No. 125 Brgy.

San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

MCQs for CORPORATIONS C. Grandfather Rule

D. DOJ-SEC Control Test
1. It refers to an attribute of a corporation indicating a
strong juridical personality. 9. It refers to test wherein shares belonging to
A. An artificial being corporations at least 60% of the capital of which is
B. Created by operation of law owned by Filipino citizens shall be considered of
C. With right of succession Philippine nationality.
D. Having only such powers, attributes and properties A. FIA Test of Philippine National
expressly authorized by law or incident to its B. SEC Control Test
existence C. Grandfather Rule
D. DOJ-SEC Control Test
2. It refers to a theory that a corporation is a creature of
the State and of all its powers and capabilities are only 10. It refers to a rule by which the percentage of Filipino
to the extent that the laws and its charter has granted equity in a target corporation engaged in nationalized
it. and/or partly nationalized areas of activities, is
A. Theory of Concession computed by attributing the nationality of second or
B. Theory of Business Enterprise even subsequent tier ownership to determine the
C. Strong Juridical Personality nationality of the corporate shareholder.
D. Limited Liability of Stockholders A. Grandfather Rule
B. DOJ-SEC Control Test
3. It refers to a theory that a corporation is not merely as C. FIA Test of Philippine National
an artificial being, but more importantly as an D. SEC Control Test
aggregation of persons doing business through an
underlying economic unit. 11. It refers to those who compose the corporation.
A. Strong Juridical Personality A. Incorporators
B. Theory of Business Enterprise B. Stockholders
C. Theory of Concession C. Corporators
D. Limited Liability of Stockholders D. Members

4. First Statement: A non-stock corporation cannot be 12. Minimum and maximum number of incorporators
converted into a stock corporation through mere A. None; 15
amendment of its Articles of Incorporation. Second B. None; None
Statement: A stock corporation may be converted into C. 5; 15
a non-stock corporation by mere amendment provided D. 5; None
all the requirements are complied with.
A. Only the first statement is true. 13. It is the same amount that can be loosely termed as the
B. Only the second statement is true. trust fund of the corporation.
C. Both statements are true. A. Authorized capital
D. None of the statements is true. B. Paid-up capital
C. Capital
5. It refers to a corporation organized for the purpose of D. Capital subscribed
administering and managing, as trustee, the affairs,
property and temporalities of any religious 14. Any extension of corporate life cannot be made earlier
denomination, sect, or church, by the chief archbishop, than __ years before the end of its original term, unless
bishop, priest, minister, rabbi, or other presiding elder there are justifiable reasons for an earlier extension as
of such religious denomination, sect, or church. may be determined by the SEC.
A. Religious society A. 5
B. Corporation sect B. 4
C. Corporation sole C. 3
D. Special corporation D. 2

6. What is a minimum requirement of continued good faith
in case of a de facto corporation?
A. Submission of articles of incorporation
B. Issuance of certificate of incorporation by the SEC
C. Submission of by-laws
D. Use of corporate powers
7. It refers to a test where the nationality of the
corporation is determined by the nationality of its
controlling stockholders.
A. Primary place of incorporation test
B. Principal place of incorporation test
C. Control test
D. Grandfather test
8. It refers to a test where a Philippine national is
considered a corporation organized under the laws of
the Philippines of which at least 60% of the capital stock
outstanding and entitled to vote is owned and held by
citizens of the Philippines, or a trustee of funds for
pension or other employee retirement or separation
benefits, where the trustee is a Philippine national and
at least 60% of the fund will accrue to the benefit of
Philippine nationals.
A. FIA Test of Philippine National
B. SEC Control Test
15. If the life of the corporation is to be extended, there
must be an amendment of the articles of incorporation
which requires __ vote of stockholders (outstanding
capital stock) or members.
A. ½
B. Majority
C. 2/3
D. ¾
16. An amendment of articles of incorporation will be
effective only upon SEC approval; but should no action
be taken by SEC within __ months from the date of
filing, then automatically is deemed effective, provided
that delay be not attributable to the corporation.
A. 3
B. 6
C. 9
D. 12
17. A corporation commences to have corporate existence
and juridical personality and is deemed incorporated
only from:
A. The date the SEC receives the articles of
incorporation.
B. The date the SEC issues a certificate of
incorporation.
C. The date the articles of incorporation is notarized.

1|P a g e RLACO/DSALES/NVALDERRAMA
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

D. The date the articles of incorporation is completely D. Majority of the number of the board as fixed in the
signed. Articles of Incorporation

18. If the by-laws are filed with SEC within one month from 27. If a corporation is issuing five (5) no-par value shares
notice of issuance of certificate of incorporation, it shall to a subscriber, how much should the consideration in
be signed by: exchange be worth?
A. Directors or trustees voting for them A. P5.00
B. All directors or members B. P25.00
C. Stockholders or members voting for them C. P50.00
D. All stockholders or members D. No minimum amount required, since there is no
par value.
19. If the power to amend, repeal, and replace the by-laws
is delegated to the board of directors or trustees, it may
revoked by __ vote of the stockholders (outstanding 28. It refers to preferred shares where the shareholder is
capital stock) or members. entitled to recover dividends in arrears.
A. 2/3 A. Cumulative
B. Majority B. Non-cumulative
C. ½ C. Participating
D. ¾ D. Non-participating

