Incorporations File Name
Incorporations File Name
Incorporations File Name
1. Is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties
expressly authorized by law or incident to its existence?
a. Corporate sole
b. Corporation
c. Partnership
d. Sole Proprietorship
2. It refers to any agency organized as a stock or non-stock corporation, vested with functions relating to public needs whether
governmental or proprietary in nature, and owned by the government directly or through its instrumentalities either wholly, or,
where applicable as in the case of stock corporations, to the extent of at least 51 per cent of its capital stock.
a. Private corporation
b. Closed corporation
c. Government-owned or controlled corporation
d. Local government units
3. The factors for the application of the doctrine of piercing the corporate veil are the following, except:
a. Stock ownership by one or common ownership of both corporations
b. Identity of directors and officers
c. The manner of keeping corporate books and records
d. Identity of corporate president
4. I. Any application of the doctrine of piercing the corporate veil should be done with caution.
II. A corporation has no power except those expressly conferred on its by the Corporate Code (or special laws) and those that
are implied or incidental to its existence. In turn, a corporation exercises said powers through its board of directors and/or its
dully authorized officers and agents.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false.
5. Corporations which have capital stock divided into share and are authorized to distribute to the holders of such shares
dividends or allotments of the surplus profits on the basis of the shares held.
a. Non-stock corporation
b. Stock corporation
c. Corporation aggregate
d. Corporation by prescription
6. Is one where no part of its income is distributable as dividends to its members, trustees, or officers?
a. Non-stock corporation
b. Stock corporation
c. Corporation aggregate
d. Corporation by prescription
7. A private corporation which has accepted from the State the grant of franchise or contract involving the performance of
public duties but which are organized for profit.
a. Government-owned or controlled corporation
b. Quasi-public corporation
c. De jure corporation
d. De facto corporation
8. I. A Corporation is created by operation of law. It acquires a judicial personality either by special law or a general law.
II. The general law under which a private corporation may be formed or organized is the Corporation Code.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false.
9. I. There shall always be a class or series of shares which have complete voting rights.
II. The right to vote is inherent in and incidental to the ownership of corporate stocks.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false.
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10. I. It is settled that unissued stocks may not be voted or considered in determining whether a quorum is present in a
stockholders’ meeting.
II. Only stock actually issued and outstanding may be voted.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false.
11. A class of stock entitling the holder to vote on corporate matters, to receive dividends after other claims and dividends have
been paid (specially to preferred shareholders), and to share in assets upon liquidation.
a. Common stock
b. Preferred stock
c. Treasury stock
d. Watered stock
12. Is once which entitles the holder thereof to certain preferences over the holders of common stock?
a. Common stock
b. Preferred stock
c. Treasury stock
d. Watered stock
13. They may be purchased or taken up by the corporation upon the expiration of a fixed period, regardless of the existence of
unrestricted retained earnings in the books of the corporation, and upon such other terms and conditions as may be stated in
the articles of incorporation, which terms and conditions must also be stated in the certificate of stock representing said shares.
a. Par value stock
b. No par value stock
c. Redeemable stock
d. Class A stock
14. Are shares with a value fixed in the articles of incorporation and the certificate of stock?
a. Par value stock
b. No par value stock
c. Redeemable stock
d. Class A stock
16. Are shares usually preferred, which by their items are redeemable at a fixed date, or at the option of either issuing
corporation, or the stockholder, or both at a certain redemption price?
a. Over- issued stock
b. Redeemable share
c. Convertible share
d. Founder’s share
17. Subscription to the capital stock of a corporation constitute a fund to which the creditors have a right to look for the
satisfaction of their claims.
a. Trust fund doctrine
b. Doctrine of indivisibility
c. Doctrine of corporate opportunity
d. None of the above.
18. Is that portion of the authorized capital stock which has been both subscribed and paid?
a. Authorized capital stock
b. Paid-up capital
c. Unissued capital
d. Outstanding capital
19. I. The contents of the articles of incorporation are binding, not only on the corporation, but also on its shareholders.
II. The general rule as to corporations is that each corporation must have a name by which it is to sue and be sued and do
all legal acts.
a. Only I is true
b. Only II is true
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c. Both are true
d. Both are false
21. One of the following is not a purpose of stating the principal office of the corporation in its articles of incorporation, except:
a. To fix the residence of the corporation in a definite place.
b. To determine the venue of court cases involving corporation.
c. For purposes of board of directors or trustee’s meeting.
d. To determine the place where the books and records of the corporation are ordinarily kept.
