IDENTIFICATION

Corporators of a corporation which has no capital stock.

● members

Maximum number of incorporators under the Revised Corporation Code.

● 15

It is a written acknowledgement by the corporation of the interest, right, and

participation of person in the management, profits, and surplus of a corporation.
● certificate of stock

A corporation formed, organized, or existing under any laws other than those of
the Philippines
● Foreign corporation

A corporation which has accepted from the state the grant of a franchise or
contract involving the rendition or performance of some public duty or service but
which is organized for profit.
● quasi-public corporation

A corporation, the capital stock of which is limited to not more than twenty
individuals.
● Close corporation

A corporation existing in fact and in law.

● de jure corporation

A corporation formed for the government of a portion of a state.

● public corporation

Minimum number of incorporators under the Revised Corporation Code.

● 1

it is a share which has been lawfully issued by the corporation and fully paid for
and later reacquired by it either by purchase, redemption, donation, forfeiture, or
other lawful means.
● Treasury share
A corporation existing in fact but not in law.
● de facto corporation

It is the unit of ownership in a stock corporation

● share of stock

A corporation which is so related to another corporation that it has the power

either to directly or indirectly elect the majority of the directors of such other
corporation.
● private corporation

A corporation begins to have corporate existence and juridical personality only

from the date of the issuance of the
● certificate of incorporation

It is an artificial being created by operation of law, having the right of succession

and the powers. attributes, and properties expressly authorized by law or
incidental to its existence.
● Corporation

A corporation which has exercised corporate powers for an indefinite period of

time without interference on the part of the sovereign power and which by fiction
of law is given the status of a corporation.
● corporation by prescription

Corporators mentioned in the articles of incorporation as originally forming and

composing the corporation and who executed and signed the articles of
incorporation as such.
● Incorporators

Owners of shares of stock in a stock corporation.

● stockholders

Where the fiction of a corporate entity is being used as a cloak or cover for fraud
or illegality, this fiction will be disregarded and the individuals composing it will be
treated as identical.
● Corporate veil
In a corporation, the power to do business and manage its affairs is vested in the
● board of directors

One which in reality is not a corporation because it is so defectively formed but is

considered a corporation in relation to those only who by reason of their acts or
admissions are precluded from asserting that it is not a corporation.
● Corporation by estoppel

A corporation incorporated under the laws of the Philippines.

● domestic corporation

Right of dissenting stockholders to demand payment for the fair market value of
their shares in cases provided by law.
● appraisal right

Right of stockholders to subscribe to all issue or disposition of shares of any

class, in proportion to their respective shareholdings.
● preemptive right

A person who apart from shareholdings and fees received from the corporation,
is independent of management and free from any business or other relationship
which could, or could reasonably be perceived to materially interfere with the
exercise of independent judgment in carrying out the responsibilities as a
director.
● Independent director

The governing body of the corporation through which all corporate powers are
exercised.
● board of directors

Questions of policy and management are left solely to the sound decision of the
board of directors. As long as it acts is good faith, in accordance with its by-laws
and Articles of Incorporation, the courts will not interfere.
● corporate veil
 TRUE AND FALSE

As a rule, a corporation is not liable for the debts of its stockholders, and the
latter are not individually liable for the corporation's debts.
● True

Corporations with certificates of Incorporation issued prior to the effectivity of the

Revised Corporation Code and which continue to exist shall have perpetual
existence.
● True

A tax exemption granted to the corporation cannot be extended to include the

dividends paid by such corporation to its stockholders.
● True

Each incorporator of a stock corporation must own or be a subscriber to at least

two shares of the capital stock.
● False

A corporation cannot come into existence by mere agreement of the parties.

● True

A corporation may acquire and possess property of all kinds as well as incur
obligations in its own name.
● True

A corporation shall have perpetual existence unless its articles of incorporation

provide otherwise.
● True

A corporation remains unchanged and unaffected in its identity by changes in its

individual membership.
● True

A corporation may exercise only such powers as are granted by law of its
creation. An express grant, however, is not necessary.
● True
Only natural persons can be incorporators under the Revised Corporation Code.
● True

The stockholders or members compose the corporation but they are not the
corporation.
● True

Natural persons who are licensed to practice a profession, and partnerships or

associations organized for the purpose of practicing a profession, shall be
allowed to organize as corporations.
● False

As a rule, a corporation has personality to bring an action for and in behalf of its
stockholders or members for the purpose of recovering property which belongs to
said stockholders or members in their personal capacities.
● False

The sale of all or substantially all of a corporation's assets occurs if the

corporation would be rendered incapable of continuing the business or
accomplishing the purpose for which it was incorporated and not when it is in the
regular course of trade or business.
● True

A corporation with a single stockholder is considered a One Person Corporation.

