BM1905

QUIZ ON POWERS OF A CORPORATION PT. 2

NAME: SECTION: DATE: SCORE:

MULTIPLE CHOICE: Encircle the letter of the correct answer. (25 items x 1 point)
1. Which of the following is NOT a requisite for the validity of bylaws?
a. It must not be contrary to the Corporation Code, any c. It must be discriminatory, oppressive and
law, and Articles of Incorporation. arbitrary.
b. It must not be contrary to morals and public policy. d. It must not impair obligations and contracts.
2. May the bylaws of a corporation prejudice or affect third persons who dealt with the corporation?
a. They cannot affect third persons who dealt with the corporation unless they have knowledge of the same
because bylaws operate merely as internal rules among stockholders.
b. As a general rule, they can affect because they are filed before the Securities and Exchange Commission
(SEC).
c. They can never affect or prejudice third persons.
d. They will always prejudice or affect third persons.
3. According to SEC ruling, what is the nature of subscription contract?
a. Divisible contract c. Either A or B
b. Indivisible contract d. Neither A nor B
4. What is the formality required by the Corporation Code for the validity and enforceability of subscription
contract?
a. It must be notarized. c. It must be registered with the SEC.
b. It must be in writing because it is covered by d. It may be in any form because it is perfected by mere
statute of fraud. consent.
5. In the absence of longer period stipulated in the contract of subscription, pre-incorporation subscription
shall be irrevocable for what period from the date of subscription?
a. Three (3) months c. One (1) year
b. Six (6) months d. Five (5) years
6. Which of the following statements shows where appraisal right may be exercised?
I. Corporation decides to sell or dispose of all or substantially all assets of corporation
II.Change in the rights of stockholders, authorize preferences superior to those stockholders, or restrict the right
of any stockholders
a. Statement I c. Both statements
b. Statement II d. None of the statements
7. When may the pre-incorporation subscription contract be allowed to be revoked?
I. When all of the other subscribers consent to II. Upon the expiration of the three (3) month period
the revocation
a. Statement I c. Both statements
b. Statement II d. None of the statements
8. It entitles the holder to the right to purchase from the issuer a pre-determined number of shares that
are already issued.
a. Subscription warrant c. Detachable warrant
b. Covered warrant d. Nondetachable warrant
9. It refers to a warrant that may not be sold, transferred or assigned to any person by the warrant holder
separate from, and independent of the beneficiary securities.
a. Subscription warrant c. Detachable warrant
b. Covered warrant d. Nondetachable warrant
10. It refers to a warrant that may be sold, transferred or assigned to any person by the warrant holder
separate from, and independent of, the corresponding beneficiary securities.
a. Subscription warrant c. Detachable warrant
b. Covered warrant d. Nondetachable warrant
11. It entitles the holder to the right to subscribe to a pre-determined number of shares out of the unissued
capital stock of the issuer.
a. Subscription warrant c. Detachable warrant
b. Covered warrant d. Nondetachable warrant

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12. This is a suit brought by the stockholder in behalf of himself and all other stockholders similarly situated
when a wrong is committed against a group of stockholders.
a. Derivative suit c. Representative suit
b. Individual suit d. Stockholder’s suit
13. This is a suit brought by one (1) or more stockholders/members in the name and on behalf of the
corporation to redress wrongs committed against it.
a. Derivative suit c. Representative suit
b. Individual suit d. Stockholder’s suit
14. This is a suit brought by the shareholder in his own name against the corporation when a wrong is
directly inflicted against him personally.
a. Derivative suit c. Representative suit
b. Individual suit d. Stockholder’s suit
15. It refers to the resolution or formal declaration of the board that the unpaid subscriptions are due and
payable.
a. Order c. Decision
b. Judgment d. Call
16. How many days shall lapse from the due date fixed in the subscription contract or from the date fixed
in the call made by the Board of Directors for the shares to be delinquent if still unpaid?
a. 15 days c. 30 days
b. 20 days d. 60 days
17. In the absence of any bidder, what shall happen to the delinquent shares and the related costs?
a. It shall be acquired by the corporation and c. It shall be acquired by the corporation and debited to
debited to expense. treasury shares.
b. It shall be acquired by the corporation and d. It shall be acquired by the corporation and debited to
debited to intangible asset. share premium.
18. Which of the following is NOT included in the proprietary rights of a shareholder?
a. To receive dividends when declared c. To participate in distribution of corporate assets upon
b. To possess and co-own corporate assets dissolution
d. To transfer of stock in the corporate book
19. What is the effectivity and validity period of voting trust agreement at any one time with the exception
of voting trust specifically required as a condition in a loan agreement whose period depends upon the
term of the loan?
a. A period not exceeding one (1) year c. A period not exceeding five (5) years
b. A period not exceeding three (3) years d. A period not exceeding 10 years
20. It is a privilege granted to a party to subscribe to a certain portion of the unissued capital stock of a
corporation within a specified period and under the terms and conditions of the grant and exercisable
by the grantee at any time within the period granted.
a. Stock options c. Warrant
b. Subscription contract d. Underlying shares
21. It is a type of security which entitles the holder the right to subscribe to the unissued capital stock of a
corporation or to purchase issued shares in the future.
a. Stock options c. Warrant
b. Subscription contract d. Underlying shares
22. It represents the equity ownership of a corporation divided up into units so that multiple people can own
a percentage of a business.
a. Certificate of stock c. Net assets
b. Equity in a corporation d. Shares of stock
23. It refers to the paper representation or tangible evidence of the stock itself and of the various interests
therein and expresses the contract between the corporation and the stockholder.
a. Certificate of stock c. Net assets
b. Equity in a corporation d. Shares of stock

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24. In which of the following causes of action is individual suit the proper remedy instead of derivative suit?
a. If there is wastage or improper diversion of corporate funds by reason if hiring officers whose main purpose
is to shield the chairman from criminal prosecution
b. Where the director of the corporation permitted the fraudulent transaction to go unpunished
c. To enforce preemptive rights in a corporation
d. None of the above
25. When may a corporation charge an interest on unpaid subscription not yet declared delinquent?
a. From the date of subscription regardless of provision in the by-laws and subscription contract
b. It cannot charge any interest.
c. From the date of subscription when required by subscription contract or by-laws at the rate fixed in the by-
laws or legal rate
d. Only from the moment there is judicial or extrajudicial demand

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