22. This is the maximum amount fixed in the articles of incorporation that may be subscribed and paid by the stockholders of
the corporation.
a. Outstanding capita stock
b. Authorized capital stock
c. Paid- up capital stock
d. None of the above
23. The following are limitations in the amendment of the articles of incorporation, except:
a. The amendment must be for legitimate purposes and must not be contrary to the Corporation Code and special laws.
b. The amendment must be approved by a majority of the board of directors or board of trustees.
c. The amendment requires the vote or written assent of stockholder’s representing majority of the outstanding capital
stock or majority members if it be a non- stock corporation.
d. The original and amended articles together shall contain all provisions required by law to be set out in the articles of
incorporation.
24. I. It is the Certificate of Incorporation that gives juridical personality to a corporation and places it under the jurisdiction of
the SEC.
II. A corporation commences its corporate existence and juridical personality and is deemed incorporated from the date the
DTI issues certificate of incorporation under its official seal.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
25. The following are requirements before one can quality as a de facto corporation, except:
a. The existence of a valid law under which it may be incorporated.
b. An attempt in good faith to incorporate.
c. Assumption of corporate powers.
d. None of the above.
26. I. The filing of articles of incorporation and the issuance of the certificate of incorporation are essential for the existence of
a de facto corporation.
II. An organization not registered with the SEC. Cannot be considered a corporation in any concept, not even as
corporation de facto.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
27. It applies when persons assume to form a corporation and exercise corporate functions and enter into business relations
with third persons.
a. Corporation by estoppel
b. De facto corporation
c. Corporation by prescription
d. De jure corporation
28. I. If a corporation does not formally organize and commence its business within 5 years from the date of its corporation, its
certificate of incorporation shall be deemed revoked.
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II. If a corporation has commenced its business but subsequently becomes inoperative for a period of at least 5 years, the
SEC may, after due notice and hearing, place the corporation under delinquent status.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
30. I. Stockholders or members periodically elect the board of directors or trustees, who are charged with the management of
the corporation.
II. Stockholders or members also elect officers to carry out management functions on a day- to- day basis.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
32. I. Once the directors of trustees are elected, the stockholders or members relinquish corporate powers to the board in
accordance with law.
II. Contracts intra vires entered into by the board of directors are binding upon the corporation.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
34. I. It is well settled in this jurisdiction that where corporate directors are guilty of a breach of trust, a
stockholder may institute a suit in behalf of himself and other stockholders and for the benefit of the corporation.
II. The board of directors ( or trustees, in case of non- stock corporations) has the sole authority to determine policies, enter
into contracts, and conduct the ordinary business of the corporation within the scope of its charter.
a. Only I is true
b. Only II is ture
c. Both are true
d. Both are false
36. I. The property of the corporation is not the property of its stockholders or members; however, it may be sold by the
stockholders or members.
II. The power and responsibility to decide whether a corporation can enter into a binding contract is lodged with the board
of directors.
a. Only I is true
b. Only II is true
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c. Both are true
d. Both are false
37. I. The acts of corporate officers within the scope of their authority are binding on the corporation.
II. Any two or more positions may be held concurrently by the same person, except that no one shall act as president and
secretary or as president and vice- president at the same time.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
39. I. The power to remove directors or trustees belongs to the officers exclusively.
II. Removal of directors or trustees may be with or without cause.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
40. The requisites for removal of directors are the following, except:
a. The removal should take place at a regular or special meeting duly called for the purpose.
b. The director or trustee can only be removed by a vote of the stockholders representing at least majority of the
outstanding capital stock or majority of the members entitled to vote in case of non- stock corporations.
c. There must be a previous notice to stockholders or members of the corporation of the intention to propose such
removal at the meeting.
d. The special meeting of the stockholders or members of a corporation for the purpose of removal must be called by
the secretary on order of the president or on the written demand of the stockholders representing or holding at least a majority
of the outstanding capital stock or a majority of the mebers entitled to vote.
41. I. The directors of a corporation shall not receive any compensation for being a members of the board of directors, except
for reasonable per diems.
