RFBT (CORP, SRC, PART, COOP) - W_ANSWERS PDF

CORPORATIONS PART I: THEORY 1. It is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence a. C...

CORPORATIONS PART I: THEORY 1. It is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence a. Corporation c. Partnership b. Cooperative d. Joint Venture 2. Corporations are distinguished from partnerships in that a. The liability extends up to private properties b. Created by agreement c. No dissolution in case of death, withdrawal or resignation of the owner d. Interest or ownership is transferable only if the owners consent 3. The following are the advantages of forming a corporation, except a. There is ease in transferability of shares of stocks b. It has a legal capacity to act and contract as a distinct unit in its own name c. The stockholder’s limited liability on the obligation of the corporation d. All of the above are advantages 4. The following are the disadvantages of forming a corporation, except a. Its credit is weakened by the limited liability feature c. It is subject to higher taxes or sometimes indirect double taxation b. There is high cost of formation and operations d. All of the above are disadvantages 5. Statement 1: A stock corporation is a corporation which has capital stock divided into shares of stocks 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 Statement 2: A non-stock corporation is a corporation where no part of its income is distributable as dividends to its members and the capital of the corporation is not divided into shares of stocks a. Both statements are true c. Only Statement 2 is true b. Only Statement 1 is true d. Both statements are false 6. It refers to a corporation with a single stockholder a. One person corporation (OPC) c. Joint Venture b. Partnership d. Corporation Aggregate 7. Statement 1: A civil corporation is a corporation established for business or profit Statement 2: An eleemosynary corporation is a corporation established for charitable purposes a. Both statements are true c. Only Statement 2 is true b. Only Statement 1 is true d. Both statements are false 8. Statement 1: A corporation sole is a religious corporation which consists of one member only or his successors Statement 2: A lay corporation is a corporation organized for a purpose other than for religious a. Both statements are true c. Only Statement 2 is true b. Only Statement 1 is true d. Both statements are false 9. Statement 1: A domestic corporation is a corporation organized under the laws of the Philippines Statement 2: A foreign corporation is a corporation organized under laws other than those of the Philippines and whose laws allow Filipino citizens and corporations to do business in its own country or State a. Both statements are true c. Only Statement 2 is true b. Only Statement 1 is true d. Both statements are false 10. Which of the following types of corporations is not required to file articles of incorporation to obtain juridical personality as a private corporation? a. Corporation by prescription c. Ostensible corporation b. De facto corporation d. De jure corporation 11. Statement 1: Incorporators refer to the persons mentioned in the Articles of Incorporation as originally forming and composing the corporation, having signed the Articles and acknowledged the same before notary public Statement 2: Corporators in a stock corporation are called stockholders  a. Both statements are true c. Only Statement 2 is true b. Only Statement 1 is true d. Both statements are false 12. Statement 1: Corporation by estoppel or ostensible corporation refers to all persons who assume to act as a corporation knowing it to be without authority. It has no juridical personality. It has no corporate existence and is not considered an artificial being in contemplation of Revised Corporation Code Statement 2: The status of contract entered into between an ostensible corporation/corporation by estoppel and another person valid and binding by reason of estoppel on both parties a. Both statements are true c. Only Statement 2 is true b. Only Statement 1 is true d. Both statements are false 13. Statement 1: A de jure corporation refers to a corporation which actually exists both in fact and in law. It has complied with all the requirements of law and therefore its juridical personality is not subject to the direct attack by the state through quo warranto proceedings Statement 2: A de factor corporation refers to a corporation which actually exists for all practical purposes as a corporation but which has no legal right to corporate existence as against the State since it has not complied with all the formalities or requirements provided by law. This corporation has a corporate existence but its juridical personality may be directly attacked by the state through quo warranto proceedings a. Both statements are true c. Only Statement 2 is true b. Only Statement 1 is true d. Both statements are false 14. Statement 1: Persons who have agreed to take and pay for original unissued shares of a corporation formed or to be formed are called subscribers Statement 2: Persons who bring about or cause to bring about the formation and organization of a corporation by bringing together the persons interested in the enterprise are called promoters a. Both statements are true c. Only Statement 2 is true b. Only Statement 1 is true d. Both statements are false 15. Statement 1: The interest or right of the stockholder in the corporation’s profit or in the net assets of corporation on dissolution is shares of stock Statement 2: Certificate of stock refers to the paper representation or tangible evidence of the stock itself and of the various interests therein and expresses the contract between the corporation and the stockholder. It is not actually necessary to render a person a stockholder in a corporation because it is merely evidence of the shares of stock covered a. Both statements are true c. Only Statement 2 is true b. Only Statement 1 is true d. Both statements are false 16. Statement 1: Common shares refer to the basic class of ordinary shares usually without extraordinary rights and privileges, and the owners thereof are entitled to pro-rata share in the profits of the corporation and in its assets upon dissolution and likewise in the management of its affairs. This type of shares which has complete voting rights is required to be present in every stock corporation Statement 2: Preferred shares refer to a type of shares of stocks that is issued with some privileges in the distribution of dividends and net assets of the corporation a. Both statements are true c. Only Statement 2 is true b. Only Statement 1 is true d. Both statements are false 17. It refers to a type of shares of stocks issued with an arbitrary amount stated in its certificate of stock. This type share of stocks cannot be issued below that said face value appearing in the certificate of stock and stated in the Articles of Incorporation. Preferred stocks must always be classified as this type of stocks while common may or may not be this type of stocks a. Par value shares c. Issued value shares b. No par value shares d. Present value shares 18. Amount equal to the aggregate par value or issued value of the outstanding capital stock a. Legal capital c. Outstanding capital stock b. Unissued capital stock d. Authorized capital stock 19. [SKIP] 20. 