporation, such as calling the Board of Directors and called:
Stockholders meetings. a. Corporators
a. Board of Directors b. Stockholders
b. By-laws c. Promoters
c. Majority of Stockholders d. Incorporators
d. Articles of Incorporation
88. They regulate different internal matters of the corporation
80. This is an authority to vote in a corporation stockholders such as calling and defining the conduct of the meeting of
meeting. stockholders and directors.
a. Proxy a. Board of directors
b. Certificate of stock b. Articles of incorporation
c. By-laws c. By-laws
d. Share of stock d. Proxy

81. A gratuitous reissue of Treasury shares will result in: 89. The document conferring authority to vote stock in a
a. Capital surplus corporate meeting:
b. Watered stock a. Power of attorney
c. Additional profit b. Capital stock
d. Stock dividend c. Shares of stock
d. Proxy
90. Three (3) of the following are attributes of a corporation. 98. This is a document of a corporation acknowledging the
Which is the exception? interest of a stockholder in the corporation’s assets.
a. An artificial being a. Certificate of stock
b. Has the right of succession b. Share of stock
c. Has powers, attributes and properties expressly c. Capital stock
authorized by law or incident to its existence d. Stockholder’s equity
d. Created by agreement of the incorporators
99. In a corporation, any two (2) or more positions may be hels
91. Three of the following are qualifications of the Board of concurrently by the same person, except that no one (1)
Directors. Which is the exception? person shall act as:
a. He must own at least one (1) share of the capital a. Chairman of the Board and President
stock b. Secretary and Treasurer
b. At least majority of them are citizens of the c. President and Secretary
Philippines d. Treasurer and Director
c. The shares owned must be recorded in the books of
the corporation. 100. A corporation may invest its funds in any other corporation
d. He must continuously own at least one )1) share of of business or any purpose other than the primary purpose
the stock of the corporation for which it was organized, only if:
a. There is majority vote of the Board of Directors and
92. The voting requirement to increase or decrease capital ratified by the stockholders representing 2/3 of the
stock outstanding capital stock
a. Majority vote of the board of directors and consented b. It is reasonably necessary to accomplish its
by the stockholders representing two-thirds (2/3) of secondary purpose, the approval of the stockholders
the outstanding capital stock not necessary
b. Two-thirds (2/3) vote of the board of directors with c. There is a majority vote of the Board of Directors
the consent of majority of outstanding capital stock d. There is majority vote of the outstanding capital stock
c. Majority vote of the board of directors and with
consent if majority of the outstanding capital stock 101. The following are advantages of no-par value share of
d. Majority vote of the board of directors and three- stock. Which is the exception?
fourths (3/4) vote of the outstanding capital stock a. No-par value share allow flexibility in price
b. The stockholders of no-par value shares are relieved
93. A dividend payable partly in cash and partly in stocks, as to of personal liability for unpaid stock subscription
class of dividend, is a: c. It allows the issue of stock in exchange of property
a. Optional dividend d. No-par value shares afford a possible remedy or
b. Liquidation dividend relief from the evil of over-capitalization and stock
c. Property dividend watering
d. Composite dividend
102. The right to vote at meetings, the right to receive dividends
94. Bonds which are not secured by any specific mortgage lien and the right to receive copies of financial statements is
of pledge or corporate property but by the general known as:
corporation are: a. Right of existence
a. Guaranteed bonds b. Pre-emptive right
b. Income bonds c. Directors right
c. Debenture bonds d. Stockholder’s right
d. Redeemable bonds
103. The Garcia Realty Development Corporation has a capital
95. These are the rules and guidelines adopted by the stock of P1,000,000 divided into 10,000 shares with a par
stockholders of a corporation for the internal government. value of p100 each. 5,000 shares are ordinary share and
a. Rules and regulations 5,000 shares are 10% preference share. In 2008 there was
b. Minutes of the meetings no declared dividends but in 2009 dividends in the amount
c. Articles of Incorporation of P200,000 were declared. The holders of the preference
d. By-law share are entitled to receive:
a. P50,000 if cumulative, non-participating
96. A distribution by a corporation of shares held by it in another b. P125,000 in non-cumulative, participating
corporation is: c. P125,000 if cumulative, participating
a. Stock dividend d. P100,000 if non-cumulative, non-participating
b. Sales of capital asset
c. Property dividend of actual distribution of corporate 104. Persons who compose the corporation whether as
assets stockholder in a stock corporation or member in a non-stock
d. Sale of treasury stock corporation, are called:
a. Incorporators
97. Corporations organized by private persons performing b. Promoters
public function and for profit to private parties are: c. Subscribers
a. Public corporations d. Corporators
b. Government controlled corporation
c. Quasi-public corporation
d. Private corporation
105. In three of the following, these persons qualify to be
incorporators. Which is the exception?
