Untitled

1.
The articles of incorporation differ from the by-laws in that articles of incorporation are:
a. the rules of action adopted by a corporation for its internal government.
b. adopted before or after incorporation.
c. a condition precedent in the acquisition by a corporation of a juridical personality.
d. approved by the stockholders if adopted after incorporation.
2. The following may be the consideration of the shares of stock of a corporation, except:
a. actual cash paid to the corporation.
b. previously incurred indebtedness of the corporation.
c. amounts transferred from unrestricted retained earnings.
d. service to be performed by a lawyer on the proposed increase in capital stock of the
corporation.
3. A certificate of stock is distinguished from share of stock in that a share of stock:
a. is the written evidence of a stockholder’s interest in the assets and management of a
corporation.
b. is tangible personal property.
c. is one of the units into which the capital stock is divided.
d. may not be issued if the subscription has not been fully paid.
4. The articles of incorporation of Acme Corporation provide for the issuance of 100,000 shares
without par value and an issued price per share of P10.00. At the time of incorporation, the
subscription and paid-up capital should not be less than:
a. P250,000.00 and P62,500.00, respectively.
b. P1,000,000.00 and P250,000.00, respectively.
P250,000.00 and P250,000.00, respectively.
d. P250,000.00 and P125,000.00, respectively.
5. Their names are mentioned in the articles of incorporation as originally forming the
corporation and are signatories thereof.
a. Corporators.
b. Stockholders.
c. Incorporators.
d. Members.
6. A corporation acquires juridical personality:

a. upon the filling of the articles of incorporation.
b. upon the filling of the by-laws.
c. upon the issuance of the certificate of incorporation.
d. within 30 days from the receipt of the notice of the issuance of the certificate of incorporation.
7. A delinquent stockholder is not entitled to the following rights, except the right:
a. to be voted.
b. to vote or be represented in the meetings of stockeholders.
c. to dividends.
d. He is not entitled to all the rights of a stockholder.
8. A, B, C, D, E, F and G are the duly elected directors for 2014 of Excellent Corporation whose
articles of incorporation provide for 7 directors. On August 1, 2014, Directors A, B, C, D and E
met to fill two vacancies in the board brought about by the valid removal of F for disloyalty to
the corporation and the death of G. In the said meeting, the remaining directors voted for X to
replace F, and Y, a son of G, to replace his father. Both X and Y are owners of at least one share
of stock of the corporation. The election of X and Y by the remaining director is:
a. valid for both X and Y.
b. not valid for both X and Y.
c. valid with respect to X; not valid with respect to Y.
d. not valid with respect to X; valid with respect to Y.
9. In the meeting of the board of directors of Grand Corporation, a construction company, held
on August 31, 2014, directors A, B, C, D and E were present among the 9 directors. The meeting
had for its agenda the following:
I. The appointment of a new treasurer.

II. The approval of the contract for the purchase of cement worth P50,000.00 from X
Construction Supplies Co.
When the voting took place, directors A, B, C and D voted for the election of Y as the new
treasurer; and directors A, B and C voted for the approval of the contract with X Construction
Supplies.
a. Both corporate acts are valid.
b. Both corporate acts are not valid.
c. The election of Y as the new treasurer is valid; the approval of the contract with X
Construction Supplies is not valid.
d. The election of Y as the new treasurer is not valid; the approval of the contract with X
Construction Supplies is valid.
10. Under this theory, the nationality of a corporation is that of the country under whose laws it
was formed.
a. Control test
b. Incorporation test
c. Domiciliary test
d. Grandfather rule
11. A corporation created in strict compliance with all the legal requirements and whose right to
exist as a corporation cannot be successfully attacked in a direct proceeding for that purpose by
the State is a:
a. de jure corporation
b. de facto corporation
c. corporation by estoppel
d. corporation by prescription
12. Stock dividends differ from cash dividends in that stock dividend:

a. do not increase the legal capital.
b. involve disbursements of corporate funds.
c. require the approval of both the board of directors and the stockholders.
d. once received by the stockholders, are beyond the reach of corporate creditors.
13. The subscriber of unpaid shares which are not delinquent shall be entitled to the following
rights, except the right to:
a. vote
b. inspect corporate books
c. a stock certificate
d. dividends
14. These statements pertaining to the right of a stockholder to inspect the books and records of a
corporation are presented to you for evaluation:
I. The right may be delegated to an agent.
II. The right may be denied if in the past, the stockholder improperly used the information which
he obtained from the books and records of another corporation of which he is also a stockholder.
a. Both statements are true.
b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true.
5. Under this doctrine, the separate personality of a corporation may be disregarded if it is used
for fraudulent or illegal purpose or to escape the faithful compliance of an obligation:
a. Trust fund doctrine
b. Doctrine of piercing the veil of corporate entity
c. Doctrine of corporate opportunity
d. Doctrine of limited capacity
16. Consolidation differs from merger in that in consolidation:

a. The surviving corporation shall enjoy all the rights, powers and attributes of a corporation
under the Corporation Code.
b. The existing liabilities of the constituent corporations shall be assumed by the surviving
corporation.
c. The corporate existence of all the constituent corporations shall be extinguished and a
new corporation emerges.
d. The surviving corporation shall possess all the rights, privileges, immunities and franchises of
the constituent corporations.
17. The right of a stockholder to demand payment of the fair value of his shares when he dissents
from certain corporate acts is known as:
a. pre-emptive right
b. appraisal right
c. redemption right
d. appreciation right
18. These statements pertaining to the meetings of directors are presented to you for evaluation:
I. Directors or trustees may attend or vote by proxy at board meetings.
II. The articles of incorporation or the by-laws of a corporation may provide for a greater
majority for its quorum during the meetings of the board of directors.
19. A stock that is issued without consideration or below par value or the issued price is known
as:
a. watered stock
b. delinquent stock
c. redeemable stock
d. preferred stock
20. A non-voting stock may vote in the following corporate acts, except in case of:
a. approval of the compensation of directors.
b. merger or consolidation
c. increase or decrease in capital stock
d. sale, lease, exchange, mortgage, pledge or other disposition of all or sustainability all of
corporate property.
21. Directors may be given compensation through any of the following ways, except by:
a. the vote of the stockholders representing at least a majority of the outstanding capital stock.
b. a provision in the by-laws.
c. the vote of the board of directors if the compensation is a reasonable per diem.
d. the vote of the board of directors if the compensation is other than per diems.
22. A is a director and owns 50% of the outstanding capital stock of Ace Corporation which is
engaged in the trading of computers. Ace Corporation purchased computer tables from Top
Corporation of which A is also a director and owns 15% of its outstanding capital stock. The
articles of incorporation of both corporations provide for 5 directors. In the approval of
the contract for the said purchase, A did not attend the meeting of the board of directors of Ace
Corporation, while in the meeting of the board of directors of Top Corporation which was called
for the same purpose, directors A, B, C and D were present with all of them voting for the
approval of the contract. Assuming that there is no fraud and that the contract is fair and
reasonable under the circumstances, the contract between Ace Corporation and Top Corporation
is:
a. valid
b. voidable at the option of Top Corporation
c. unenforceable against Top Corporation
d. void because corporations with interlocking directorate should not enter into a contract with
each other.
23. One of the following acts may be performed by the executive committee of a corporation.
Which is it?
a. Declaration of stock dividends
b. Filling of vacancies in the board of directors
c. Amendment or repeal of the by-laws or adoption of new by-laws
d. Approval of contracts in the ordinary course of business
24. The following statements pertain to the express powers of a corporation.

