Beruflich Dokumente
Kultur Dokumente
1. A doctrine which states that a corporation, as an artificial being, owes its life to the state. Its
birth being purely dependent on the will of the state:
a. theory of concession;
b. enterprise theory;
c. realist theory;
d. symbol theory.
2. Genossenchaft theory means:
a. it is the reality of the group as a social and legal entity, independent of
state recognition and concession:
b. the corporation is regarded as the symbol for the aggregate of group
jural relations of the persons composing the enterprise;
c. a corporation is the legal recognition of group interests which as a
practical matter already exists;
d. the theory draws its vitality from the fact that it is not legal fiction alone
that creates a corporate entity as the corporation is an association of
individuals allowed to transact under an assumed name.
3. Which of the following statements is correct?
Statement A: The general or primary franchise of a corporation, that is, the
right to exist as such, is vested in the individuals who compose the
corporation.
Statement B: The special or secondary franchise of a corporation is vested
in a corporation.
a. only A is correct;
b. only B is correct;
c. both are correct;
d. both are incorrect.
4. One of the attributes of a corporation is that it is an artificial being. It means that:
a. it is a juridical person with a personality separate and apart
from its individual members or stockholders;
b. the stockholders or members composing the corporation are the
corporation itself;
c. it is in fact and in reality a person and may perform all actions that can
be done by natural persons;
d. all of the above.
5. It is a legal consequence of theory of corporate fiction or entity:
a. generally, a corporation may be made to answer for acts or liabilities of
its stockholders or members;
b. the property of the corporation is the property of its stockholders;
c. it may bring civil and criminal actions in its own name and in behalf of
its members;
2
24. It is one which actually exists for all practical purposes as a corporation but which has no
legal right to corporate existence as against the state:
a. de facto corporation;
b. de jure corporation;
c. ostensible corporation;
d. domestic corporation.
25. All persons who assume to act as a corporation knowing it to be without authority to do so
shall be liable as:
a. corporation by estoppel;
b. general partners;
c. solidary debtors;
d. joint obligors.
26. Quasi-public corporations refer to:
a. corporations formed for the government of a portion of the State for the
general welfare;
5
29. It is a corporation the shares of which are owned by a relatively limited number of
stockholders at a particular time:
a. close corporation;
b. closed corporation;
c. closely held corporation;
d. non-stock corporation.
a. every director must own at least one (1) share of the capital stock;
b. at least two of the directors must be residents of the Philippines;
c. the share of stock held by the director must be recorded in the stock and
transfer book;
d. every director must continuously own at least a share of stock during his
term.
35. Statement 1: A corporation cannot be an incorporator.
Statement 2: A corporation may subscribe for shares of stock in another
corporation.
a. only statement 1 is correct;
b. only statement 2 is correct;
c. both statements are correct;
d. both statements are incorrect.
36. Corporators are:
a. shareholders;
b. trustees and directors;
c. subscribers, promoters or entrepreneurs and members;
d. incorporators, stockholders, or members.
37. Statement 1: An incorporator must be a resident of the Philippines.
Statement 2: An incorporator need not subscribe to the capital stock.
a. only statement 1 is correct;
b. only statement 2 is correct;
c. both statements are correct;
d. both statements are incorrect.
38. A corporation may be organized either as a stock or non-stock but this entity can only be
organized as a stock corporation:
a. educational corporations;
b. religious corporations;
c. banks;
d. trading corporations.
39. It governs the relationship between and among the stockholders or members:
a. articles of incorporation;
b. by-laws;
c. voting trust agreement;
d. proxy agreement.
40. The articles of incorporation shall be disapproved by the SEC when:
a. the articles are not in prescribed form;
b. the purpose is unconstitutional, illegal or immoral;
c. there is no favorable recommendation of the appropriate agency for
corporations requiring secondary licenses;
d. all of the above.
41. Importance of a purpose clause in the articles of incorporation;
a. imposes implied limitations on authority of the board of
directors/trustees by exclusion of the lines of activity which are not
7
covered;
b. authorizes the board of directors/trustees to enter into all kinds of
contracts;
c. determines the dealings that are relevant to the stockholders;
d. none of the above.
42. What is the nature of a share of stock?
a. it confers immediate title to the properties of the corporation;
b. it represents a distinct undivided interest in the common property of the
corporation;
c. the shares are personal property of the corporation;
d. the share of stock constitutes an indebtedness of the corporation to the
stockholder.
43. A share of stock issued to organizers and promoters, which are given special privileges over
other shares:
a. common share;
b. preferred share;
c. promotion share;
d. founders’ share.
44. A corporation which may issue a no-par value share:
a. stock corporation;
b. non-stock corporation;
c. banks and trust companies;
d. insurance companies and building and loan associations.
45. A share of stock which entitles its holder to receive the stipulated dividends only:
a. participating preferred share;
b. non-participating preferred share;
c. convertible share;
d. cumulative preferred share.
46. A prohibited consideration for the issuance of shares of stocks:
a. previously incurred indebtedness;
b. stock dividends;
c. patents or copyrights;
d. future services.