a. Must have paid at least 25% of their subscription
b. Natural persons not less than five, not more than 15
c. Majority are residents of the Philippines
d. Need not be citizens of the Philippines
106. Dividends are declared and paid out of the
a. Paid-up capital
b. Capital stock
c. Net income of the current year
d. Unrestricted retained earnings
107. The following defect will preclude the creation of even a de
facto corporation:
a. The name of the corporation closely resembles that
of a pre-existing corporation that it will tend to
deceive the public
b. The incorporators or a certain number of them are
not residents of the Philippines
c. Lack of certificate of incorporation from the
Securities and Exchange Commission
d. Answer not given
108. The distinction between a proxy and a voting trust is that in
a voting trust:
a. The trust has a legal title to the shares of the
transferring stockholder
b. Unless coupled with interest, is revocable at any time
c. Is not limited to any particular meeting
d. Answer not given
109. The distinction between subscription of shares from
purchase of shares is that in subscription of shares:
a. It is an independent agreement between the
individual and the corporation to buy shares of stock
from it at a stipulated price
b. It takes place before or after incorporation and is
generally paid in installment or upon call.
c. In case of insolvency of the corporation, the
subscription price cannot be enforced on the theory
that the corporation can no longer perform its
obligation to deliver the certificate of stock
d. Answer not given
110. A corporation created in strict or substantial conformity with
the statutory requirements for incorporation and whose right
to exist as a corporation cannot be successfully attacked
even in a direct proceeding for that purpose by the State is
known as:
a. De jure corporation
b. De facto corporation
c. Corporation by estoppels
d. Answer not given
111. One of the characteristics of treasury shares is that:
a. They have the status of outstanding shares
b. They may not be reissued or sold again
c. They participate neither in dividends nor in the
meetings of the corporation as voting stocks
d. Answer not given
112. Which of the following will not qualify as incorporator of a
corporation?
a. A minor who is emancipated by voluntary concession
or marriage
b. A married woman without the consent of her
husband where the property involved in the act of
incorporation is paraphernal
c. A corporation
d. Answer not given
113. The articles of incorporation is required to state the names,
nationalities and residences of persons who act as directors
or trustees are duly elected and qualified. This requirement
is intended to provide a basis by which the Securities and
Exchange Commission could determine whether the
Articles of Incorporation has complied with the requirement
that:
a. At least a majority of the directors or trustees are
residents of the Philippines
b. All the directors or trustees are residents of the
Philippines
c. 2/3 of the directors or trustees are residents of the
Philippines
d. Answer not given
114. The power to revoke corporate franchise for causes
specified by law is vested only in the:
a. President of the Republic of the Philippines
b. Securities and Exchange Commission
c. Court of component jurisdiction
d. Answer not given
115. Corporate dissolution may take place by voluntary inaction
which will in the cessation of its corporate powers and the
corporation shall be deemed dissolved. Such dissolution
may result from:
a. Inaction by the corporation through its failure to
formally organize and commence with the
transaction of its businesses or the construction of its
works within two years from the date of its
incorporation
b. Failure of the corporation to submit the annual
reports required by the Securities and Exchange
Commission for a period of five years
c. Merger or consolidation with respect to absorbed
corporation
d. Answer not given
116. Watered stocks are shares of stock issued by a corporation
for a consideration in any form other than cash valued in
excess of its fair value. In this regard:
a. The issue by itself is void
b. The agreement that it shall be paid less than its par
or issued value is illegal and void and can not be
enforced
c. The subscriber and purchaser shall not be liable for
the full par value of the shares
d. Answer not given
117. The voting proportion required to enable a corporation to
invest its funds in any other corporation on business of 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
b. Majority vote of the board of directors and ratified by
majority of the stockholders
c. Majority of the board of directors and ratifies by 2/3
of the outstanding stockholders
d. Majority of the board of directors and ratified by 2/3
of the outstanding capital stock
118. An officer of a corporation may hold two or more positions
in the corporation but not as:
a. Chairman of the Board and President
b. President and Treasurer
c. Secretary and Treasurer
d. Vice President and Secretary
119. The right of a corporation to exist as juridical person during
its term as stated in its Articles of Incorporation despite the
death of any of its stockholders is:
a. Right of existence
b. Right of succession
c. Right of redemption
d. Pre-emptive right
120. The interest or right of the owner in the corporation’s profits
or in the net assets of the corporation on dissolution is:
a. Dividend
b. Certificate of stock
c. Share of stock
d. Capital
121. Requirement to effect the amendment of by-laws of a
corporation.