I. A corporation may establish pension, retirement, and other plans for the benefit of its directors,
trustees, officers and employees.
II. A corporation may make donations for the benefit of a political party or candidate or for
purposes of partisan political activity provided the donations are reasonable.
25. Which of the following by-laws is valid?

a. A by-law which provides that one need not be the owner of a share of stock to become a
director of the corporation.
b. A by-law which provides that that one must be the owner of more than one share of
stock of the corporation to become a director.
c. A by-law which provides that one can continue to be a director throughout his term although
he has disposed all his shares in the corporation.
d. A by-law which provides a greater number of directors that that stated in the articles of
incorporation.
26. Winner Corporation, a dealer-manufacturer of garments and with principal office in

Caloocan City, held the meeting of its stockholders in Nasugbu, Batangas, in conjunction with its
annual company outing. Stockholders owning 75% of the capital stock were present, while 25%
were duly represented by proxies. In the said meeting, the corporation by a vote of the
stockholders representing 80% of the capital stock, approved the purchase of sewing machines
worth P5,000,000.00. The by-laws of the Corporation provide that contracts in excess of
P3,000,000.00 must be ratified by the stockholders. The contract for the purchase of the sewing
machines was unanimously approved by the board of directors before it was presented to the
stockholders for ratification. S, a stockholder who did not vote for the approval of the resolution,
now questions its validity on the ground that the meeting was held outside the place where the
principal office of the corporation is located. What is the status of the contract for the purchase of
the sewing machines?
a. Void
b. Valid
c. Unenforceable
d. Voidable
27. Which of the following statements pertaining to non-stock corporations is incorrect?
a. Members may vote by mail.
b. The number of trustees may be more than 15.
c. Any incidental income that it may earn may be distributed as dividends to its members.
d. The meetings of members may be held outside the city or municipality where the principal
office of the corporation is located.
28. A corporation may acquire its own shares for a legitimate purpose provided it has
unrestricted retained earnings. In which of the following acquisitions is the requirement of
unrestricted retained earnings not imposed?
a. When the acquisition is made to eliminate fractional shares.
b. When delinquent shares are acquired in a delinquency sale.
c. When redeemable shares are repurchased in accordance with the terms provided in the
articles of incorporation.
d. When shares are acquired from stockholders who exercise their appraisal right.
Items 29, 30 and 31 are based on the following information:
Danilo, a resident of Malolos, Bulacan obtained a loan from the Rural Bank of Sta. Rosa, Nueva
Ecija amounting to P90,000.00. The loan is secured by a pledge of shares of stock of Saint
Michael Corporation covered by 3 stock certificates of 1,000 shares each, which certificates are
registered in the name of Servando, a friend of Danilo. The current market value of the shares
based on the records of the Philippine Stock Exchange is P30.00 per share. Other than pledge of
the shares, no other document or information is recorded in the books of San Michael
Corporation at its office in Pasig City.
29. Who is entitled to vote the shares of stock in the stockholders’ meeting?
a. Danilo
b. Servando
c. Rural Bank of Sta. Rosa
d. None, the right to vote the shares is suspended while the pledge constituted on the shares is
existing.
30. The pledge in order that it may bind third persons requires the following:
a. The deed of pledge must be accompanied by an affidavit of good faith and recorded in the
Register of Deeds of Pasig
b. It must be in a public instrument showing a description of the thing pledged and the date of the
pledged and registered in the Register of Deeds of Pasig.
c. The pledge must be in a public instrument showing a description of the thing pledged
and the date of the pledge. Registration in the Register of Deeds is not required.
d. The deed of pledge must be accompanied by an affidavit of good faith and recorded in the
Register of Deeds of Pasig and the province of Bulacan.
31. Danilo pays the Rural Bank of Sta Rosa the sum of P30,000.00. May Danilo demand the
cancellation of the pledge of 1,000 shares of stock by reason of such payment?
a. No, Danilo has to pay his obligation of P90,000.00 in full before he can demand any
cancellation of the pledge of the shares of stock.
b. Yes, Danilo can demand cancellation of the pledge of 1,000 shares because the market value
of the same is equivalent to the payment of P30,000.00 that was made.
c. No, Danilo can demand cancellation of the pledge only if he has paid more than 50% of his
debt.
d. Yes, Danilo can demand cancellation because the pledge of each of the 3 stock certificates is
independent of one another.
32. S is the registered owner of 500 shares of stock of XYZ Corporation whose articles of
incorporation provide for 11 directors. In the annual election of directors for 2014, 12 position,
namely, A, B, C, D, E, F, G, H, I, J, K and L. K and L are minority stockholders whom S wishes
to elect to represent him and the other minority stockholders in the board. In the said election of
directors, S may cast a maximum of:
a. 500 votes
b. 6,000 votes
c. 5,500 votes
d. 1,000 votes
33. One of the distinctions between a partnership and a corporation is that a partnership:

a. is managed by a board of directors.
b. is characterized by the principle of delectus personae.
c. has the right of succession.
d. may be dissolved only with the consent of the State.
34. One of the distinctions between a proxy and a voting trust agreement is that in a voting trust
agreement:
a. the representative acquires legal title to the shares to be voted.
b. the exercise of the right to vote is limited to a particular meeting.
c. the representative cannot vote if the stockholder is present during the meeting.
d. the agreement need not be recorded with the Securities and Exchange Commission.
35. Which of the following statements is false concerning treasury shares?

a. They are entitled to dividends.
b. They have no voting right.
c. They may be disposed of for a price lower than the par value provided such price is
reasonable.
d. They are not outstanding shares.
36. Which of the following will cause the automatic dissolution of a corporation?

a. Continuous inoperation for a period of at least 5 years
b. Failure to formally organize and commence the transaction of its business or the
construction of its works within 2 years from its incorporation
c. Failure to adopt by-laws and submit the same to the Securities and Exchange Commission
within 30 days from the receipt of the official notice of the issuance of its certificate of
incorporation
d. Commission by the corporation of an ultra-vires act
37. Which of the following statements pertaining to no-par shares is incorrect?
a. Subscriptions to no-par shares are deemed fully paid and non-assessable
b. Shares without par value may not be issued for a consideration of less than P5.00 per share
c. No-par shares may not be issued by banks, trust companies, insurance companies, public
utilities and building and loan associations
d. Subscriptions to no-par shares in excess of the issued price shall be available for
distribution as stock dividends.
38. A, B, C, D, E, F, G, H and I are directors of Strong Cement Corporation whose articles of

incorporation provide for 9 directors. In the meeting of September 2014, directors A, B, C, D,
and E were present to approve a contract for the purchase of cement bags from E who deals in
the said product. The contract was deliberated upon exhaustively by the said directors in the
meeting including E. When the voting took place, however, only A, B, C and D who found the
contract fair and reasonable under the circumstances, voted for its approval. The contract
between the corporation and E is:
a. Valid and enforceable
b. Voidable at the option of the corporation
c. Unenforceable against the corporation
d. Void because a corporation must not enter into a contract with any of its directors since a
director occupies a position of trust
39. A, B, C, D and E distributed calling cards identifying themselves as directors of Summit