47. The issuance of a watered stock is not permitted in order to protect subscribers and creditors,
which of the following is not covered by the prohibition?
a. treasury shares;
b. bonus shares;
c. discount shares;
d. stock dividends issued without retained earnings;
48. Where the articles of incorporation provide for non-voting shares, the holders of such shares
shall nevertheless be entitled to vote on the following matters, except:
a. amendment of the articles of incorporation and of by-laws;
b. sale, lease, exchange, mortgage, pledge or other disposition of all or
substantially all of the corporate property;
c. incurring, creating, or increasing bonded indebtedness, or increasing
or decreasing capital stock;
8
56. It is a privilege granted to a party to subscribe to a certain portion of the unissued capital
stock of a corporation within a certain period and under the terms and conditions of the grant
exercisable by the grantee at any time within the period granted:
a. stock subscription;
b. stock option;
c. stock split;
d. stock dividend.
57. A stock split, as distinguished from stock dividend:
a. converts profits into permanent account;
b. alters the amount of the capital;
c. increases the number of shares without change in the capital;
d. postpones realization of profits of the stockholder.
58. At the option of the corporation, its contract with one or more of its directors or trustees or
officers is:
a. generally voidable;
b. generally valid;
c. generally rescissible;
d. unenforceable.
59. Contracts between two or more corporations having interlocking directors are:
a. generally voidable;
b. generally valid;
c. generally rescissible;
d. unenforceable.
60. Doctrine of business or corporate opportunity:
a. prohibits the corporation from engaging in business not included in its
primary purpose;
b. refers to the principle that no director or officer shall place his personal
interest over and above the interest of the corporation;
c. means that related corporations may be allowed to engage in related
businesses as long as there is no monopoly;
d. pertains to right of creditors to sue directors or officers who took
advantage of the business opportunity belonging to the
corporation.
61. Which of the following purposes may be allowed by the SEC?
a. “to carry on any lawful business;”
b. “to practice the profession of a CPA;”
c. “to engage in trading general merchandise;”
d. all of the foregoing.
62. Doctrine of limited capacity means that:
a. the corporation has limited power to invest in other corporations;
b. it has only such powers as are expressly and impliedly granted, and
incidental to its existence;
c. it may perform only those acts provided by its by-laws;
d. it is subject to limitation that the exercise of its power must not be
contrary to law, morals, good customs, public order, and public
policy.
10
63. Trust fund doctrine holds that the assets of the corporation are trust funds to be maintained
unimpaired, for whose benefit is the trust fund?
a. stockholders;
b. creditors;
c. corporation;
d. all of the above.
64. Trust fund doctrine forbids the corporation from distributing its assets to stockholders
without provision being first made for the payment of corporate debts, what is the effect of such
disposition of assets?
a. the disposition is unenforceable;
b. the disposition is void;
c. the disposition is voidable;
d. the disposition is subject to resolution or rescission.
65. Cash dividend, as distinguished to stock dividend:
a. diminishes the asset of the corporation;
b. needs concurrence of the stockholders;
c. increases the capital of the corporation;
d. may be reached by corporate creditors.
66. A certificate issued to shareholders in lieu of a dividend, entitling them to money, stock,
bonds, land or other benefits at some future time:
a. bonds dividends;
b. script dividends;
c. property dividends;
d. liquidating dividends.
67. It is the amount that would be paid on each share to retiring stockholders or in the event the
company is liquidated:
a. fair market value;
b. appraised value
c. book value;
d. liquidation value.
68. A corporation the sole purpose of which is to invest its capital in a specific property and
thereafter to consume that property or extract its value for profit:
a. sole corporation;
b. wasting assets corporation;
c. close corporation;
d. joint venture.
69. Stock corporations are prohibited from retaining surplus profits in excess of 100% of their
paid-in capital stock, except:
a. it is justified by a definite expansion projects approved by the board;
b. declaration of dividends is barred under a loan agreement;
c. special reserve is needed for probable contingencies;
d. all of the above.
70. The power to sue is one of the expressed powers of the corporation, it is lodged with the:
a. stockholders;
b. president of the corporation;
c. board of directors;
11
d. executive committee.
71. What is the nature of the powers of the board of directors or trustees?
a. the powers are original and not delegated;
b. they are conferred and can be revoked by the stockholders;
c. they are subject to the maxim delegate potestas non potest delegare;
d. acts of ownership.
72. The following are classes of corporate powers, except:
a. those expressly granted or authorized by law;
b. those that are implied or necessary to the exercise of the express or
incidental powers;
c. those incidental to corporation’s existence;
d. those that may be useful to its business
73. Incidental powers of the corporation are those that attach to a corporation at the moment of
its creation, which of the following is not incidental?
a. power to have a corporate seal;
b. power to adopt and amend its by-laws;
c. power to merge or consolidate;
d. power to sue and be sued;
e. power to invest corporate funds for any other purpose other than the
primary purpose.
74. The following are limitations to the exercise of power of a corporation to enter into
management contract, except:
a. the contract must be approved by the board of directors and ratified by
stockholders of both corporations;
b. the period of the contract must not be longer than five years for any one
term;
c. the contract must always be subject to the power of the board;
d. the articles of incorporation of the managed corporation must be
amended.