a. Majority vote of the board of Directors
b. Vote of 2/3 of the outstanding capital stock
c. Majority vote of the Board of Directors and majority
vote of the outstanding capital stock
d. Majority vote of the outstanding capital stock
122. The nationality of the corporation is determined by the place
of the controlling stockholders. This test is:
a. Control test
b. Incorporation test
c. Domicile test
d. Capitalalization test
123. The following person can not be incorporator of a
corporation.
a. A resident alien
b. A married woman without the consent of the
husband even if the payment of her shares is her
paraphernal property
c. A subscriber on the share of the corporation who
pays less than 25% of his subscription
d. A corporation organized under the laws of the
Philippines
124. One of the following is not required and does not form part
of the three-fold duty of directors of a corporation. Which
one?
a. Duty of diligence
b. Duty of obedience
c. Duty of loyalty
d. Duty of efficiency
125. These do not form part of the outstanding capital stock:
a. Bonus shares
b. Founder’s shares
c. Treasury shares
d. Redeemable shares
126. One of the following does not require stockholder’s
approval:
a. Merger or consolidation
b. Change of corporate name
c. Investment of corporate funds for a purpose outside
of the main purpose of the corporation.
d. Declaration of cash dividend
127. Under this test, a corporation is a national of the country
pursuant to whose laws it is incorporated:
a. Nationality test
b. Control test
c. Capitalization test
d. Incorporation test
128. Which of the following statements is not correct?
a. In the delinquency sale at public auction, the highest
bidder is one who offers to pay the full amount of the
balance of the subscription plus interest and
expenses of the sale for the highest number of
shares.
b. The sale of delinquent stock at public auction can be
stopped if the Board of Directors stops the sale for
valid reason.
c. Payment of unpaid subscription may not be enforced
by applying cash dividends to delinquent
stockholders.
d. The Board of Directors shall order, by resolution, the
sale of delinquent stock specifying the amount due
plus accrued interest, the place, time and date of the
sale
129. A stockholder who does not approve the action taken by the
Board of Directors in proposing to amend the Articles of
Incorporation is allowed to withdraw from the corporation in
one of the following instances:
a. Merger or consolidation
b. Investment of corporate funds in another corporation
c. Creating, incurring, increasing or decreasing any
bonded indebtedness
d. Shortening or prolonging corporate existence
130. Membership in a non-stock corporation and all rights arising
therefrom cannot be transferred even if provided in the
articles of incorporation or by laws because membership
and the rights arising therefrom are personal and non-
transferable.
Treasury stocks sold for less than par or issued value are
considered “watered stock” and as such are prohibited by
law.
a. True; True
b. True; False
c. False; False
d. False; True
131. Which of the following issuance of stocks is not allowed
under the Corporation Code of the Philippines (BP 68):
a. X Corp. issued preferred stock for P1 par value.
b. Y Corp. issued a no par value share for P10 per
share.
c. Metro Bank Corp. issued a no par value common
shares for P5 per share.
d. Malayan Insurance Corp. issued a preferred stock
for P4 per share.
132. Which of the following cannot be included as a valid
provision under the by laws:
a. The time, place and manner of calling and
conducting regular or special meetings of the
directors or trustees;
b. The time, place and manner of calling and
conducting regular or special meetings of the
stockholders or members;
c. The penalties for violation of the by laws
d. The time for holding the annual election of the
directors or trustees and the mode or manner of
giving notice thereof.
133. What is the voting proportion required for the voluntary
dissolution of the corporation?
a. Majority votes of the board of directors and 2/3 votes
of the outstanding capital stock.
b. Majority votes of the board of directors and majority
vote of the outstanding capital stock
c. Majority vote of the board of directors and 2/3 vote of
the stockholders
d. Majority vote of the board of directors and majority
vote of the stockholders
134. A corporation commences its existence from the issuance
of the certificate of incorporation, which one is the
exception?
a. Close corporation
b. Widely-held corporation
c. Religious corporation
d. Non-stock corporation
135. A subscribed to 1,000 shares of stock of X Corporation. She
paid 25% of the said subscription. During the stockholders
meeting, can A vote all her subscribed shares?
a. No, because the subscription has not yet been fully
paid.
b. No, because A's shares have become delinquent
which cannot be voted.
c. No as to the unpaid percentage of subscription.
d. Yes, because unpaid shares not delinquent can be
voted.