● True

Qualifications of directors or trustees. In general, Philippine citizenship is not a

requirement.
● False

If a quorum is present, nominees for directors or trustees receiving the majority of

votes shall be declared elected.
● True
A corporation whose term has expired may apply for revival of its corporate
existence subject to all of its duties, debts and liabilities existing prior to its revival
but not to all the rights and privileges under its certificate of incorporation.
● False

If a corporation has commenced its business but subsequently becomes

inoperative for a period of at least five consecutive years, the Commission may,
after due notice and hearing, place the corporation under delinquent status. A
delinquent corporation shall have a period of two years to resume operations.
● True

The non-holding of elections of directors or trustees shall be reported to the SEC

within thirty (30) days from the date of the scheduled election. The report shall
specify a new date for the election, which shall not be later than sixty (60) days
from the scheduled date.
● True

Directors hold office for 1 year until their successors are elected and qualified.
Trustees shall be elected for a term not exceeding two years from among the
members.
● False

Liability of directors, trustees or officers for damages is solidary.

● False

No corporate name shall be allowed by the Commission if it is not

indistinguishable from that already reserved or registered for the use of another
corporation, or if such name is not already protected by law, rules and
regulations.
● True

As a rule, contracts between corporations with interlocking directors are valid.

● False

The number of directors shall not be more than fifteen.

 ● True

A corporate term for a specific period may be extended or shortened by

amending the articles of incorporation. No extension may be made earlier than
two years prior to the original or subsequent expiry date(s).
● False

Actual use or exercise in good faith of corporate powers conferred upon it by law
is required to be considered a de facto corporation.
● True

Corporate franchise or certificate of incorporation may be revoked if a corporation

does not commence business operations within two years from the date of its
incorporation.
● False
●

In general, stock corporations shall not be required to have minimum capital

stock.
● True

To increase or decrease capital stock; incur, create or increase bonded

indebtedness requires majority vote of the board of directors or trustees and
assent of stockholders representing two thirds of the outstanding capital stock or
two-thirds of members.
● False

A stockholder is allowed to concentrate his votes and give one candidate as

many votes as the number of directors to be elected multiplied by the number of
shares shall equal.
● True

No application for revival of certificate of incorporation of banks, etc. shall be

approved unless accompanied by a favorable recommendation of the appropriate
government agency.
 ● True

Banking corporations are required to have independent directors consisting of at

least 10% of such board.
● False

The articles of incorporation or any amendment thereto may be rejected or

disapproved if it is not substantially in accordance with the form prescribed in the
law.
● True

The Commission shall not accept for filing any certificate of increase of capital
stock unless accompanied by a sworn statement of the treasurer of the
corporation lawfully holding office at the time of the filing of the certificate,
showing that at least twenty-five percent (25%) of the increase in capital stock
has been subscribed and that at least twenty-five percent (25%) of the amount
subscribed has been paid.
● True

To extend or shorten corporate term requires majority vote of the board of

directors or trustees and assent of stockholders representing two-thirds of the
outstanding capital stock or two-thirds of members.
● True

Removal of directors or trustees. As a rule, removal may be with or without cause

unless the director or trustee was elected by the minority stockholders or
members.
● False

Amendment of the articles of incorporation takes effect upon approval by the

SEC or from date of filing if not acted upon within 6 months from filing.
● True
Amendment of the articles of incorporation may be made by two-thirds vote of
the board of directors and vote or written assent of stockholders representing at
least a majority of the outstanding capital stock or majority of the members if it be
a non-stock corporation.
● False

The board of directors may create special committees of temporary or permanent

nature and determine the members' term, composition, compensation, powers,
and responsibilities.
● True

If a director, by virtue of such office, acquires a business opportunity which

should belong to the corporation, thereby obtaining profits to the prejudice of
such corporation, such director must account for and refund to the latter all such
profits, unless the act has been ratified by a vote of the stockholders owning or
representing at least two-thirds of the outstanding capital stock.
● True

The share of stock held by the director must be registered in his name in the
Stock and Transfer Book and such director must continuously own at least 1
share of stock during his term.

True

As a rule, a director is not entitled to any additional compensation as director. If

allowed, compensation cannot exceed 10% of net income before taxes of the
preceding year.

True

As a rule, dealings of directors, trustees or officers with the corporation are

voidable on the part of the corporation.

True

An arbitration agreement may be provided in the articles of incorporation.

False

The same person may hold two or more positions concurrently, except that no
one shall act president and secretary or as president and treasurer at the same
time.

True

In general, corporations are prohibited from retaining profits in excess of 100% of

paid-up capital.

False

At the meeting called for the election of Directors or Trustees, there must be
present in person or by written proxy, the owners representing two-thirds of the
outstanding capital stock or two thirds of members in non-stock corporations.

False

Stockholders or members may also vote through remote communication or in

absentia when authorized by the by-laws.

True

The board of directors or trustees must act together as a body in order to bind
the corporation by their acts at a meeting at which there is a quorum.

True

A person shall be disqualified from being a director, trustee or officer if within five
years prior to the election or appointment, such person was convicted by final
judgment of an offense punishable by imprisonment for a period exceeding five
years.

False
Election is by ballot unless there is a request by any voting stockholder or
member that it be by vivo voce.

False

To enter into a management contract requires majority vote of directors or

trustees and stockholders representing majority of the outstanding capital stock
or majority of the members of the managing and managed corporation.

True