II. The two instances where the directors are to be entitled to compensation shall be when it is fixed by the corporation’s
by- laws or when the stockholders, representing at least a majority of the outstanding capital stock, vote to frant the same. In
no case shall the total yearly compensation of directors, such as directors, exceed 10% of the net income after income tax of
the corporation during the preceding year.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
42. Corporate directors are personally liable if found guilty of gross negligence or bad faith in directing the affairs of the
corporation, which results in damage or injury to the corporation, its stockholders or members, and other persons.
a. Doctrine of self- dealing board of directors
b. Doctrine of corporate opportunity
c. Doctrine of double compensation
d. Doctrine of trust fund
43. the requisites for a contract of the corporation with one or more of tis directors or trustees or officrs to be valid are the
following, except:
a. The presence of such directors or trustee in the board of meeting in which the contract was approved was not
necessary to constitute a quorum for such meeting.
b. The vote of such director or trustee was not necessary for the approval of the contract.
c. The contract is fair and reasonable under the circumstances.
d. In case of an officer, the contract has been previously authorized by the stockholders.
44. A director, by virtue of his office, acquires for himself a business opportunity which should belong to the corporation,
thereby obtaining profits to the prejudice of such corporation. He must account to the latter for all such profits by refunding the
same.
a. Doctrine of self- dealing board of directors
b. Doctrine of corporate opportunity
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c. Doctrine of double compensation
d. Doctrine of trust fund
46. I. A corporation has no power except those expressly conferred on it by the Corporation Code and those that are implied or
incidental to its existence.
II. In turn, a corporation exercises said powers through its board of directors and/or its duly authorized officers and agents.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
47. Is an action brought by a stockholder on behalf of the corporation to enforce corporate rights against the corporation’s
directors, officers or other insiders?
a. Individual suit
b. Corporate suit
c. Derivative suit
d. Representative suit
48. It meanse that a stockholder who dissented and voted against the proposed corporate action, may choose to get out of the
corporation by demanding payment of the fair market value of his shares.
a. Pre- emptive right
b. Appraisal right
c. Stockholders right
d. Right to liquidation
49. The distribution of corporate capital happens only in the three instances, except:
a. Amendment of the articles of incorporation to reduce the authorized capital stock.
b. Purchase of redeemable shares by the corporation, regarding of the existence of unrestricted retained earnings.
c. Dissolution and eventual liquidation of the corporation.
d. Amendment of the by- laws to reduce the authorized capital stock.
50. The following are the requirements of increase or decrease of authorized capital stock, except:
a. No decrease of the capital stock shall be approved if its effect shall prejudice the rights of corporate creditors.
b. Approval by a majority vote of the board of directors.
c. Ratification by the stockholders holding at least 2/3 of the outstanding capital stock.
d. Approval thereof by the DTI.
51. it is the preferential right of all stockholders of a stock corporation to subscribe to all issues or disposition of shares of any
class, in proportion to their respective shareholdings.
a. Appraisal right
b. Right to vote
c. Pre- emptive right
d. Voting right
52. I. The purpose of pre- emptive right is to enable the shareholder to retain his proportionate control in the corporation.
II. A suit to enforce pre- emptive rights in a corporation is a derivative suit.
a. Only I is true
b. Only II is ture
c. Both are true
d. Both are false
53. The requirements for the sale or other disposition of all or substantially all of its assets are the following, except:
a. SEC approval is required.
b. Approval by the majority vote of its board of directors or trustees.
c. Ratification by the vote of the stockholders representing at least 2/3 of the outstanding capital stock, or in case of non-
stock corporation, by the vote of at least 2/3 of the members.
d. Any dissenting stockholder may exercise his appraisal right.
54. The following are instances when a corporation may acquire its own shares, except:
a. To eliminate fractional shares arising out of stock dividends.
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b. To collect or compromise an indebtedness to the corporation, arising out of unpaid subscription, in a delinquency
sale, and to purchase delinquent shares sold during said sale.
c. To pay dissenting or withdrawing stockholders entitled to payment for their shares under the provisions of the Revised
Corporation Code.
d. To acquire founders shares.
55. I. The corporation may only acquire its own stocks in the presence of unrestricted retained earnings.
II. Preferred shares may be acquired even without surplus profit for as long it will not result to the insolvency of the
Corporation.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
56. The following are the requisites for the exercise of a corporate power to invest corporate funds in another corporation,
except:
a. Approval of the majority of the board of directors or trustees.
b. Ratification by the stockholders representing at least 2/3 of the outstanding capital stock, or by at least 2/3 of the
members in the case of non- stock corporations, at a stockholder’s or member’s meeting duly called for the purpose.
c. Written notice of the proposed investment and the time and place of the meeting shall be addressed to each
stockholder or member by mail or served personality.
d. Any dissenting stockholder shall have pre-emptive rights.