136. After dissolution but within the three-year period for
liquidation a corporation's term may still be extended by
amendment of its articles of inc-0rporation.
The dissolution of a corporation shall take place because it
has been in continuous inoperation for five-years.
a. True; True
b. True; False
c. False; False
d. False; True
137. The bay-laws may provide that the holders of a majority of
the outstanding capital stock may elect all the members of
the board of directors.
That it may also provide that no officer of the corporation
shall be required to be a stockholder.
a. True; True
b. True; False
c. False; False
d. False; True
138. Which of the following is not a requisite for a close
corporation?
a. The number of stockholders shall not exceed twenty.
b. That no close corporation is a stockholder thereof
owning at 2/3 of the voting stock.
c. There is a restriction in the transfer of shares.
d. There is no public offering of shares
139. The declaration of dividends out of the capital and not
surplus profits is violation of the doctrine of piercing the veil
of corporate fiction.
When the corporation is used as an alter ego or conduit to
avoid the performance of an obligation is violation of the
trust fund doctrine.
a. True; True
b. True; False
c. False; False
d. False; True
140. Majority of the following must residents of the Philippines,
except
a. Members of the board of directors
b. incorporation
c. Members of the board of trustees
d. Officers
141. Stockholders' meeting must be in the city or municipality
where the principal office is located while members meeting
of non-stock corporation may be outside thereof.
The secretary of the corporations must generally be a
citizen and resident of the Philippines.
a. True; True
b. True; False
c. False; False
d. False; True
142. Private corporations have the following attributes, except:
a. It is created by law as a juridical person.
b. It has the right of succession.
c. It may be formed, organized and existing under a
special law or charter.
d. It has the powers, attributes and properties expressly
authorized by the law or incident to its existence.
143. ln three of the following instances, shares with or without
voting rights can be voted, except:
a. Increase or decrease of capital stock
b. Dissolution of the corporation
c. Election of directors or trustees
d. Merger or consolidation with other corporation
144. One of the following does not have voting rights:
a. Preferred shares
b. Redeemable shares
c. Treasury shares
d. Common shares
145. The executive committee cannot act on this matter except:
a. Filling or vacancy in the board of directors
b. Cash dividend declaration
c. Board resolution on depository bank of the
corporation
d. Stock dividend declaration
146. 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.
147. ABC Corporation has an authorized capital stock of P1M
divided into 50,000 common shares and 50,000 preferred
shares. At its inception, the Corporation offered for
subscription all the common shares. However, only 40,000
shares were subscribed. Recently, the directors thought of
raising additional capital and decided to offer to the public
all the authorized shares of the corporation at their market
value. Would Mr. X, a stockholder holding 4,000 shares
have pre-emptive rights to the remaining 10,000 shares?
a. Yes, because all stockholders have pre-emptive
rights to all issues or dispositions of share of any
class in proportion to shareholding.
b. No, because he did not subscribe to them when
offered at incorporation.
c. Yes, if approved by 2/3 of the outstanding capital
stock.
d. No, because pre-emptive right applies only in case
of increase in the capital stock.
148. Based on the same facts, would Mr. X have pre-emptive
rights to the 50,000 preferred shares?
a. Yes, because all stockholders have pre-emptive
rights to all issues or dispositions of shares of any
class in proportion to shareholding.
b. No, because he did not subscribe to them when
offered at incorporation.
c. Yes, if approved by 2/3 of the outstanding capital
stock.
d. No, because pre-emptive rights apply only in
increase of capital stock.
149. The merger or consolidation of corporations become
effective upon approval by the constituent corporations of
the plan of merger or consolidation as the case may be.
After the merger, the absorbed corporation must undertake
dissolution and winding-up procedures.
a. True; True
b. True; False
c. False; False
d. False; True
150. Juan was a stockholder of X Corporation who sold his
shares to 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 forthwith 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 rightful owner being the 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.
151. When the preferred shares are issued by a corporation with
a fixed interest on the face thereof, the effect is:
a. The contract subscription subsists.
b. The said stockholder is a creditor of the corporation.
c. The said shares of stocks become negotiable
instruments.
d. The stockholder is a plain investor who may benefit
or suffer with financial success or failure of the
corporation.
152. Three of the following are not authorized to issue no-par
value shares. Which one of the exception?
a. industrial companies
b. Trust companies
c. Insurance companies
d. Public utilities
153. The corporation has a nine-member board. Two of the
members have sold their shares while two others are
abroad. To have a quorum, the number required is:
a. Seven
b. Three
c. Five
d. Four
154. A majority of the directors or trustees of all corporations
organized in the Philippines must be citizens of the
Philippines.