20. It refers to powers that can be inferred from or
necessary for the exercise of the express powers.
A. Express
B. Implied
C. Incidental
D. Necessary
21. In the absence of a stipulation in the by-laws, when is
the time to determine one’s voting right?
A. At the time of election
B. At the start of the calendar year
C. At the start of the fiscal year
D. At the end of the previous calendar year
22. Any director or trustee of a corporation may be
removed from office, with or without cause, by a vote
of the stockholders holding or representing __ of the
capital stock, or if the corporation be a non-stock
corporation, by a vote of __ of the members entitled to
vote.
A. 2/3; majority
B. Majority; 2/3
C. Majority; majority
D. 2/3; 2/3
23. How is a directorship or trusteeship by reason of an
increase in the number of directors or trustees filled?
A. By written assent of the stockholders
B. By majority vote of the members of the Board
C. By an election at a regular or special meeting
called for the purpose
D. By appointment of the remaining members of the
Board if constituting a quorum
24. How can a vacancy caused by the resignation of a hold-
over director be filled?
A. By appointment by the President
B. By vote of the stockholders
C. By appointment by the Board of Directors
D. By vote of the remaining members of the Board
25. Where should the directors/trustees hold their regular
meetings?
A. Anywhere in the world
B. Anywhere in the Philippines
C. Anywhere in the city or municipality where the
corporation’s principal office is located
D. Anywhere in the region where the corporation’s
principal office is located
26. What is the quorum in a board meeting?
A. Majority of the number of the board as fixed in the
by-laws
B. 2/3 of the number of the board as fixed in the
Articles of Incorporation
C. 2/3 of the number of the board as fixed in the by-
laws
29. It refers to preferred shares that participates with
common shares after receiving its dividends at
preferred rate.
A. Cumulative
B. Non-cumulative
C. Participating
D. Non-participating
30. To be effective, the terms and conditions affecting
redeemable shares must be stated in the:
A. Articles of incorporation.
B. Certificate of stock representing such shares.
C. Articles of incorporation and by-laws.
D. Articles of incorporation and certificate of stock
representing such shares.
31. Founders’ shares form part of __ shares.
A. Preferred
B. Redeemable
C. No-par
D. Common
32. The privilege attached to founders’ shares can only be
good for:
A. 5 years from the date of approval by the SEC
B. 3 years from the date of approval by the SEC
C. 5 years from the date of incorporation
D. 3 years from the date of incorporation
33. It refers to a share issued without consideration.
A. Watered
B. Preferred
C. Bonus
D. Discounted
34. It refers to a share issued as fully paid when the
corporation has received a lesser sum of money than
its par or issued value.
A. Watered
B. Preferred
C. Bonus
D. Discounted
35. When is a stock dividend considered a watered stock?
A. When it is issue when there are no sufficient
retained earnings or surplus to justify it
B. When it is issued without consideration
C. When it is issued for consideration other than
actual cash, the fair value of which is less than its
par or issued value
D. When it is issued as fully paid when the corporation
has received a lesser sum of money than its par or
issued value

2|P a g e RLACO/DSALES/NVALDERRAMA
 No. 125 Brgy. San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com

36. A delinquent stockholder shall not be entitled to any of 44. Who will receive the summons and notices for the
the rights of a stockholder but he shall still be entitled foreign corporation?
to: A. Resident agent
A. Vote in meetings B. President
B. Receive dividends C. Secretary
C. Pre-emptive right D. Treasurer
D. Appraisal right
45. It refers to shares, participation, or interests in a
37. Who is the officer duly authorized to make entries on corporation or in a commercial enterprise or profit-
the stock and transfer book? making venture and evidenced by a certificate,
A. President contract, instrument, whether written or electronic in
B. Vice President character.
C. Corporate Secretary A. Securities
D. Treasurer B. Shareholdings
C. Stockholdings
38. If a voting trust is a requirement for a loan agreement, D. Certificate of Stock
how long can it be made effective?
A. 5 years 46. It refers to any corporation with a class of equity
B. 3 years securities listed on an Exchange or with assets in
C. 1 year excess of P50,000,000 and having 200 or more
D. Until full payment of the loan holders, at least 200 of which are holding at least 100
shares of a class of its equity securities.
39. In case the appraisal right is exercised, the fair value A. Public company
shall be agreed upon but in case there is no agreement B. Private company
within __ days from the date the vote was taken, the fair C. Large entity
value shall be determined by a majority of 3 D. Medium entity
disinterested persons one of whom shall be named by
the stockholder, another by the corporation, and the 47. It refers to a publicly announced intention by a person
third by the two who were chosen. acting alone or in concert with others to acquire equity
A. 60 securities of a public company.
B. 45 A. Call offer
C. 30 B. Tremendous offer
D. 90 C. Tender offer
D. IPO
40. It refers to a suit brought by one or more
stockholders/members in the name and on behalf of
the corporation to redress wrongs committed against
it, or protect/vindicate corporate rights whenever the
officials of the corporation refuse to sue, or the ones to
be sued, or has control of the corporation.
A. Individual
B. Representative
C. Derivative
D. Pre-emptive

41. When should stockholders/members hold its regular

meeting?
A. Annually on a date fixed in the by-laws
B. On any date in April of every year as the board may
determine
C. Not later than April 15 of every year
D. Monthly as called by the President

42. First Statement: Dead members should no longer be

counted for determining quorum.
Second Statement: In a board meeting, an abstention
is presumed to be counted as an affirmative vote in so
far as it may be construed as an acquiescence in the
action of those who voted affirmatively.
A. Only the first statement is true.
B. Only the second statement is true.
C. None of the statements is true.
D. Both statements are true.

43. In case of dissolution by shortening corporate term, the

corporation is deemed dissolved when?
A. Upon approval of the amended Articles of
Incorporation or upon expiration of the new term
B. Upon receipt of the amended Articles of
Incorporation
C. Upon filing of the amended Articles of
Incorporation
D. 60 days after filing the amended Articles of
Incorporation

3|P a g e RLACO/DSALES/NVALDERRAMA

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