75. Forever Earning Corp. (FEC), through its board of directors, sold its goodwill to Lasting
Profit, Inc. (LPI). The goodwill constitutes substantially all of FEC’s property and assets.
However, despite the sale of its goodwill, FEC continues to do its business and earns profit there
from. Mr. Luser, a minority stockholder of FEC, questions the sale of goodwill alleging that the
sale must be authorized by the vote of its stockholders representing at least 2/3 of the outstanding
capital stock. Is Mr. Luser correct?
a. Yes, although FEC may sell or otherwise dispose all or substantially all
of its property and assets, including its goodwill, the sale or
disposition must be authorized by the stockholders;
b. Yes, FEC’s sale of its goodwill is ultra vires;
c. No, FEC can still continue the business for which it was organized;
d. No, Mr. Luser has no right to question the action of the board.
76. The legal effect of merger or consolidation:
a. liquidation of the enterprise of the selling corporation;
b. the acquiring corporation assumes only those obligations set forth in the
agreement;
12
77. Appraisal right of a stockholder refers to his right to demand payment of the fair value of his
shares after dissenting from a corporate action, in what case this right is not applicable?
a. merger or consolidation;
b. sale, conveyance, mortgage, or other disposition of all or substantially
all of the corporate properties and assets;
c. amendment of the articles of incorporation or by-laws;
d. investing funds in another corporation or business for any purpose other
than its primary purpose.
78. The following are limitations to the appraisal right of a stockholder, except:
a. the dissenting stockholder must have fully paid his subscription;
b. the dissenting stockholder must have voted against the proposed
corporate action;
c. there must be a written demand on the corporation for payment of his
shares;
d. payment of the shares must be made only out of the unrestricted
retained earnings of the corporation.
79. A stockholder has a pre-emptive right which a corporation may deny, what is the purpose of
a pre-emptive right?
a. to protect from impairment and dilution the basic rights of a stockholder
in the corporation;
b. to protect the investors from mismanagement by the board of directors;
c. to prevent dissipation of corporate assets;
d. to prevent discrimination among stockholders and creditors of a
corporation.
80. Right of pre-emption is given to a stockholder:
a. as an option of the stockholder to subscribe to a new allotment of shares
whenever the capital stock of a corporation is increased or new
shares of stock are issued;
b. to safeguard the right of stockholders to preserve their proportionate
corporate interests;
c. to compensate the stockholders for the risk in investing their money;
d. all of the above.
81. The extent of a stockholder’s right of inspection of corporate books:
a. the stockholder may be allowed to take books from the office of the
corporation;
b. the corporation has the duty to supply any stockholder, upon his
request, with a list of its stockholders showing their respective
subscriptions;
c. the right extends to subsidiaries of a parent corporation domiciled and
with its books and records in another jurisdiction;
d. the right includes the right to make copies, abstracts and memoranda of
the contents of the books, records or any document by his
13
True of False:
15
a. The Roman Catholic Church even without registration with the SEC is
considered a corporation by the State.
b. A private corporation which is neither owned nor controlled by the
government may be created by special law.
c. Authorized capital stock limits the number of shares that may be issued by
a corporation.
d. Non-voting shares are not allowed to vote on all matters affecting the
corporation.
e. A meeting of stockholders or members is always required for the
amendment of the articles of incorporation.
f. A corporation may deny the pre-emptive right of its stockholders;
g. Holders of delinquent stocks are not entitled to dividends.
h. Merger is when two or more constituent corporations decide to
amalgamate, as a result of which, a new corporation is born.
i. A no par value share has always an issued value based on the
consideration for which it was issued.
j. A “no par value” share may not be issued for less P5.00 per share;
k. Redeemable shares may be issued only when expressly so provided in the
articles of incorporation and upon expiration of the period fixed,
they may be taken up or purchased, regardless of the existence of
unrestricted retained earnings.
l. A corporation may purchase or acquire its own shares provided that the
acquisition is for a legitimate purpose and that there be unrestricted
retained earnings.
m. Incorporators must be natural persons, not less than five but not more than
fifteen, all of legal age, and a majority of whom are residents of the
Philippines.
n. Redeemable or callable shares 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.
o. In a voting trust agreement, a trustee acquires legal title to the shares of
the transferring stockholders.
p. An executive committee, composed of not less than three members of the
board, may be created by the board of directors.
q. Any two (2) or more positions in a corporation may be held concurrently
by the same person without exception.
r. The secretary of the corporation must be a director, and a resident and
citizen of the Philippines.
s. A person convicted by final judgment of an offense punishable by
imprisonment for a period exceeding six (6) years, or a violation of
the Corporation Code, committed within five (5) years prior to the
date of his election or appointment is disqualified from being
elected or appointed as a director, trustee or officer.
t. Vacancies occurring in the board other than by removal may be filled by
the remaining directors if still constituting a quorum.
u. An incumbent director or trustee may be removed by merely electing a
16