Any two or more positions may be held concurrently by the
same person, except that no one shall act as president and
secretary or as secretary and treasurer at the same time
a. True; True
b. True; False
c. False; False
d. False; True
155. When par value shares are issued above par, the premium
or excess is to be considered as part of the legal capital.
Shares issued without par value shall be deemed fully paid
and non-assessable and the holder of such shares shall not
be liable to the corporation or its creditors in respect thereto.
a. True; True
b. True; False
c. False; False
d. False; True
156. Which of the following corporate acts requires the approval 164. This is the equitable right of the stockholders to subscribe
of the majority of the outstanding capital stock or of the to all issues of shares in proportion to their shareholdings to
members. maintain their equity participation in the corporation:
a. To invest corporate funds in another corporation or a. Right of firm refusal in close corporation
business. b. Right to dividends date entity
b. To adopt, amend or repeat by-laws. c. Pre-emptive right
c. To dissolve the corporation. d. Appraisal right of dissenting stockholder
d. To amend the articles of incorporation.
165. In the matter of management of the corporation, this is
157. A distribution by a corporation of shares held by it in another supreme:
corporation is: a. Majority of the shareholders
a. Stock dividend b. Board of directors
b. Sale of treasury stock c. 2/3 of the stockholders
c. Sate of capital assets d. Officers of the corporation
d. Property dividend
166. This is the written acknowledgment of the interest of the
158. They are issued to those who helped in incorporating the stockholder in the corporation.
corporation or for services rendered in launching the a. Proxy
welfare of the same. b. Voting trust agreement
a. Preferred shares c. Share of stock
b. Stock in escrow d. Certificate of stock
c. Founders shares
d. Promotion stock 167. This is a public instrument giving authority to vote for
stockholder
159. A director of a corporation may be removed from the office a. Proxy
by a vote of the stockholders' holding representing: b. Stock certificate
a. Majority of the outstanding capital stock c. Voting trust agreement
b. 2/3 of the stockholder d. Voting trust certificate
c. 2/3 of the outstanding capital stock
d. Majority of the stockholder 168. A gratuitous reissue of treasury shares will result in:
a. Capital surplus
160. Three of the following are attributes of a corporation. Which b. Stock dividend.
is the exception? c. Watered stock
e. Created by agreement of the incorporators d. Property dividend
f. An artificial being
g. Has a right of succession 169. A certificate of stock is not a 069otlable instrument because
h. Has powers, attributes and property expressly it lacks the requirement of:
authorized by law or incident to its existence a. The instrument must be in writing and signed by the
maker or drawer.
161. As regards the corporate by-laws, which of the following is b. It must contain an unconditional order or promise to
false? · pay a sum certain in money.
a. To adopt majority of the outstanding capital stock is c. It must be payable to order or to bearer .
needed. d. It must be payable on demand or at fixed or
b. To delegate to the board of directors the power to determinable future time
amend, repeal or adopt new bylaws, 2/3 of the
outstanding capital stock 170. The number of trustees in a nonstock corporation may be:
c. To revoke the power delegated to the board to a. Not less than five years but not more than fifteen.
amend, repeal or adopt new by-laws, 2/3 of the b. Not less than five but may be more than fifteen.
outstanding capital stock. c. Not less than five but not more than eleven.
d. To amend, repeal or adopt new by-laws, majority of d. May be less than five and more than fifteen.
the outstanding capital stock.
171. Which of the following is a limitation on proxy?
162. The power to deny pre-emptive rights to stockholders is: a. The proxy acquires legal titles to the shares of the
a. Incidental power stockholder.
b. Implied power b. The proxy may attend the meeting even in the
c. Express power presence of the stockholder
d. Discretionary power c. The proxy as a rule for the meeting for the meeting
only for which it is issued.
163. As regards treasury shares, which is not correct? d. The proxy is not revocable at will of the stockholder.
a. They have no voting rights while in the treasury.
b. They may be distributed as property dividend if there
is surplus profit.
c. They are not entitled to dividends.
d. They are considered part of the earned or surplus
profits thus distributable as dividends.