57. I. The right of appraisal may be exercised when there is a fundamental change in the charter or articles of incorporation
substantially prejudicing the rights of the stockholders.
II. A corporation can purchase its own shares, provided payment is made out of surplus profits and the acquisition is for
legitimate corporate purpose.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
58. Corporate profits set aside, declared, and ordered to be paid by the directors for distribution among stockholders at a fixed
time.Income
a. Revenue c. Sales
b. Dividends
59. I. Payment of dividends to a stockholder is not a matter of right but a matter of consensus.
II. The declaration of dividends is dependent upon the availability of surplus profit or restricted retained earnings.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
61. It is an agreement whereby a corporation delegates the management of its affair to another corporation for a certain period
of time.
a. Management contract c. Contract of agency
b. Voting trust agreement d. Self- dealing contract
62.It refers to an act outside or beyond corporate powers, including those that may ostensibly be within such powers but are,
by general or special laws, prohibited or declared illegal.
a. Intra vires act
b. Ultra vires act
c. Doctrine of limited capacity
d. Doctrine of piercing the veil of corporate fiction
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63. The rules and regulations or private laws enacted by the corporation to regulate, govern and control its own actions, affairs
and concerns and its stockholders or members and directors and officers with relation thereto and among themselves in their
relation to it.
a. By- laws c. Resolution
b. Articles of incorporation d. Rules, regulation and discipline
64. I. The purpose of a by-law is to regulate the conduct and define the duties of the members towards the corporation and
among themselves.
II. By- laws are the relatively permanent and continuing rules of action adopted by the corporation for its own government
and that of the individuals composing it and having the direction, management and control of its affair and activities.
a. Only I is true c. Both are true
b. Only II is true d. Both are false
65. I. It is the generally accepted rule that third persons are bound by by- laws.
II. By- laws may be necessary for the “government” of the corporation but these are subordinate to the articles of
incorporation.
a. Only I is true c. Both are true
b. Only II is true d. Both are false
66. I. After incorporation, the by- laws must be signed and approved by all the incorporators and filed with the SEC together
with the articles of incorporation.
II. Before incorporation, the affirmative vote of the stockholders representing at least a majority of the outstanding capital
stock, or of at least a majority of the members shall be necessary.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
68. I. The owners of majority of the outstanding capital stock or majority of the members in a non- stock corporation may
delegate to the board of directors or trustees the power to amend or repeal any by- laws or adopt new by- laws.
II. The amended or new by- laws shall only be effective upon the issuance by the SEC of a certification that the same are
not inconsistent with the Corporation Code.
a. Only I is true
b. Only I is ture
c. Both are true
d. Both are false
69. I. The general rule is that every member of a non- stock corporation every legal owner of shares in a stock corporation has
a right to be present and to vote in all corporate meetings.
II. Voting may be expressed personally, or through proxies who vote in through remote communication or in absentia.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
70. I. Directors must act as a body in a meeting called pursuant to the law or the corporation’s by-laws, otherwise, any action
taken therein may be questioned by any objecting director or shareholder.
II. The general rule is that a corporation, through its board of directors, should act in the manner and within the formalities,
if any, prescribed by its charter or by the general law.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
71. The requirements for a valid meeting are the following, except:
a. It must be held at the principal place of business only.
b. It must be held at the stated date and at the appointed time.
c. It must be called by the proper person.
d. The person or persons designated in the by- laws have authority to call stockholders or members meeting.
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72. Is the book which records the names and addresses of all stockholders arranged alphabetically , the instalments paid and
unpaid on all stocks for which subscription has been made, and the date of payment thereof?
a. Stock and transfer book
b. Check book
c. Journals
d. Ledgers
73. I. Every decision of at least a majority of the directors or trustees present at a meeting at which there is a quorum shall be
valid as a corporate act.
II. The election of officers shall require the vote of a majority of the directors or trustees present at a meeting at which there
is a quorum.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
74. The requirements for board meeting are the following, except:
a. Meeting of the directors or trustees duly assembled as a Board.
b. Presence of the required quorum.
c. Decision of the majority of all the members of the board only.
d. Meeting at the place, time, and manner provided in the by-laws.
75. I. Meetings of directors or trustees of corporations may be held anywhere in or outside of the Philippines, unless the bylaws
provide otherwise.