Corporation, to several individuals during business conference. In reality, however, no such
corporation is registered with the Securities and Exchange Commission. X, who received a
calling card granted credit amounting to 50,000.00 to "Summit Corporation" believing that such
a corporation really existed. When the supposed corporation was unable to pay, X brought a
court action against it. At that time, "Summit Corporation" had assets of P30,000.00.
a. " Summit Corporation" is liable only up to P30,000.00, its remaining assets, since it is
different from A , B, C, D and E who are not liable in their individual capacíties.
b. X can go after the separate assets of A, B , C, D and E after exhausting the assets of "
Summit Corporation ."
c. A , B, C, D and E can move for the dismissal of the court action because "Summit Corporation
" has no personality of its own.
d. X cannot allege the lack of juridical personality on the part of "Summit Corporation" because
he is estopped from doing so.
40.Which of the following subscriptions does not comply with the subscription and paid-up
capital requirements at the time of incorporation ?
Authorized, Subscribed, Paid-up
a. P1,000,000.00 250,000.00 62,500.00
b. 300,000.00 75,000.00 500,000.00
c. 100,000.00 100,000.00 100,000.00
d. 50,000.00 12,500.00 3,125.00
41. An auditing firm composed of Certified Public Accountants may validly form:
I. a partnership
II. a corporation
 a. The statement is true with respect to both business organizations.
 b. The statement is false with respect to both business organizations.
 c. The statement is true with respect to partnership; false with respect to corporation.
 d. The statement is false with respect to partnership; true with respect to corporation.
 42 A, B, C, D, E, F and G are directors of Commonwealth Appliances Corporation, a trader
of appliances, whose articles of incorporation provide for 7 directors . On September 1, 2014, the
board of directors met to approve a contract for the purchase of appliances from A who is an
importer of appliances. Present during the meeting were A, B, C, D and E with A, B, C and D
voting for the approval of the contract . Assuming that the contract is fair and reasonable under
the circumstances, what is the status of the contract between the corporation and A ?
 a. Valid
 b. Voidable
 c. Unenforceable
 d. Void
 43 Alpha Corporation's articles of incorporation provide for 7 directors and an authorized
capital stock of P1,000,000.00 divided into 10,000 shares with a par value of P100.00 per share.
In the election of directors for 2010, the following ran for the position: A, B, C, D, E, F, G and
H. On that date, the corporation had 7,000 outstanding shares of which 5,000 shares had been
paid in full, while 2,000 shares were paid to the extent of 50% of the subscription price. All the
shares were subscribed at par value and covered by a binding subscription agreement. If you
were a stockholder who owns 500 shares, how many votes are you entitled to cast in the election
of directors?
 a. 500 votes
 b. 3,500 votes
 c. 4,000 votes
 d. 7 votes
 44. Refer to the information in the preceding number. The number of shares issued by the
corporation is:
 a. 7,000 shares
 b. 5,000 shares
 c. 6,000 shares
 d. 10,000 shares
 45. Alpine Corporation obtained a loan amounting to P1,000,000.00 from Eastern Bank. To
secure the obligation, P, the president of Alpine, mortgaged his own building in favor of
the bank. The contract of loan and deed of mortgage have been signed by the parties but have not
been acknowledged before a notary public.
 a. Alpine Corporation and P are one and the same person
 b. P may validly mortgage his own property to secure the obligation of Alpine to the bank
 c. The mortgage is not yet binding between the parties since it has not been notarized
 d. The mortgage contract can stand independently from the contract of loan
 46. On May 1, 2015, S subscribed to 1,000 shares of stock of Sigma Corporation at the par
value of P10.00 per share. Pursuant to the policy of the corporation which requires a down
payment of 60% of the subscription price, S paid P6,000.00 upon the execution of the
subscription contract. The balance of the subscription must be paid after 30 days, which in the
case of the subscription of S, is May 31, 2015.
a. Upon the execution of the subscription contract, S may demand the issuance to him of a stock
certificate covering 600 shares.
b. S is already qualified to vote although he has not yet paid his subscription in full.
c. If S fails to pay the balance of his subscription on May 31, 2015, his shares will become
delinquent on June 1, 2015
d. In case of delinquency, only 400 shares will be considered delinquent.
47. Which is the operative act that will give juridical personality upon a corporation?
a. The filing of the articles of incorporation.
b. The filing of the by-laws.
c. The issuance of the certificate of incorporation.
d. The execution by the incorporators of the articles of incorporation which is the contract among
themselves.
Items 48, 49 and 50 are based on the following information:
The articles of incorporation of XYZ Corporation provide, among other matters, for an
authorized capital stock of P1,000,000.00 divided into 10,000 shares at P100.00 par value per
share. Five thousand (5,000) shares have been subscribed at P100.00 per share of which 3,000
shares have been paid in full while 2,000 shares have been paid at 80% of the subscription price.
Of the 3,000 shares paid in full, 100 shares were reacquired at par value.
 48. The issued capital stock of the corporation is:
 a. P360,000.00
 b. P500,000.00
 c. P300,000.00
 d. P290,000.00
 49. The outstanding capital stock of the corporation is:
 a. P1,000,000.00
 b. P500,000.00
 c. P490,000.00
 d. P290,000.00
 50. The subscribed capital stock of the corporation is:
 a. P500,000.00
 b. P490,000.00
 c. P190,000.00
 d. P200,000.00
 51. How many shares are needed to elect 3 directors and assure each of them a seat in the
board of directors assuming that the articles of incorporation provide for 11 directors and the
corporation has 5,000 shares outstanding and entitled to vote?
 a. 1,251 shares
 b. 5,000 shares
 c. 1,667 shares
 d. 1,364 shares
 52. Sevilla owned a 5-storey building where he operated at the ground floor Café de Seville, a
restaurant which was frequented by the tenants of the building and the employees of the
neighboring establishments. He also owned an adjoining vacant lot which Benitez had been
offering to buy for some time. Eventually, Sevilla sold the vacant lot to Benitez under an
agreement that Benitez should not put up any restaurant catering similar business on the lot
within 5 years from the time of sale. Benitez completed the construction of a building on the lot
in 6 months and admitted lessees including Peggie's Place, an eatery managed by Peggie,
Benitéz's sister, and owned by Golden Spoon Corporation which was incorporated just three
months earlier at the instance of Benitez as principal stockholder owning 95% of the subscribed
capital and Peggie and other investors as minority stockholders. Sevilla now complains that
Benitez violated his agreement with him but Benitez contends that Golden Spoon is a different
company.
 a. Benitez did not violate the agreement because Golden Spoon has a personality separate and
distinct from that of Benitez.
 b. Benitez violated the agreement because under the circumstances, he and the Golden Spoon
Corporation should be considered as one.
 c. Benitez did not violate the agreement because the eatery is being managed by another
person.
 d. Sevilla has no course of action against Golden Spoon under the Principle of Relativity of
Contract because Golden Spoon was not a party to the agreement between him (Sevilla) and
Benitez.
 53. The articles of incorporation of Alco corporation, a construction company, classify its
shares into voting common stock and non-voting preferred stock, and provide for 11 directors. Its
bylaws, on the other hand, give the board of directors the authority to approve transactions not
exceeding P2,000,000.00. Any transaction in excess of the said amount have to be ratified by the
stockholders. In which of the following cases may the preferred stock vote?
 a. Approval of a loan amounting to P3,000,000.00 from Equitable Bank.
 b. Declaration of stock dividends from the unissued common stock.
 c. Increase in the number of directors from 11 to 15.
 d. Purchase of cement worth P2,500,000.00 from Davao Cement Corporation.
 54. Which of the following statements pertaining to treasury shares is incorrect?
 a. Treasury shares are not part of subscribed capital stock.
 b. Treasury shares may be disposed of at a price lower than the par or issued price provided it
is reasonable and approved by the board of directors.
 c. Treasury shares are not entitled to dividends.
 d. Treasury shares, once disposed of, entitle the purchaser or transferee the right to vote.
 55. The articles of incorporation of Power Corporation provide for 15 directors. For the year
2003, only 5 meetings of the board of directors were convened because of the difficulty in
mustering a quorum. In view thereof, some transactions of the corporation which required board
approval did not materialize resulting in lost profits. In preparation for the annual meeting of
stockholders, the following were considered by the board of directors as possible solutions for
approval of the stockholders:
 I. Amending the by-laws reducing the quorum to 6 directors.
 II. Providing a by-law for the creation of an executive committee consisting of 5 members of
the board of directors to act on matters that may be delegated to it by the board.
 III. Providing a by-law allowing directors to send representatives during the board meeting
provided that the representative is given a special power of attorney.
 lV. Amending the articles of incorporation reducing the number of directors from 15 to 7
effective the expiration of the term of the incumbent directors.
Which of the above proposed solutions may you validly recommend for submission to the
stockholders?
 a. I or III
 b. II or IV
 c. I or IV d. II or III
 56. In which of the following corporations will those composing the corporation be liable as
general partners?
 a. Corporation by prescription
 b. De facto corporation
 c. Corporation by estoppel
 d. De jure corporation
 57. The following statements concerning representative voting were presented to you for
evaluation:
 I. The representative acquires legal title to the shares.
 ll. It is good only for the meeting for which it was intended.
 lll. It is generally revocable, and the stockholder may vote even in the presence of the
representative.
 lV. The agreement giving the representative the power to vote must be duly notarized and a
copy thereof must be submitted to the securities and exchange commission to be effective and
enforceable.
 a. I and IV apply to voting trust agreement.
 b. I and III apply to voting trust agreement.
 c. I and IV apply to proxy.
 d. I and III apply to proxy.
 58. The articles of incorporation of Alpha Corporation, a construction company, provide for 7
directors. In the monthly meeting of the board of directors held on April 12, 2004, directors A, B,
C, D and E were present and the following resolutions were approved:
 I. A resolution for the purchase of 500 pieces of hollow blocks from Excellent Concrete
Enterprises, a sole proprietorship owned by E. B, C, D and E voted for the resolution.
 II. A resolution appointing T as the new treasurer of the corporation. A, B, C and D voted for
the resolution.
 Based on the foregoing:
 a. Both resolutions are valid.
 b. Both resolutions are not valid.
 c. Resolution I is valid; Resolution II is not valid.
 d. Resolution I is not valid; Resolution II is valid.
 59. Which cause of vacancy in the board of directors may be filled by the board of directors if
the remaining directors still constitute a quorum and by the stockholders if such quorum does not
exist?
 a. Removal of a director.
 b. Resignation of a director.
 c. Increase in the number of directors.
 d. Expiration of the term of some directors.
 60. Which of the following rights is the subscriber of shares not fully paid who is not
delinquent not entitled to?
 a. Right to dividends.
 b. Right to vote in stockholders’ meetings.
 c. Right to a stock certificate.
 d. Right to inspection of corporate books and records.
 61. The following statements were presented to you:
 I. All ultra-vires acts are illegal acts.
 II. An illegal acts are ultra-vires acts.
 a. Both statements are true
 b. Both statements are false
 c. I is true; II is false.
 d. I is false; II is true.
 62. The following are transactions pertaining to shares of stock of a certain corporation:
 I. Subscriptions to 100 shares of stock at P100.00 par value per share by Mr. AA.
 II. Purchase of 30 shares of stock from the corporation’s treasury shares by Mr. BB at a total
price of P300.00.
 III. Purchase of 100 shares of stock by Mr. DD, another stockholder.
 Which of the above transactions are enforceable although they are not in writing?
 a. I and II
 b. II and III
 c. I and III
 d. I only
 63. In which of the following corporate acts in the appraisal right not available?
 a. Merger or consolidation.
 b. Extension or shortening of corporate existence.
 c. Sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of its
corporate stock.
 d. Investment of funds for the accomplishment of the primary purpose of the corporation.
 64. Which of the following is not a qualification of incorporators of a stock corporation?
 a. They must be natural persons.
 b. They must be of legal age.
 c. Majority of them must be a citizens of the Philippines.
 d. They must be subscribers to at least 1 share of stock of corporation.
 65. The certificate of incorporation of Seven Stars Corporation, a trading corporation, was
issued although only 2 of its 5 incorporators are residents of the Philippines. The corporation
created in such a situation is a:
 a. de jure corporation.
 b. Corporation by estoppel.
 c. De facto corporation.
 d. No corporation was created at all.
 66. The following statements pertaining to the power of a corporation to issue non-voting
shares were presented to you for evaluation:
 I. Those classified as “redeemable” or “preferred” may be deprived of the voting right.
 II. All shares of the corporation may be deprived of the voting right.
 III. Non-voting shares may vote in certain corporate acts like in the amendment of the articles
of incorporation.
a. I and II are true c. I and III are true
b. II and III are

d. All statements are true
true
 67. Which of the following is not a qualification of directors of a stock corporation?