172. For a de facto corporation to exist, it is necessary that it is
issued by the SEC a certificate of incorporation just like a
de jure corporation.
ln corporation by estoppel, those who represent themselves
as forming by a corporation are liable as stockholders to
third persons.
a. True; True
b. True; False
c. False; False
d. False; True
173. The following are requirements for incorporators. Which is
not?
a. Majority of them must be residents of the Philippines
b. Majority of them must be of legal age
c. They must be natural persons
d. They must be not less than five nor more than fifteen
in numbers
174. In three of the following corporate acts, dissenting
stockholders have appraisal rights 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 than primary
purpose.
d. Disposition of all or substantially all of the corporate
assets.
175. Stockholders with or without voting rights may vote on the
following matters except
a. Amendment of the articles of incorporation
b. Dissolution of the corporation
c. Election of directors
d. Adoption and amendment of by-laws
176. The nationality of the corporation determined by the
nationality of the stockholders in control of the same is
called:
a. Domicile test
b. Management test
c. Incorporation test
d. Control test
177. Directors and officers who approve illegal or fraudulent acts
or guilty of gross negligence or bad faith in conducting the
affairs of the corporation are liable jointly and severally.
In case of issuance of watered stock, only the directors and
officers who approved the same are liable for the "water" to
the corporation and creditors but not the stockholder who
received the shares.
a. True; True
b. True; False
c. False; False
d. False; True
178. Directors as a rule are entitled to compensation as directors
but not exceeding ten percent of the net income before tax
of the preceding year.
All private corporations in the Philippines shall be
incorporated under the Corporation Code which is a general
law.
a. True; True
b. True; False
c. False; False
d. False; True
179. For the contract between the corporation and its directors,
officers or trustees may not be voidable, the following are
conditions except:
a. The presence of the director or trustee is not
necessary for the quorum.
b. The contract is fair and reasonable under the
circumstances.
c. The vote of the director or trustee is not necessary
for the approval of the contract.
d. Ratification by majority of the outstanding capital
stock or members.
180. Redeemable shares may be taken up or purchased by the
corporation even in the absence of surplus profits.
Treasury shares may be reissued for a reasonable price
even below par value.
a. True; True
b. True; False
c. False; False
d. False; True
181. In case of shares owned in common by two or more
stockholders, the consent of either is enough to vote the
same.
The pledgee or mortgagee shall have the right to vote the
shares unless stipulated otherwise.
a. True; True
b. True; False
c. False; False
d. False; True
182. Contracts between corporations with interlocking directors
shall only be voidable and not void because of the nominal
interest of the director.
Management contracts shall be approved by 2/3 vote of the
directors and stockholders of both managed and managing
corporation.
a. True; True
b. True; False
c. False; False
d. False; True
183. Vacancy in the board of directors can be filled up by the
remaining directors in the following cases, except.
a. Increase in the number of directors
b. Resignation of a director
c. Death of a director
d. None of the above
184. The following are requisites for de facto corporation, except
one:
a. Valid law under which is incorporated.
b. Actual use of corporate powers.
c. Attempt in good faith to organize.
d. Non-issuance by the SEC of certificate of
incorporation
185. In open corporation, only in certain case do stockholders
have appraisal right of dissenting stockholders while in
close corporation stockholders can at any time for whatever
reason demand payment of surrendered shares.
In the former, there is no restriction in the transfer of shares
while in the latter there 1s in the form of the right of first
refusal of the corporation or stockholders.
a. True; True
b. True; False
c. False; False
d. False; True
186. The by-laws of a corporation may provide that the
stockholders or trustees meeting may be outside of the
Philippines.
The code of by-laws may be filed with the SEC either before
or after incorporation.
a. True; True
b. True; False
c. False; False
d. False; True
187. Which of the following statements is correct?
a. To sell lease, mortgage or otherwise dispose of all or
some of the corporate assets, majority vote of
directors or trustees and majority of the outstanding
capital stock or of the members is needed;
b. To enter into management contract, a majority vote
of the board of directors and majority of the
outstanding capital stock or of the members is
required;
c. To issue stock dividends, majority vote of the quorum
of the board of directors and majority of the
outstanding capital stock is required;
d. To invest corporate funds in another corporation or
business, majority vote of directors or trustees and
majority of the outstanding capital stock or of the
members thereof.
188. It is illegal to issue watered stocks. However, stocks issues
without any consideration at all is justified if such issues are
bonus shares.