II. Notice of regular or special meetings stating the date, time and place of the meeting must be sent to every director or
trustee at least 1 day prior to the scheduled meeting, unless a longer time is provided in the bylaws.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
76. I. In case of pledged or mortgaged shares in stock corporations, the pledge or mortgagee shall have the right to attend and
vote at meetings of stockholders.
II. In case of shares of stock owned jointly by two or more persons, in order to vote the same, the consent of all the co-
owners shall be necessary.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
77. The requirements for a valid proxy are the following, except:
a. It shall be in writing.
b. It shall be signed by the stockholder or member.
c. It shall be filed before the scheduled meeting with the corporate treasurer.
d. Unless otherwise provided in the proxy, it shall be valid only for the meeting which it was intended.
79. A trust created by an agreement between a group of the stockholders of a corporation and the trustee or by a group of
identical agreements between individual stockholders and a common trustee, whereby it is provided that for a term of years, or
for a period contingent upon a certain event, or until the agreement is terminated, control over the stock owned by such
stockholders, either for certain purposes or for all purposes,
is to be lodged in the trustee, either with or without a reservation to the owners, or persons designated by them, of the power to
direct how such control shall be used.
a. Proxy
b. Voting trust agreement
c. Management contract
d. Executive committee
80. The following are the requirements imposed on a voting trust agreement, except:
a. The agreement must be in writing and notarized and specify the terms and conditions thereof.
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b. A certified copy of such agreement shall be filed with the corporation and with the SEC; In case of non- compliance,
the said agreement is effective and enforceable.
c. The certificate or certificates of stock covered by the voting trust agreement shall be cancelled and new ones shall be
issued in the pursuant to said agreement.
d. It shall be noted that the transfer in the name of the trustee or trustees is made pursuant to said voting trust
agreement.
81. The three tests of voting trust agreement are the following, except;
a. That the voting rights of the stock are separated from the other attributes of ownership.
b. That the voting rights granted are intended to be irrevocable for a definite period of time.
c. That the principal purpose of the grant of voting rights is to acquire voting control of the corporation.
d. None of the above.
83. Is an action brought by minority shareholders in the name of the corporation to redress wrongs against it for which the
directors refuse to sue?
a. Individual suit
b. Representative suit
c. Class suit
d. Derivative suit
85. Where a stock or member is denied the right of inspection, his suit would be _____ because the wrong is done to him
personally and not to the other stockholders or the corporation.
a. Individual
b. Representative
c. Class
d. Derivative
86. Any contract for the acquisition of unissued stock in an existing corporation or a corporation still to be formed shall be
deemed a ______ notwithstanding the fact that the parties refer to it as a purchase or some other contract.
a. Contract of sale
b. Subscription contract
c. Management contract
d. None of the above
87. I. As long as the shares are not considered delinquent, stockholders are entitled to all rights granted to it whether or not
subscribed capital stocks are fully paid.
II. Shares of stock shall not be issued in exchange for promissory notes or future service.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
89. For a valid transfer of stocks, there must be strict compliance with the mode of transfer prescribed by law. One of the
following is not a requirement for transfer of stocks:
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a. There must be delivery of the stock certificate.
b. The certificate must be endorsed by the owner or his attorney- in- factor or other persons legally authorized to make
the transfer.
c. To be valid against third parties, the transfer must be recorded in the books of the corporation.
d. To be valid against third parties, the transfer must be recorded in the SEC.
90. I. The rule is that the endorsement of the certificate of stock by the owner or his attorney-in-fact or any other person legally
authorized to make the transfer shall be sufficient to effect the transfer of shares only if the same is coupled with delivery.
II. The delivery of the stock certificate duly endorsed by the owner is the operative act of transfer of shares from the lawful
owner to the new transferee.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
91. I. The certificate of stock itself once issued is a continuing affirmation or representation that the stock described therein is
valid and genuine.
II. Stock issued without authority and in violation of law is voidable and confers rights on the person to whom it is issued
and subjects him to no liabilities.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
93. I. The general rule is that obligations incurred by the corporation, acting through its directors, officers and employees are
their joint responsibilities.