 a. Each director must be the owner of at least 1 share of stock.
 b. Such shares of stock must stand in their name in the books of the corporation during their
term as directors.
 c. Majority of the directors must be a citizens of the Philippines.
 d. The number of directors should not be less than 5 nor more than 15.
 68. Which of the following statements pertaining to the purpose or purposes of a stock
corporation is incorrect?
 a. A stock corporation may have more than one purpose.
 b. The purposes, if there are several, must be susceptible of being lawfully combined.
 c. The purposes may be stated together in the articles of incorporation.
 d. The purposes must be lawful.
 69. A stock corporation is similar to a non-stock corporation in what respect?
 a. Transferability of shares or of membership
 b. Method of voting directors or trustees
 c. Voting by stockholders or members in person or by proxy
 d. Term of directors or trustees
 70. Which of the following special corporations is required by the Corporation Code to have
its number of directors in multiples of 5, i.e., 10 or 15?
 a. A stock educational corporation
 b. A non-stock educational corporation
 c. A corporation sole
 d. A religious society
 71. A, B, C, D and E are all Certified Public Accountants. They want to practice their
profession under one company. What kind of business organization may they establish for such
purpose ?
 a. Partnership only
 a. b . Corporation only
 b. Either a partnership or a corporation at their option
 c. Neither a partnership nor a corporation
 72. A, B, C , D and E are all licensed mechanical engineers. They want to put up a business
for the purpose of importing industrial machineries. What kind of business organization may
they put up for such purpose?
 b. Corporation only
 c. Either a partnership or a corporation
 d. Neither a partnership nor a corporation
 73. A is a Certified Public Accountant; B is a lawyer; while C is a mechanical engineer. They
want to put up a business for the purpose of exporting dried fish. What kind of business
organization may the three of them establish for such purpose?
 b. Corporation only
 c. Either a partnership or a corporation
 d. Neither a partnership nor a corporation because they belong to different professions
 74. In which of the following instances is a foreign corporation not engaged in business in the
Philippines?
 a. Opening a liaison office in the Philippines.
 b. Participating in the management of a domestic business in the Philippines.
 c. Having a nominee director to represent its interests in a domestic corporation.
 d. Appointing a distributor who is domiciled in the Philippines.
 75 These statements are presented to you:
 I. The members of board of directors of a corporation may provide for themselves
compensation other than per diems
 II. A director who receives compensation as such may also be given separate compensation if
the serves the corporation in another capacity like the president who is required to be a director.
In your evaluation of the foregoing statements:
 c. Only Statement I is true
 d. Only Statement II is true
 76. These statements are presented to you:
 I. The existence of interlocking incorporators, directors and officers is sufficient to justify
piercing of the veil of corporate fiction.
 II. Substantial identify of incorporators or directors of corporations necessarily implies fraud.
 I. The sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of
corporate property requires the vote of a majority of the board of directors or trustees, and 2/3 of
the outstanding capital stock or ⅔ of the members.
 II. The board of directors or trustees may abandon the sale or other disposition of all or
substantially all of the corporate property without further approval from the stockholders or
members.
 78. Who may vote the shares without the need of any written proxy?
 a. The pledgee of shares of stock
 b. The mortgagee of shares of stock
 c. The executor of an estate which owns the shares of stock
 d. The stockholder who transferred his shares in a voting trust agreement
 79. S and ABC Corporation entered into a "Deed of Sale of Shares of Stock" for the
acquisition by S of 1,000 of the unissued shares of the latter at P100.00 par value per share. S
was to give a down payment of 50% with the balance to be paid after 30 days. What kind of
contract was entered into between S and ABC Corporation?
 a. Contract of sale
 b. Contract of purchase
 c. Contract of subscription
 d. Some other contract
 80. S, a stockholder of ABC Corporation, visited the corporate office and demanded the
inspection of the books of accounts of the company. D, the director who was in charge of such
books, refused to allow S to inspect them on the ground that six months earlier, S used some
financial data that he obtained from XYZ Corporation of which he was also a stockholder, in
order to aid a competitor of XYZ Corporation to the detriment of the latter. Was the refusal of D
justified?
 a. No, because the data that S improperly used were taken from another corporation.
 b. Yes, because such improper use of data, although pertaining to another corporation, is a
legal ground to deny a stockholder the exercise of his right to inspect the corporate books.
 c. No, because such refusal is a violation of a stockholder's right to inspect corporate books.
 d. No, because such ground can be used only against S if he were to inspect the books of
XYZ Corporation.
 81. These equations are presented to you:
 I. A +B = A
 II. A + B X
What do the above equations represent?
 a. I, merger; II, consolidation
 b. I, consolidation; II, merger
 c. Both equations represent merger
 d. Both equations represent consolidation
 82. A stockholder is entitled to the payment of the fair value of his shares when he dissents
from certain corporate acts. Such fair value shall be the fair value of the shares as of the day:
 a. on which the vote was taken, excluding any appreciation or depreciation in anticipation of
such corporate action.
 b. prior to the date on which the vote was taken, excluding any appreciation or depreciation in
anticipation of such corporate action was taken.
 c. on which the vote was taken, including any appreciation or depreciation in anticipation of
such corporate action.
 d. prior to the date on which the vote was taken, including any appreciation or depreciation in
anticipation of such corporate action was taken.
 83. Green Livelihood Projects, Inc. is a non-stock non-profit corporation whose articles of
incorporation provide for 9 trustees with staggered terms. The trustees first elected and their
respective terms of office are: Afable, Bernabe and Calimag, 3 years; Dayag, Estacio and
Formeloza, 2 years; and Gesmundo, Hilacan and Ibero, 1 year. After one year, Jalmasco,
Kintanar and Lopez were elected to replace Gesmundo, Hilacan and Ibero whose terms expired.
What is the term of office of Jalmasco, Kintanar and Lopez?
 a. One year
 b. Two years
 c. Three years
 d. Five years
 84. Refer to the preceding number. Assume that Afable resigned after one year and three
months in office and Modena was elected to replace him. What is the term of office of Modena?
 a. One year
 b. One year and nine months
 c. One year and three months
 d. Three years
 85.These statements concerning the number of trustees of a non-stock corporation at the time
of its incorporation are presented to you:
 I. The number of trustees may be more than 15.
 II. The number of trustees may be less than 5.
 a. Both I and II are correct.
 b. Both I and II are incorrect.
 c. I is correct. II is incorrect.
 d. I is incorrect. II is correct.
 I. Under the Corporation Code, a close corporation is one whose members belong to the same
family. In other words, it is a family corporation.
 II. Banks, insurance companies and educational institutions, among other corporations, cannot
be incorporated as a close corporation.
In your evaluation of the foregoing statements;
87. These statements concerning a close corporation are presented to you:
 I. The business may be managed by the stockholders rather than by a board of directors.
 II. If the stockholders manage the corporation, no meeting is required to elect directors.
 88. Which of the following statements concerning a close corporation is false?
 a. The stockholders may agree among themselves to the effect that they are partners among
themselves.
 b. Any action of the board of directors without a meeting shall be valid if all the stockholders
have actual or implied knowledge of the action and they make no prompt objection thereto in
writing.
 c. In case of deadlock in management, the SEC may order the corporation to acquire its own
shares of stock provided it has unrestricted retained earnings.
 d. A close corporation shall not list in any stock exchange or make any public offering of any
of its stock of any class.
 89. Immediately after their election, the directors must formally organize by the election of
the following officers, except:
 a. President
 b. Vice President
 c. Treasurer
 d. Corporate Secretary
 90. The president of a corporation may at the same time be the:
 a. Treasurer
 b. Corporate Secretary
 c. Chairman of the Board of Directors
 d. None of the foregoing, because the president cannot occupy another position in the
corporation during his term
 91. The following positions in a corporation are presented to you:
 I. President
 II. Treasurer
 III. Corporate Secretary
 IV. Chairman of the Board
Who of the foregoing must be a director of the corporation at the same time?
 a. I and II
 b. III and IV
 c. I and III
 d. I and IV
 92. Who may or may not be a director of a corporation?
 a. Treasurer
 b. Corporation Secretary
 c. Both (a) and (b)
 d. Neither (a) nor (b)
 93. The certificate of incorporation of Parametro Corporation was issued by the Securities and
Exchange Commission despite the fact that only 3 out of its 7 incorporators were residents of the
Philippines. Such inadvertent issuance of the certificate of incorporation:
 a. means Parametro Corporation is unincorporated.
 b. makes Parametro Corporation a de facto corporation.
 c. does not affect the acquisition by Parametro Corporation of the status of a de jure
corporation because non-compliance of the residence requirement is a minor defect that does not
affect corporate existence.
 d. results in the automatic dissolution of the Parametro Corporation upon discovery by SEC
of the corporation's failure to comply with the residence requirement for incorporators.
 94. Which of the following documents may be submitted before or after incorporation?
 a. Verification certificate as to the name of the corporation
 b. By-laws
 c. Certificate of bank deposit as to the paid -up capital
 d. Articles of incorporation
 95. An incorporator of a stock corporation at the time of incorporation must be:
 a. the owner of at least one share of stock of the corporation.
 b. a member of first board of directors.
 c. a duly elected officer of the corporation.
 d. all of the foregoing.
 96. A subscriber of the capital stock of a corporation still to be formed must be:
 a. an incorporator
 b. a signatory to the articles of incorporation
 c. a member of the incoming board of directors
 d. none of the foregoing
 97. The articles of incorporation of a Eastex Computer Corporation provide for 15 directors.
Which of the following is invalid concerning its by-laws?
 a. That the quorum in the meetings of directors be at least 8 directors
 b. That the quorum in the meetings of directors be at least 10 directors
 c. That the quorum in the meetings of directors be at least 7 directors