A director is removed from office by a vote of the
stockholders holding at least 2/3 of the outstanding capital
stock. The vacancy occasioned by such removal can be
filled by the vote of the majority of the remaining directors if
still constituting a quorum.
a. True; True
b. True; False
c. False; False
d. False; True
189. The authorized capital stock of a proposed corporation is
P1,000,000 divided into 10,000 shares with a par value of
P100 each. The minimum amount of subscription that must
be paid up is
a. P62,500 or 625 shares
b. P75,000 or 750 shares
c. PS0,000 or 500 shares
d. P87,500 or 875 shares
190. Which of the following will qualify as incorporator in a
corporation?
a. A minor
b. Partnership
c. A corporation
d. Foreigner
191. The Corporation Code requires that:
a. At least a majority of the directors are residents of
the Philippines.
b. All of the directors or trustees are residents of the
Philippines.
c. All of the directors or trustees are citizens of the
Philippines.
d. Majority of the directors are citizens of the
Philippines.
192. 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.
b. Majority vote of the board of directors and ratified by
majority of the outstanding capital stock.
c. Majority vote of the board of directors and ratified by
2/3 of the outstanding the capital stock.
d. Majority vote of the board of directors and ratified by
2/3 of the stockholders.
193. Watered stock is share of stock issued by a corporation for
a consideration less than its par or issued value or for a
consideration in any form other than cash, valued in excess
of its par value. In this regard-
a. The agreement that it shall be paid for less than its
par value is illegal and void and cannot be enforced.
b. The issue itself is void.
c. The subscriber shall not be liable for full par value.
d. Answer not given
194. One of the following Is a ground for the suspension or
revocation of the certificate of incorporation by the S.E. C.
a. If the 90rporation fails to commence and start to
operate and the failure is due to cause beyond its
control;
b. If the corporation has commenced its business
transaction and afterwards ceased operations
continuously for a period of at least 5 years;
c. If the corporation has commenced its operations and
subsequently become continuously inoperative for
two years.
d. None of the above
195. The following are corporate acts in which a stockholder of a
corporation shall have the right to dissent and demand
payment of the fair value of his shares of stock, except one-
a. In case of an amendment to the articles of
incorporation which has the effect of changing or
restricting the rights of any stockholder.
b. In case of incurring, creating or increasing bonded
debts.
c. In case of merger or consolidation;
d. In case of sale, lease, mortgage or other disposal of
all or any corporate assets.
196. Subscriber Glow has a total 1,000 delinquent shares at P10
par value, to be sold at public auction sale. Total amount
recoverable ·includes: total amount of the delinquent
shares P10,000 and total expenses of the sale P 5,000.
Who will be declared the highest bidder among the following
bidders in the public sale?
a. M, who is willing to pay the P15,000 at 920 shares;
b. A, who is willing to pay the P15,000 at 950 shares;
c. N, who is willing to pay the P15,000 at 970 shares;
d. G, who is willing to pay the P15,000 at 900 shares.
197. The following are ways of enforcing payment of unpaid
subscription, which is the exception-
a. Filing a court action to recover unpaid subscription;
b. Sale at public auction of delinquent stocks;
c. Denying delinquent stock cash dividends;
d. Denying delinquent stock the right to vote and voted
upon.
198. A corporate doctrine which the stockholders are not
personally liable for corporate debts-
a. Piercing the veil of corporate fiction
b. Trust fund doctrine
c. Separate legal entity
d. Corporate opportunity
199. A stockholder who does not approve the action taken by the
Board of Directors in proposing to amend the articles of
incorporation is not allowed to withdraw from the
corporation in one of the following instances-
a. Creating, incurring, increasing or decreasing any
bond indebtedness
b. Shortening or prolonging corporate existence
c. Investing of corporate funds in another corporation
d. Merger or consolidation
200. Which of the following statement is not correct?
a. The sale of delinquent stock at public auction can be
stopped if the board of directors stop the sale for
valid reasons.
b. Payment of unpaid subscription may not be enforced
by applying cash dividends to delinquent
stockholders.
c. In delinquency sale at public auction the highest
bidder is one who offers to pay the full amount of the
balance of the subscription plus interest and
expenses of the sale for the highest number of
shares.
d. The board of directors shall order by resolution the
sale of the delinquent stock specifying the amount
due plus accrued interest, the place, time and date
of the sale.
201. One of the following does not require stockholders’
approval:
a. Change of corporate name
b. Merger or consolidation
c. Declaration of cash dividend
d. Investment of corporate funds outside main purpose
of the corporation
202. Which of the following is the disadvantage of forming a
corporation?
a. The subservience of minority stockholders to the
wishes of the majority subject only to equitable
restraints.
b. The free and ready transferability of ownership.
c. The shareholders are not liable for the debts of the
business.
d. The owner of succession the existence of the entirety
is not affect by the personal vicissitudes of the
individual stockholders.