II. A corporation is a juridical entity with legal personality separate and distinct from those acting for and in its behalf and, in
general, from the people comprising it.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
94. The following, except one, are the exceptional circumstances warranting the disregard of the doctrine of separate entity:
a. When directors and trustees or, in appropriate case, the officers of a corporation vote for or assent to patently
unlawful acts of the corporation.
b. When a director or officer has consented to the issuance of watered down stocks or who,having knowledge thereof,
did not forthwith file with the corporate secretary his written objection thereto.
c. When a director, trustee or officer has contractually agreed or stipulated to hold himself personally and solidarily
liable with the corporation.
d. When a director, trustee or officer is made, by specific provision of by- laws, personally liable for his corporate action.
95. Is a bidder who shall offer to pay the full amount of tha balance on the subscription together with accrued interest, costs of
advertisement and expenses of sale for the smallest number of shares or fraction of a share.
a. Lowest bidder
b. Highest bidder
c. Winning bidder
d. Losing bidder
97. I. The proper custodian of the books, minutes and official records of a corporation is usually the corporate treasurer.
II. The signature of the corporate president gives the minutes of the meeting probative value and credibility.
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a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
98. I. The stockholder’s right of inspection of the corporation’s books and records is based upon their ownership of the assets
and property of the corporation.
II. The right of inspection granted to stockholders is absolute.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
99. The books and records required to be kept by the corporation are the following, except:
a. Minutes of meeting of stockholders or members.
b. Minutes of all meetings of directors or trustees.
c. Stock and transfer book, in case of stock corporations.
d. Log Book.
100. As a rule, a corporation that purchases the assets of another will not be liable for the debts of the selling corporation,
provided the former acted in good faith and paid adequate consideration for such assets, except when any of the following
circumstances is present. Which is not one of the exceptions?
a. Where the purchaser expressly or impliedly agrees to assume the debts.
b. Where the transaction does not amount to a consolidation or merger of the corporations.
c. Where the purchasing corporation is merely a continuation of the selling corporation.
d. Where the transaction is fraudulently entered into in order to escape liability for those debts.
101. I. Merger or consolidation becomes effective upon the mere agreement of the constituent corporations.
II. Ordinarily, in the merger of two or more existing corporations, one of the corporations survives and continues the
combined business, while the rest are dissolved and all their rights, properties, and liabilities are acquired by the surviving
corporation.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
102. I. In the merger of two existing corporations, one of the corporations survives and continues the business, while the other
is dissolved, and all its right, properties and liabilities are acquired by the surviving corporation.
II. By operation of law, upon the effectivity of the merger, the absorbed corporation ceases to exist but its right and
properties, as well as liabilities, shall be taken and deemed transferred to and vested in the surviving corporation.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
103. It means that a stockholder who dissented and voted against the proposed corporate action, may choose to get out of the
corporation by demanding payment of the fair market value of his shares.
a. Pre-emptive right
b. Appraisal right
c. Voting right
d. Management right
105. I. In a close corporation, any stockholder of a close corporation may, for any reason, compel the said corporation to
purchase his shares at their fair value, which shall not be less than their par or issued value, when the corporation has
sufficient asset in its book to cover its debts and liabilities exclusive of capital stock.
II. The appraisal right may be exercised by any stockholder who shall have voted against the proposed corporation action,
by making a written demand on the corporation within 30 days after the date on which the vote was taken for payment of the
fair value of his shares.
a. Only I is true
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b. Only II is true
c. Both are true
d. Both are false
106. I. The dissenting stockholder shall be entitled to receive payment of the fair value of his shares as agreed upon between
him and the corporation or as determined by the appraisers chosen by them.
II. Payment may be made regardless if the corporation has unrestricted retained earnings in its book to cover the same.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
107. The following are instances where a dissenting stockholder who demands payment of his shares is no longer allowed to
withdraw from his decision, except:
a. The corporation consents to the withdrawal.
b. The proposed corporate action is approved by the SEC where its approval is necessary.
c. The proposed corporate action is abandoned or rescinded by the corporation.
d. The SEC determines that such stockholder is not entitled to appraisal right.
110. I. Any profit which a non-stock corporation may obtain as an incidental to its operation shall, whenever necessary or
proper, be used for the furtherance of the purpose or purposes for which the corporation was organized.