 d. The by-laws do not mention anything about the quorum in the meetings of directors
 98. What may be the composition of the executive committee of a corporation?
 a. Directors
 b. Stockholders who are neither officers nor directors
 c. Officers who are neither stockholders nor directors
 d. A combination of (a), (b) and (c)
 99. The executive committee must have at least:
 a. Three members who must act with a unanimous vote of all its members
 b. Three members who must act by a majority vote of all the members
 c. Five members who must act with a unanimous vote of all its members
 d. Five members who must act by a majority vote of all its members
 100. Which of the following causes of vacancy in the board of directors may be filled by the
remaining directors if they still constitute a quorum?
 a. Increase in the number of directors
 b. Removal of a director
 c. Expiration of the term of a director
 d. Disqualification of a director
 101. Who may be removed as a director without cause during their term of office?
 a. A director representing the majority stockholders
 b. A director representing the minority stockholders
 c. Either of (a) and (b)
 d. Neither of (a) and (b) because they can only be replaced upon the expiration of their term
of office through the election of another in their place since the removal is without cause
 102. Which shares may be issued with or without par value?
 a. Common shares
 b. Preferred shares
 c. Both common and preferred shares
 d. Neither common nor preferred shares
 103. The rule that protects directors who act with due care and in good faith, as long as their
decisions are lawful and in the best interests of the corporation.
 a. Fairness rule
 b. Business judgment rule
 c. Golden rule
 d. Anti-trust rule
 104. A suit brought by a stockholder in the name and in behalf of the corporation to protect
corporate rights or redress wrongs committed against the corporation, whenever corporate
officers refuse to bring such actions or such officers are the ones to be sued or held liable.
 a. Individual suit
 b. Class suit
 c. Representative suit
 d. Derivative suit
 105. A stock corporation, in general, is taxed in the same manner as a:
 a. general professional partnership
 b. non-general professional partnership
 c. sole proprietorship
 d. cooperative
 106. Samorano is a the owner of 500 shares of stock of Center Sales Corporation whose
articles of incorporation provide for 5 directors. In the annual election of directors, the following
ran for the position of director: Abanes, Baricuatro, Castillo, Doromal, Elmora, and Filamor.
Samorano asks you which of the following is the incorrect way of casting his votes.
 a. 500 votes each for the 6 candidates
 b. 500 votes each for Abanes, Baricuatro, Castillo, Doromal and Elmora
 c. 2,500 votes for Abanes
 d. 1,000 votes for Abanes, 1,000 votes for Baricuatro, and 500 votes for Castillo
 107. Which of the following is not a characteristic of a corporation?
 a. Perpetual life
 b. Transferability of ownership interests
 c. Unlimited liability on the part of the stockholders
 d. Ability to attract large amount of capital
 108. Which of the following provisions in the articles of incorporation cannot be amended?
 a. Name of corporation
 b. Number and name of incorporators
 c. Term of existence
 d. Primary purpose
 109. No-par shares may not be issued for a price lower than:
 a. stock exchange quotation price
 b. issued price
 c. market price
 d. fair market value
 110. Shares that may be issued at a price higher than P5.00 per share are:
 a. par value shares
 b. no par value shares
 c. both (a) and (b)
 d. neither (a) nor (b)
 111. Shares that may be issued at a price lower than P5.00 share are:
 a. par value shares
 b. no-par value shares
 112. Other than from retained earnings, dividends may be declared out of:
 a. paid-in capital in excess of par value
 b. paid-in capital in excess of issued price
 113. Which of the following is an incorrect composition of the capital stock of a corporation?
 a. Both par value and no-par value shares
 b. Both preferred and common shares
 c. Either par value or no-par value shares
 d. Either common or preferred shares
 I. A director is an agent of the corporation by virtue of his being elected as a director.
 II. A director who owns the controlling interest in a corporation has only one vote in the
meeting of the board of directors
 In your evaluation of the foregoing statements:
 c. Statement I is true; Statement II is false
 d. Statement I is false; Statement II is true
 115 The following vote on a per head basis, except:
 a. directors of a stock corporation
 b. stockholders
 c. trustees of non -stock corporation
 d. members (of a non -stock corporation)
 I. A person may become a stockholder of a corporation through the receipt of a stock
dividend given to him in payment of services previously rendered
 II . A contract of subscription has for its object unissued or issued shares such as treasury
shares
 117. The highest bidder in a delinquency sale is the one willing to pay the:
 a. highest amount for the highest number of shares
 b. lowest amount for the lowest number of shares
 c. full amount of the balance of the subscription, accrued interest, cost of advertisement and
expenses of sale for the smallest number of shares
 d. full amount of the balance of the subscription, accrued interest, cost of advertisement and
expenses of sale for the highest number of shares
 118. Carmona is a creditor of Solomon who is a stockholder of record of 1,000 shares of
Montero Corporation. Solomon sells the shares to Bacalso through a deed of absolute sale that
has not yet been recorded in the books of Montero Corporation. The transfer of the shares by
Solomon to Bacalso is:
 a. valid between Solomon and Bacalso
 b. valid as against Montero Corporation and Carmona
 c. valid as to Solomon, Bacalso, Montero Corporation and Carmona
 d. not valid as regards any of those mentioned in (c) until it has been recorded in the books of
Montero Corporation
 119. For the purpose of determining the validity of the contract entered into between two
corporations with interlocking directors whose interest in one corporation is nominal and
substantial in the other, the presence of the interlocking director should not be necessary to
constitute a quorum and his vote should not be necessary for the approval of the contract in the
meeting of the board of directors:
 a. of the corporation where his interest is substantial
 b. of the corporation where his interest is merely nominal
 c. of both corporations
 d. of neither corporation for as long as there is no fraud and the contract is fair and reasonable
under the circumstances because he has a personality separate and distinct from both
corporations
 120. For the purpose of interlocking directorate, an interlocking director's interest in a
corporation is considered substantial if it is:
 a. at least 20%
 b. more than 20%
 c. at least 25%
 d. more than 25%
CORPORATION
 1. The nationality of a corporation is determined by the law of its domicile or place of
principal business. The test is known as:
 A. The control theory
 B. The full absorption theory
 C. The incorporation theory
 D. The management theory
 2. This is unincorporated business organization created by an instrument by which property is
to be held and managed by trustees for the benefit and profit of such person as may be or become
the holders of transferable certificates evidencing the beneficial interests in the estate
 A. Business Trust
 B. Close Corporation
 C. Condominium Corporation
 D. Joint Stock Company
 3. When preferred shares are issued by a corporation with a fixed annual interest on the face
thereof, the effect is:
 A. The contract of subscription is between the corporation and the stockholder subsists
 B. The stockholder is a plain investor who may rise or fall with the financial success or failure
of the corporation.
 C. The stockholder is a creditor of the corporation
 D. The shares of stock are negotiable instruments under the Negotiable Instruments Law
 4. This class of shares are those issued for no consideration or inadequate consideration:
 A. Bonus shares
 B. Deferred shares or founders shares
 C. Over issued shares
 D. Watered shares
 5. The power to deny pre-emptive right as a corporate power is classified as an:
 A. Express power
 B. Incidental power
 C. Implied power
 D. Discretionary power
 6. The power to invest corporate funds in another corporation or business or for any other
purpose as a corporate power is classified as an:
 7. The power of conducting commercial contracts (to increase the business) and sponsoring
athletic contest for employees to keep them in good health or maintaining a hospital for the
employees is an example of:
 8. To establish pension, retirement, and other plans for the benefits of its directors, trustees,
officers and employees is an example of:
 9. A religious order is considered as a:
 A. Corporation by prescription
 B. Public corporation
 C. Corporation sole
 D. None of them.
 10. Place of residence of a corporation shall be its:
 A. Place of incorporation
 B. Place of residence of majority of stockholders
 C. Place where the principal office is established
 D. None of them
 11. This shall constitute a quorum for transaction of corporate business:
 A. Majority of the members
 B. Majority of the stockholders
 C. Majority of the directors
 D. All of them
 12. Juridical personality of a corporation begins:
 A. From the date of issuance of certificate of incorporation
 B. By agreement of the parties
 C. Acknowledgement before a Notary Public
 D. None of them
 13. 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
 14. 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
 15. 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.
 16. 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
 17. 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 lest 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
 18. 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
 19. 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
 20. 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
 21. 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
 22. 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
 23. 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
 24. 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
 25. 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
 26. The authorized capital stock of a proposed corporation is P100,000 divided into 1,000
shares with a par value of P100.00 each. The minimum amount of subscription that must be paid
is:
 A. P8,750 or 87.5 shares
 C. P5,000 or 50 shares
 B. P6,250 or 62.5 shares
 D. P7,500 or 75 shares
 27. In the matter of management of the business affairs of a corporation, this is supreme:
 A. Majority of the stockholders
 B. 2/3 of the stockholders
 C. Board of Directors
 D. President of the corporation
 28. This is the equitable right of stockholders to subscribe to newly issued shares of the
corporation in proportion to their present shares in order to maintain their equity in the
corporation.
 A. Right of redemption
 B. Concept of corporation entity
 C. Right to sue and be sued
 D. Pre-emptive right
 29. This is a written acknowledgement of an interest of a stockholder in the corporation.
 A. Proxy
 C. Certificate of Stock
 B. Share of stock
 D. Capital Stock
 30. These are the persons who sign the Articles of Incorporation, who may or may not be
subscribers of shares
A.
C. Directors
Incorporators
B. Trustees D. Promoters
 31. Choose the minimum requirement of the Corporation Law to corporate formation:

Authorized Subscribed
Paid-In Capital
Capital Capital
A. P100,000 P20,000 P5,000
B. 100,000 20,000 4,000
C. 100,000 25,000 5,000
D. 100,000 25,000 6,250
 32. They provide and regulate the internal matters of the corporation, such as calling the
Board of Directors and Stockholders meetings.
 A. Board of Directors
 C. By-laws
 B. Majority of Stockholders
 D. Articles of Incorporation
33. This is an authority to vote in a corporation stockholders meeting.
A. Proxy C. Certificate of stock
B. By-laws D. Share of stock
 34. A gratuitous reissue of Treasury shares will result in:

 A. Capital surplus
 C. Watered stock
 B. Additional profit
 D. Stock dividend
 35. Three (3) of the following are similarities between a partnership and a corporation. Which
is not?
 A. The individuals composing both have title voice in the conduct of the business
 B. Both have juridical personality separate and distinct from that of the individuals
composing them
 C. Like a partnership, a corporation can act only through agents
 D. Both are organizations composed of an aggregate if individuals
 36. One of the following is the limitation on proxies. Which is?
 A. Proxy acquires legal title to the shares of the stock
 B. A proxy votes even in the presence of the stockholder
 C. The proxy is voted only for the meeting for which it was intended
 D. A proxy is revocable at any time
 37. The number of the Board of Trustees in a non-stock corporation:
 A. Shall not be less than five but not more than eleven
 B. May be more than fifteen upon its organization
 C. May be less than five upon its organization
 D. Shall not be less than five but not more than fifteen
 38. One of the following is a ground for the suspension or revocation of the certificate of
incorporation by the Securities and Exchange Commission.
 A. If the corporation has commenced its business transactions and afterwards ceased
operation continuously for a period of at least five (5) years
 B. If the corporation fails to commence and start to operate and the failure is due to causes
beyond the control of the Corporation
 C. If the corporation does not formally commence its business transaction and subsequently
become continuously inoperative for a period of two (2) years
 39. Right of the corporation to continue as a juridical entity for the term stated in the articles
of incorporation despite the death of any stockholder.
 A. Juridical personality
 C. Right of succession
 B. Pre-emptive right
 D. Right of existence
 40. Original signatories in the articles of incorporation are called:
 A. Corporators
 C. Stockholders
 B. Promoters
 D. Incorporators
 41. They regulate different internal matters of the corporation such as calling and defining the
conduct of the meeting of stockholders and directors.
 A. Board of directors
 C. Articles of incorporation
 B. By-laws
 D. Proxy
 42. The document conferring authority to vote stock in a corporate meeting:
 A. Power of attorney
 C. Capital stock
 B. Shares of stock
 D. Proxy
 43. The minimum requirement of Corporation Law to corporate formation.
Paid in
Authorized Subscribed Capital
Capital
A. P500,000 P100,000 P25,000
B. 500,000 125,000 31,250
C. 500,000 100,000 20,000
D. 500,000 125,000 25,000
 44. Three (3) of the following are attributes of a corporation. Which is the exception?
 A. An artificial being
 B. Has the right of succession
 C. Has powers, attributes and properties expressly authorized by law or incident to its
existence
D. Created by agreement of the incorporators
 45. Three of the following are qualifications of the Board of Directors. Which is the
exception?
 A. He must own at least one (1) share of the capital stock
 B. At least majority of them are citizens of the Philippines
 C. The shares owned must be recorded in the books of the corporation.
 D. He must continuously own at least one )1) share of the stock of the corporation
 46. The voting requirement to increase or decrease capital stock
 A. Majority vote of the board of directors and consented by the stockholders representing
two-thirds (2/3) of the outstanding capital stock
 B. Two-thirds (2/3) vote of the board of directors with the consent of majority of outstanding
capital stock
 C. Majority vote of the board of directors and with consent if majority of the outstanding
capital stock
 D. Majority vote of the board of directors and three-fourths (3/4) vote of the outstanding
capital stock
 47. A dividend payable partly in cash and partly in stocks, as to class of dividend, is a :
 A. Optional dividend
 C. Liquidation dividend
 B. Property dividend
 D. Composite dividend
 48. Bonds which are not secured by any specific mortgage lien of pledge or corporate
property but by the general corporation are:
 A. Guaranteed bonds
 C. Income bonds
 B. Debenture bonds
 D. Redeemable bonds
 49. These are the rules and guidelines adopted by the stockholders of a corporation for the
internal government.
 A. Rules and regulations
 C. Minutes of the meetings
 B. Articles of Incorporation
 D. By-law
 50. Which of these conditions comply with the minimum requirement of the law to corporate
formation?
Authorized Subscribed
Paid In Capital
Capital Capital
A. P100,000 P25,000 P12,500
B. 64,000 16,000 4,000
C. 200,000 50,000 10,000
D. 200,000 40,000 10,000
 51. A distribution by a corporation of shares held by it in another corporation is:

 A. Stock dividend
 B. Sales of capital asset
 C. Property dividend of actual distribution of corporate assets
 D. Sale of treasury stock
 52. Corporations organized by private persons performing public function and for profit to
private parties are:
 A. Public corporations
 B. Government controlled corporation
 C. Quasi-public corporation
 D. Private corporation
 53. This is a document of a corporation acknowledging the interest of a stockholder in the
corporation’s assets.
 A. Certificate of stock
 C. Share of stock
 B. Capital stock
 D. Stockholder’s equity
 54. In a corporation, any two (2) or more positions may be hels concurrently by the same
person, except that no one (1) person shall act as:
 A. Chairman of the Board and President
 B. Secretary and Treasurer
 C. President and Secretary
 D. Treasurer and Director
 55. A corporation may invest its funds in any other corporation of business or any purpose
other than the primary purpose for which it was organized, only if:
 A. There is majority vote of the Board of Directors and ratified by the stockholders
representing 2/3 of the outstanding capital stock
 B. It is reasonably necessary to accomplish its secondary purpose, the approval of the
stockholders not necessary
 C. There is a majority vote of the Board of Directors
 D. There is majority vote of the outstanding capital stock
 56. The following are advantages of no-par value share of stock. Which is the exception?
 A. No-par value share allow flexibility in price
 B. The stockholders of no-par value shares are relieved of personal liability for unpaid stock
subscription
 C. It allows the issue of stock in exchange of property
 D. No-par value shares afford a possible remedy or relief from the evil of over-capitalization
and stock watering
 57. The right to vote at meetings, the right to receive dividends and the right to receive copies
of financial statements is known as:
 A. Right of existence
 C. Pre-emptive right
 B. Directors right
 D. Stockholder’s right
 58. The Garcia Realty Development Corporation has a capital stock of P1,000,000 divided
into 10,000 shares with a par value of p100 each. 5,000 shares are ordinary share and 5,000
shares are 10% preference share. In 2008 there was no declared dividends but in 2009 dividends
in the amount of P200,000 were declared. The holders of the preference share are entitled to
receive:
 A. P50,000 if cumulative, non-participating
 B. P125,000 in non-cumulative, participating
 C. P125,000 if cumulative, participating
 D. P100,000 if non-cumulative, non-participating
 59. Persons who compose the corporation whether as stockholder in a stock corporation or
member in a non-stock corporation, are called:
 A. Incorporators
 C. Promoters
 B. Subscribers
 D. Corporators
 60. 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
 61. 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
 62. 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
 63. 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
 64. 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
 65. 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
 C. De facto corporation
 B. Corporation by estoppels
 66. 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
 67. 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
 68. 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
 69. 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
 70. 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
 71. 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
 72. 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
 73. 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
 74. 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
 C. Right of succession
 B. Right of redemption
 D. Pre-emptive right
 75. 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 C. Certificate of stock
B. Share of stock D. Capital
 76. 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
 77. The nationality of the corporation is determined by the place of the controlling
stockholders. This test is:
 A. Control test
 C. Incorporation test
 B. Domicile test
 D. Capitalalization test
 78. 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
 79. 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
 C. Duty of obedience
 B. Duty of loyalty
 D. Duty of efficiency
 80. These do not form part of the outstanding capital stock:
 A. Bonus shares
 C. Founder’s shares
 B. Treasury shares
 D. Redeemable shares
 81. 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
 82. Under this test, a corporation is a national of the country pursuant to whose laws it is
incorporated:
 A. Nationality test
 C. Control test
 B. Capitalization test
 D. Incorporation test
 83. 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
 84. 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
 85. I. 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.
 II. Treasury stocks sold for less than par or issued value are considered “watered stock” and
as such are prohibited by law. Which is correct?
 A. True; False
 B. Both statements are false
 C. False; True
 D. Both statements are true.
COOPERATIVE
 1. Statement 1: A cooperative has the right of succession
 Statement 2: A cooperative can sue and be sued
 a. Only statement 1 is true
 b. Only statement 2 is true
 c. Both statements are true
 d. Both statements are not true
 2. Which of the following is correct in relation to the characteristics of cooperatives?
 a. Members of a cooperative have unlimited liability
 b. The cooperative is a person separate and distinct from its member
 c. A cooperative has an indefinite life
 d. A cooperative cannot enter into a merger or consolidation
 3. What is the governing body for cooperatives?
 a. Cooperative Development Authority
 b. Securities and Exchange Commission
 c. Cooperative Regulatory Commission
 d. Cooperative Registration Board
 4. Which of the following is not contained in the Articles of Cooperation?
 a. Name of the cooperative
 b. Common bond of membership
 c. Area of operation
 d. Qualifications for admission to membership
 5. Statement 1: A cooperative may or may not adopt bylaws
Statement 2: The minimum subscription requirement for cooperatives is equivalent to 25% of the
authorized share capital
 6. Generally, the minimum paid-up share capital of a cooperative should be 25% of the total
subscription but:
 a. Not less than P5,000
 b. Not less than P10,000
 c. Not less than P15,000
 d. Not less than P20,000
 7. In organizing a primary cooperative, how many persons are required?
 a. At least five
 b. At least seven
 c. At least ten
 d. At least fifteen
 8. A single-purpose cooperative may transform into a multi-purpose or may create
subsidiaries only after:
 a. At least one year of operations
 b. At least two years of operations
 c. At least three years of operations
 d. At least four years of operations
 9. Where should an appeal be filed in case an appellant wants to question the denial of the
application for registration of a cooperative?
 a. Court of Appeals
 b. Securities and Exchange Commission
 c. Cooperative Development Authority
 d. Office of the President
 10. All applications for registration shall be finally disposed of by the Cooperative
Development Authority within a period of sixty (60) days from the filing. Upon the lapse of 60
days, and there is inaction on the part of the CDA, then:
 a. The period to decide is deemed extended for 60 days
 b. The period to decide is deemed extended indefinitely
 c. The application is deemed denied
 d. The application is deemed approved
 11. It refers to the full membership of the cooperative duly assembled for the purpose of
exercising the rights and performing all the obligations pertaining to cooperatives, and is
considered the highest policy-making body of the cooperative.
 a. Outstanding members
 b. Full assembly
 c. General assembly
 d. Members’ congress
 12. A special meeting may be called through a written request by:
 a. At least 10% of the total members
 b. At least 25% of the total members
 c. At least 1/3 of the total members
 d. A majority of the total members
 13. In order to constitute a quorum, a meeting shall be attended by:
 a. At least 10% of the total members entitled to vote
 b. At least 25% of the total members entitled to vote
 c. At least 1/3 of the total members entitled to vote
 d. A majority of the total members entitled to vote
 14. What is the maximum term allowed for the members of the Board of Directors of a
cooperative?
 a. One year
 b. Two years
 c. Three years
 d. Four years
 15. Which of the following causes of vacancy will require a general assembly to be filled up?
 a. Resignation of the member of the Board
 b. Civil interdiction
 c. Death of a member of the Board
 d. Expiration of the term
 16. It is one who has no right to vote nor be voted upon and shall be entitled only to such
rights and privileges as the by-laws may provide.
 a. A regular member
 b. An irregular member
 c. An associate member
 d. A provisional member
 17. Statement 1: Any officer or employee of the Cooperative Development Authority shall be
disqualified to be elected or appointed to any position in a cooperative.
Statement 2: All elective officials of the Government shall be ineligible to become officers and
directors of cooperatives.
 18. Joe is a member of X Cooperative. X Cooperative had assets of P100 million and
liabilities of P60,000,000. As a member, Joe’s contribution to the cooperative is P150,000. Joe
withdraws from the cooperative. Assuming the by-laws of the cooperative is silent on the matter,
can Joe withdraw his P150,000 contribution?
 a. Yes, considering that there is no express prohibition on the by-laws on the matter.
 b. Yes, but only 40% may be given to Joe. The remaining portion shall be retained by the
cooperative in payment of liabilities.
 c. No, it will violate the trust fund doctrine.
 d. No, the entire portion shall be retained by the cooperative in payment of liabilities.
 19. Which of the following causes of termination of membership requires a vote of the
majority of all the members of the cooperative?
 a. Death of a member in a primary cooperative
 b. Member not patronizing any of the services of the primary cooperative he is a member of
 c. Insanity of a member in a primary cooperative
 d. Dissolution of a member in a secondary cooperative
 20. The notice of withdrawal must be given by a member to the Board of Directors within:
 a. 15 days from effectivity date of withdrawal
 b. 30 days from effectivity date of withdrawal
 c. 45 days from effectivity date of withdrawal
 d. 60 days from effectivity date of withdrawal
 21. What is the limit of ownership that a member in a primary cooperative may own?
 a. Not more than 10%
 b. Not more than 20%
 c. Not more than 30%
 d. Not more than 50%
 22. Statement 1: Members may transfer their shares or interest even without the approval of
the Board of Directors
Statement 2: Generally, where a member of cooperatives dies, his heir shall be entitled to the
shares of the decedent.
 23. Under the Cooperative Code, how long should documents or books pertaining to financial
and nonfinancial operations be kept for:
 a. Three (3) years
 b. Five (5) years
 c. Seven (7) years
 d. Ten (10) years
 24. Every cooperative shall draw up regular reports of its program of activities, including
those in pursuance of their socio-civic undertakings, showing their progress and achievements at
the end of every fiscal year. This reports shall be:
 a. Filed with the CDA within 90 days from the end of the calendar year
 b. Filed with the CDA within 120 days from the end of the calendar year
 c. Filed with the CDA and SEC within 90 days from the end of the calendar year
 d. Filed with the CDA and SEC within 120 days from the end of the calendar year
 25. In this kind of cooperative, membership is terminated upon reaching the age of 18.
 a. Service cooperative
 b. Laboratory cooperative
 c. School cooperative
 d. Youth cooperative
 26. A cooperative whose members are secondary cooperatives is called a/n:
 a. Tertiary cooperative
 b. Union
 c. Federation
 d. Multicooperative
 27. In case of a federation, what is the minimum number of members?
 a. 5 primary cooperatives
 b. 10 primary cooperatives
 c. 15 primary cooperatives
 d. 20 primary cooperatives
 28. In order for a merger or consolidation to be valid, it must be approved by:
 a. A majority of all members with voting rights
 b. 1/3 of all members with voting rights
 c. 2/3 of all members with voting rights
 d. 3/4 of all members with voting rights
 29. Statement 1: Dissenting members to a merger or consolidation are required to be members
of the merged or consolidated cooperative in case the required vote was secured.
Statement 2: Mergers and consolidations of cooperatives require the approval of the Cooperative
Development Authority.
 30. Any registered cooperative may resolve to divide itself into the two (2) or more
cooperatives upon securing the approval of:
 a. A majority of all members with voting rights
 b. 1/3 of all members with voting rights
 c. 2/3 of all members with voting rights
 d. 3/4 of all members with voting rights
SECURITIES REGULATION CODE
 1. Which of the following is not requisite of an investment contract?
 a. It must involve an investment of money
 b. The investment of money is made in a common enterprise
 c. The investor must have an expectation of profits
 d. The profit will be derived exclusively from the efforts of others
 2. Which government agency governs the registration of securities?
 a. Securities and Exchange Commission
 b. Securities Registration Commission
 c. Securities Regulatory Board
 d. Securities Registration Board
 3. It is a contract between a buyer and a seller whereby the buyer is obligated to take delivery
and the seller is obliged to deliver a fixed amount of an underlying commodity at a
predetermined price and date.
 a. Futures
 b. Warrant
 c. Forward
 d. Options
 4. Statement 1: If the issuer of securities has filed for a judicial declaration of insolvency, then
the SEC may revoke the registration of such securities.
Statement 2: If the issuer of securities has been convicted by final judgement of an offense
involving moral turpitude, then the SEC may revoke the registration of such securities.
 5. Which of the following is not required to be registered with the SEC under the SRRC?
 a. Shares of stock
 b. Voting trust certificates
 c. Certificates of deposit
 d. Contract of real estate mortgage
 6. Which of the following is required to be registered with the SEC under the SRC?
 a. Treasury bills
 b. Bonds of the Government of Japan
 c. Membership certificates in non-stock corporations
 d. Bonds issued by banks
 7. ABC Corporation is a close corporation. It applied for an increase in authorized share
capital on January 5, 2021, which was approved by the Securities and Exchange Commission.
Pursuant to the increase, ABC Corporation issued 10,000 shares of stock exclusively to its
existing shareholders. No broker’s commission was paid in the transaction. Is the transaction
required to be registered under the SRC?
 a. No, because the sale is only exclusive to its own stockholders only
 b. Yes, because the object of the sale is shares covered by the SRC
 c. Yes, because no broker’s commission was paid
 d. No, because the sale did not exceed 100,000 shares
 8. On the requirement to register securities under the SRC, which of the following is
generally an exempt transaction?
 a. Pre-incorporation subscription
 b. Reissuance of treasury shares
 c. Flotation of bonds
 d. Sale of shares with warrants
 9. The deadline for the filing of the general information sheet is:
 a. April 15 of the following year
 b. 30 days following the date of the annual stockholder’s meeting
 c. 60 days following the date stated in the by-laws of the corporation
 d. 90 days following the date of the filing of the audited financial statements with the SEC
 10. A material non-public information includes:
 a. Information that concerns the internal management of the entity issuing securities
 b. Information involving market studies and analyses
 c. Information that will affect the price of the security
 d. Information that constitutes falsity and manipulations
 11. Who among the following is not an insider?
 a. The issuer
 b. Director of the issuer
 c. Officer of a clearing agency
 d. Relative within the fourth degree of consanguinity of the director of the issuer
 12. Gryffindor Corporation is engaged in the manufacturing of smartphones. In the product
development stage is a top secret smartphone which has four (4) back cameras, waterproof, no
bezel, 5G technology, and tested to withstand a drop from a height of 100 feet. The Vice
President for Research, Ginny, informed her husband, Neville, that such phone is on the works
and is nearing the finishing stage. Ginny intimidated that the phone will be a game-changer.
Neville ask that Ginny email the details of the phone, which Ginny did. After viewing the email,
Neville went to the restroom and inadvertently left his laptop and email open. Ron passed by
Neville’s desk and saw the email. Curious, Ron read the contents of the email and saw the
planned development and launch of the smartphone. Who is an insider?
 a. Ginny only
 b. Ginny and Neville only
 c. Neville and Ron only
 d. Ginny, Neville, and Ron
 13. If there is a purchase or sale of a security of the issuer made by an insider or such
insider’s spouse or relatives by affinity or consanguinity within the 2nd degree, legitimate or
common-law after such information came into existence, but prior to the dissemination of such
information to the public and the lapse of a reasonable time for the market to absorb such
information:
 a. There is a presumption that the transaction is entered into fraudulently
 b. There is a presumption that the transaction has been effected while in possession of
material non-public information
 c. There is a presumption that the transaction requires a tender offer
 d. There is a presumption that the transaction was entered into regularly
 14. This is done by placing of purchase or sale order, at or near the close of the trading period
in order to affect the closing price likewise affecting the opening price the following day.
 a. Securing the close
 b. Drawing the open
 c. Marking the close
 d. Bringing the open
 15. In this transaction, a part or portion of the issue/security which is outstanding but
intentionally held by dealers or other person with a view of reselling them later for profit thereby
affecting supply of the security or its availability while demand remains the same or increases,
driving the prices up.
 a. Squeezing the float
 b. Painting the tape
 c. Pushing the line
 d. Washing the sink
 16. Included in the application of the mandatory tender offer rule are corporations:
 a. Having at least 200 shareholders who each have at least 20o shares
 b. Having at least 100 shareholders who each have at least 20o shares
 c. Having at least 200 shareholders who each have at least 10o shares
 d. Having at least 100 shareholders who each have at least 10o shares
 17. The mandatory tender offer applies to any person who intends to acquire shares of listed
corporations amounting to:
 a. At least 20%
 b. At least 25%
 c. At least 30%
 d. At least 35%
 18. ABCDEF Corporation is 20% owned by A, 10% owned by B, 25% owned by C, and the
remainder are owned by the other stockholders. C plans to acquire all the shares of A and B. Is
the transaction covered by the mandatory tender offer rule assuming ABCDEF Corporation have
assets amounting to P75 million?
 a. No, since the corporation is not a listed corporation
 b. No, since the purchase does not involve at least 30% of the corporation’s shares
 c. Yes, since the purchase involves at least 30% of the corporation’s shares
 d. Yes, since C will gain control of the corporation after the transaction
 19. Statement 1: Mergers and consolidations are not exempt from the mandatory tender offer
requirement if the threshold percentage of shares acquired is reached. Statement 2: Purchases in
connection with privatization undertaken by the government are not exempt from the mandatory
tender offer requirement if the threshold percentage of shares acquired is reached.
 20. The process of tender offer involves:
 a. Executing the deed of assignment of shares in a public instrument
 b. Sending letters of notices to each shareholder on record
 c. Making an announcement in a newspaper of general circulation
 d. Listing the shares with the local stock exhange