203. The following are qualifications of corporate directors,
except:
a. Must own at least one share of stock.
b. Must not be convicted by final judgment with
imprisonment at least 6 yrs. and committed within 5
yrs. prior to election.
c. Majority are citizens of the Philippines.
d. Ownership of shares must be recorded in the books
of the corporation.
204. The following are the requisites except one, for valid
declaration and/or issuance of stock dividend.
a. Existence of original & unissued shares
b. Existing unrestricted retained earning
c. Dividends declaration by the Board of Directors and
approved by 2/3 vote of the outstanding capital
stock.
d. It is issued to increase the authorized capital.
205. Purely ultra vires acts of the officers of a corporation to
invest corporate funds in another business or corporation,
i.e., acts not contrary to law, morals, publics policy may be
ratified by:
a. Majority vote of all members of the board
b. Stockholders with 1/2 of voting power
c. Stockholders holding 2/3 of the voting power
d. Majority vote of the board present
206. Requirement to effect the amendment of the by-laws of a
corporation:
a. Majority vote of the board of directors
b. Majority vote of the outstanding capital
c. Vote of 2/3 of the outstanding capital stock
d. Majority vote of the board of directors and majority
vote of the outstanding capital stock
207. The interest or right of the stockholder in the corporations'
profits or in the net assets of corporation on dissolution is-
a. Shares of stock
b. Capital
c. Dividend
d. Certificate of stock
208. The right of a corporation to exist as juridical person during
its term as stated in the articles of incorporation despite the
death of any of its stockholders is:
a. Right of existence
b. Pre-emptive right
c. Right of succession
d. Right of redemption
209. The following cannot be incorporator of a corporation:
a. A corporation organized under Philippine laws
b. A resident alien
c. A married woman without the consent of her
husband even if the payment of shares Is
paraphernal property
d. Subscriber who pays less than 25% of his
subscription
210. One of the characteristics of treasury shares is that-
a. They may be reissued or sold again.
b. They have status of outstanding shares.
c. They may participate in the meeting of corporation
as voting shares.
d. They are entitled to dividends.'
211. Watered stocks are shares of stock issued by a corporation
for a consideration less than its par or issued value or for a
consideration in any form other than cash, valued in excess
of its par value. In this regard:
a. The agreement that it shall be paid for less than its
par value is illegal and void and cannot be enforced.
b. The subscriber or purchaser shall not be liable for the
full par value of the shares.
c. The issue itself is void.
d. The directors’ officers and stockholder are jointly
liable.
212. The distinction between proxy and voting trust is that in a 219. Corporators are incorporators.
voting trust: lncorporators are corporators.
a. The trustee has no legal title to the shares of the a. True; True
transferring stockholder. b. True; False
b. It is limited to any particular meeting. c. False; False
c. The stock certificate is not cancelled. d. False; True
d. The trustee may attend the stockholders' meeting
even in the presence of the stockholder trustor. 220. Which of the following statement is correct?
a. Eleemosynary corporation is one established for
213. The following defect will preclude the creation of even a de business or profit.
facto corporation: b. Corporation aggregate is one established for
a. The incorporators or a certain number of them are religious purposes.
not residents of the Philippines. c. Civil corporation is one established under the laws of
b. Lack of certificate of incorporation from the SEC. the Philippines.
c. Name of the corporation closely resembles that of a d. Lay corporation is one established for purposes
preexisting corporation and may deceive the public. other than religious.
d. There is actual use of corporate powers.
221. All of these shares do not have voting rights except:
214. The meetings of the Board of Directors of a stock a. Treasure shares
corporation may be held anywhere in the world. b. Delinquent shares
The meetings of the members of a non-stock corporation c. Preferred shares
may be held anywhere within the Philippines. d. Founders shares
a. True; True
b. True; False
c. False; False
d. False; True

215. The holders of non-voting shares shall nevertheless be

entitled to vote on the following matter:
a. Increase or decrease of capital stock
b. Dissolution of the corporation
c. Adoption or. Amendment of by-laws
d. Dividend declaration

216. Appraisal right means that whenever the capital stock of a

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

217. A foreign corporation doing business in the Philippines

without a license may be sued but it cannot sue. ·
A written demand for payment of the fair value of the shares
made in the exercise of the appraisal right will suspend the
stockholder's rights.
a. True; True
b. True; False
c. False; False
d. False; True

218. 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 other legal processes may be served in
all actions or other legal proceeding against such
corporation is called:
a. Resident director
b. Receiver
c. Resident agent
d. Trustee