II. A non-stock corporation can be converted into a stock corporation by mere amendment of its articles of incorporation
because the conversion would change the corporate nature.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
112. I. The Plan of Distribution of Assets may be adopted by a majority vote of the board of trustees and approval of majority of
the members having voting rights present or represented by proxy at the meeting during which said plan is adopted
II. Member’s meeting may be held at any place outside the principal office of the corporation provided it shall be within the
Philippines.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
113. The following are corporations that cannot incorporate as a close corporation, except:
a. Mining or oil companies
b. Stock exchanges
c. Banks
d. Industrial companies
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114. The following are characteristics of a close corporation, except:
a. Where the articles of incorporation provide that the business of the corporation shall be managed by the stockholders
themselves rather than by the board of directors, then the stockholders shall be deemed to be the directors with all the
liabilities imposed by the Corporation code on directors. The stockholders shall not be personally liable for the corporation
torts.
b. Quorum may be greater than mere majority.
c. Restrictions on transfer of shares can be validly imposed.
d. Any action by the directors of a close corporation without a meeting shall nevertheless be deemed valid.
115. I. The board of directors of a stock educational corporation shall be the same as in ordinary stock corporation which is not
less than 5 and not more than 15.
II. The board of trustees of educational corporation shall not be less than 5 nor more than 15 provided that the number of
trustees shall be in multiples of 3.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
116. I. A One Person Corporation shall not be required to have a minimum authorized capital stock.
II. The One Person Corporation is required to submit and file corporate by-laws.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
117. I. The One Person Corporation shall appoint a treasurer, corporate, secretary, and other officers as it may deem
necessary.
II. The single stockholder may be appointed as the corporate secretary.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
118. I. The single stockholder shall designate a nominee and an alternative nominee who shall, in the event of the single
stockholder’s death or incapacity, take the place of the single stockholder as director and shall manage the corporation’s
affairs.
II. The articles of incorporation shall state the names, residence, addresses and contact details of the nomine and
alternative nominee, as well as the extent and limitations of their authority in managing the affairs of the One Person
Corporation.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
119. The One Person Corporation shall submit the following within such period as the SEC may prescribe:
a. Annual financial statements audited by an independent certified public accountant.
b. A report containing explanations or comments by the president on every qualification, reservation, or adverse remark
or disclaimer made by the auditor in the latter’s report.
c. A disclosure of all self-dealings and related party transactions entered into between the One Person Corporation and
the single stockholder.
d. All of the above.
120. I. A sole shareholder claiming limited liability has the burden of affirmatively showing that the corporation was adequately
financed.
II. Where the single stockholder cannot prove that the property of the One Person Corporation is independent of the
stockholder’s personal property, the stockholder shall be jointly and severally liable for the debts and other liabilities of the One
Person Corporation.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
121. I. When a single stockholder acquires all the stocks of an ordinary stock corporation, the latter may apply for conversion
into a One Person Corporation.
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II. A One Person Corporation may be converted into an ordinary stock corporation after due notice to the SEC of such fact
and of the circumstances leading to the conversion, and after compliance with all other requirements for stock corporations.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
122. I. The One Person Corporation converted from an ordinary stock corporation shall succeed the latter and be legally
responsible for all the latter’s outstanding liabilities as of the date of conversion.
II. The ordinary stock corporation converted from a One Person Corporation shall succeed the latter and be legally
responsible for all the latter’s outstanding liabilities as of the date of conversion.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
123. The following are the voluntary modes of dissolution of a corporation, except:
a. By the vote of the board of directors or trustees and the resolution adopted by the stockholders or members where no
creditors are affected.
b. By legislative enactment.
c. By amending the articles of incorporation to shorten the corporate term.
d. In case of a corporation sole, by submitting to the SEC a verified declaration of the dissolution for approval.
124. I. A corporation formed or organized under the Corporation Code may be dissolved voluntarily or involuntarily
II. If dissolution of a corporation does not prejudice the rights of any creditor having a claim against it, the dissolution may
be effected by majority vote of the board of directors or trustees, and by a resolution duly adopted by the affirmative vote of the
stockholders owning at least majority of the members.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
125. I. In case of dissolution where creditors are affected, the SEC may appoint a receiver to take charge of the liquidation of
the corporation.
II. An involuntary dissolution may be affected by amending the articles of incorporation to shorten the corporate term.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
126. The following may be grounds for involuntary dissolution of the corporation:
a. Non- use of corporate charter.
b. Continuous inoperation of a corporation.
c. Upon receipt of a lawful court order dissolving the corporation.
d. All of the above.
127. Is one formed, organized or existing under any laws other than those of the Philippine and whose laws allow Filipino
citizens and corporations to do business in its own or state?
a. Foreign corporation
b. Domestic corporation
c. Government owned-and controlled corporation
d. None of the above
128. I. The purpose of the law in requiring that a foreign corporation doing business in the Philippines be licensed is to subject
such corporation to the jurisdiction of the courts.