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1.

6. A corporation acquires juridical personality:

I. The appointment of a new treasurer.

12. Stock dividends differ from cash dividends in that stock dividend:

16. Consolidation differs from merger in that in consolidation:

24. The following statements pertain to the express powers of a corporation.

25. Which of the following by-laws is valid?

26. Winner Corporation, a dealer-manufacturer of garments and with principal office in

33. One of the distinctions between a partnership and a corporation is that a partnership:

35. Which of the following statements is false concerning treasury shares?

36. Which of the following will cause the automatic dissolution of a corporation?

38. A, B, C, D, E, F, G, H and I are directors of Strong Cement Corporation whose articles of

39. A, B, C, D and E distributed calling cards identifying themselves as directors of Summit

b. II and III are

 67. Which of the following is not a qualification of directors of a stock corporation?

 31. Choose the minimum requirement of the Corporation Law to corporate formation:

A. P100,000 P20,000 P5,000

B. 100,000 20,000 4,000

C. 100,000 25,000 5,000

D. 100,000 25,000 6,250

A. Proxy C. Certificate of stock

B. By-laws D. Share of stock

 34. A gratuitous reissue of Treasury shares will result in:

A. P500,000 P100,000 P25,000

B. 500,000 125,000 31,250

C. 500,000 100,000 20,000

D. 500,000 125,000 25,000

A. P100,000 P25,000 P12,500

B. 64,000 16,000 4,000

C. 200,000 50,000 10,000

D. 200,000 40,000 10,000

 51. A distribution by a corporation of shares held by it in another corporation is:

B. Share of stock D. Capital

 76. Requirement to effect the amendment of by-laws of a corporation.

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