II. It is not the absence of the prescribed license but “doing business” in the Philippines without such license which debars
the foreign corporation from access to Philippine courts.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
129. I. If a foreign corporation does business in the Philippines without a license, it cannot sue before the Philippine courts.
II. If a foreign corporation is not doing business in the Philippines, it still need a license to sue before
Philippine courts on an isolated transaction or on a cause of action entirely independent of any business
transaction.
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a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
132. I. Actual transaction of business within the Philippines territory is an essential requisite for the Philippines to acquire
jurisdiction over a foreign corporation and thus require the foreign corporation to secure a Philippine business license.
II. If a foreign corporation does not transact such kind of business in the Philippines, even if it exports its products to the
Philippines, the Philippines has no jurisdiction to require such foreign corporation to secure a Philippine business license.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
133. I. A foreign corporation without a license is not ipso facto incapacitated from bringing an action in Philippine courts. A
license is necessary only if a foreign corporation is “transacting” or “doing business” in the country.
II. A party is stopped from challenging the personality of a corporation after having acknowledge the same by entering into
a contract with it.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
134. I. The SEC may investigate an alleged violation of the Revised Corporation Code, or of a rule, regulation, or order of the
SEC.
II. The SEC may administer oaths and affirmations, issue subpoena and subpoena duces tecum, take testimony in any
inquiry or investigation.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
137. I. Actual transaction of business within the Philippine territory is an essential requisite for the Philippine to acquire
jurisdiction over a foreign corporation and thus require the foreign corporation to secure a Philippine business license.
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II. If a foreign corporation does not transact such kind of business in the Philippines, even if it exports its products to the
Philippines, the Philippines has no jurisdiction to require such foreign corporation to secure a Philippine business license.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
138. I. A foreign corporation without a license is not ipso facto incapacitated from bringing an action in philipine courts. A
license is necessary only if a foreign corporation is “transacting” or “doing business” in the country.
II. A party is stopped from challenging the personality of a corporation after having acknowledged the same by entering
into a contract with it.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
139. I. The SEC may investigate an alleged violation of the Revised Corporation Code, or of a rule, regulation, or order of the
SEC.
II. The SEC may administer oaths and affirmations, issue subpoena and subpoena duces tecum, take testimony in any
inquiry or investigation.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
140. I. Whenever the SEC has reasonable basis to believe that a person has violated, or is about to violate the Revised
Corporation Code, a rule , regulation, or order to the SEC, it may direct such person to desist from committing the act
constituting the violation.
II. The SEC may issue a cease and desist order ex parte to enjoin an act or practice which is fraudulent or can be
reasonably expected to cause significant, imminent, and irreparable danger or injury to public safety or welfare.
a. Only I is true
b. Only Ii is true
c. Both are true
d. Both are false
141. I. The unauthorized use of a corporate name shall be punished with a fine ranging from P10,000 to P200,000.
II. When, despite the knowledge of the existence of a ground for disqualification, a director, trustee or officer wilfully holds
office, or wilfully conceals such disqualification, such director, trustee or officer shall be punished with a fine ranging from
P10,000 to P 200,000 at the discretion of the court, but shall not be permanently disqualified from being a director, trustee or
officer of any corporation.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
142. I. A corporation that conducts its business through fraud shall be punished with a fine ranging from P200,000 to
P2,000,000.
II. A corporation used for fraud, or for committing or concealing graft and corrupt practices as defined under pertinent
statutes, shall be liable for a fine ranging from P100,000 to P5,000,000.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
143. it refers to any person who provides truthful information relating to the SEC possible commission of any offense or
violation under Revised Corporation Code.
a. Whistleblower
b. Intermediary
c. Mediator
d. Conciliator
144. The SEC shall have the power and authority to:
a. Issue opinions to clarify the application of laws, rules, and regulations.
b. Issue ceaseand desist orders ex parte to prevent imminent fraud or injury to the public.
c. Hold corporations in direct and indirect contempt.
d. All of the above.
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145. I. An arbitration agreement may be provided in the afrticles of incorporation of bylaws of a corporation.
II. Regulators such as the Bangko Sentral ng Pilipinas and the Insurance Commissions shall exercise primary authority
over special corporations such as banks, nonbank financial institutions, and insurance companies under their supervision and
regulation.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
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