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 primary purpose and the secondary purposes may be stated together as one purpose in the articles of  incorporation d. The purposes must be lawful 21. How may a corporation be created under Philippine setting? a. In case of private corporation, by operation of general corporation law particularly the Revised Corporation Code of the Philippines. b. In case of public corporation, by law or enactment of special law. c. Either A or B. d. By mere consent of the contracting parties 22. Which of the following corporate legal doctrines is not true? a. The business judgement rule means that a stockholder is personally liable for the financial obligations of the corporation to the extent only of his unpaid subscription or that a stockholder’s liability for corporate debts extends only up to the amount of his capital contribution b. The doctrine of separate juridical personality means that a corporation is a juridical entity with legal personality separate and distinct from those acting for and, in its behalf c. The right of succession or continuity of existence means that the corporation has the capacity for continuous existence despite the death or replacement of its shareholders or members, for it has a personality separate and distinct from those who compose it d. The trust fund doctrine means that the capital stock of a corporation or the assets of an insolvent corporation representing its capital is a trust fund reserved for the benefit of company’s creditors 23. Are the stockholders, directors or officers personally liable for the liabilities of the corporation after the assets of the corporation are exhausted? a. Yes because they are considered to be general partners b. No under all instances c. Yes under all instances d. No as a general rule, unless exceptional cases warrant the piercing of the veil of corporate fiction 24. What are the exceptional cases wherein the courts may pierce the veil of corporate fiction so that the stockholders, directors or officers will become personally liable for corporate debts? a. When the corporate entity is used as a mere alter ego, business conduit or instrumentality of a person or another entity b. When the corporate entity is used to defeat public convenience such as in case of labor case c. When the corporate entity is used to commit fraud or to justify a wrong or to defend a crime or to commit tax evasion d. Any of the above 25. [SKIP] 26. Statement 1: The status of contracts entered into by a de facto corporation is valid and binding to protect members of the public who deal in good faith with a corporation who seems to be properly authorized Statement 2: The liability of officers and directors of a de facto corporation to creditors is only up to the extent of their subscription unless they acted in bad faith a. Both statements are true c. Only Statement 2 is true b. Only Statement 1 is true d. Both statements are false 27. Under the Revised Corporation Code, what is the requirement for the issuance of preferred shares? a. Preferred shares of stock must be issued with par value b. Preferred shares of stock may either be par value shares or no-par value shares c. Preferred shares of stock must be no-par value shares d. Preferred shares of stock may be issued only with discounted value 28. What is/are the means by which the issue price of no par value common value shares is determined? a. It may be fixed by the Board of Directors based on the authority given in the articles of incorporation b. It may be fixed in the articles of incorporation or by-laws c. It may be fixed by stockholders representing at least a majority of the outstanding capital stock at a meeting duly called for the purpose d. Any of the above 29. Which is correct as regards to legal capital of par-value shares of stocks and no-par value shares of stocks? a. In case of par-value shares of stocks, the legal capital is the total par value of shares issued and subscribed b. In case of no par-value shares of stocks, the legal capital is the entire consideration received  c. Both A and B d. Neither A nor B 30. When no-par value common shares of stocks are issued, what is the minimum issue price? a. P1.00 c. P5.00 b. P2.00 d. P10.00 31. If founder’s share classified as such in the Articles of Incorporation is given exclusive right to vote and be voted in the election of the board of directors, what is the maximum period or limit of that right? a. 2 years from the approval of SEC c. 5 years from the approval of SEC b. 3 years from the approval of SEC d. 10 years from the approval of SEC 32. Which of the following statements refers to the authorized capital stock? a. It refers to the portion of the capital stock or total shares of stock issued to subscribers or stockholders, whether fully paid or partially paid, except treasury shares. It pertains to capital stock entitled to dividends or right to vote b. It refers to the total amount of the capital that persons have agreed to take and pay for, which need not necessarily be, and can be more than, the par value of the shares c. It refers to the amount fixed in the articles of incorporation that may be subscribed and paid by the stockholders of the corporation d. It refers to the amount equal to the aggregate par value of total shares issued and subscribed in case of par value shares or total consideration received in case of no par value shares and it cannot be returned to shareholders until dissolution 33. What is the life of a private corporation? a. It has perpetual existence unless its articles of incorporation provide for a specific term b. It has maximum life of 20 years c. It has maximum life of 30 years d. It has maximum life of 50 years 34. What is the period for renewal of term of a private corporation prior its term expiration? a. Within a 1-year period c. Within a 3-year period b. Within a 2-year period d. Within a 5-year period 35. Under the Revised Corporation Code, may the corporation with a fixed term whose term has expired file an application for revival of certificate of incorporation with SEC? a. No, because the corporation is ipso facto dissolved by operation of law upon failure to renew the term within the deadline b. Yes, a corporation whose term has expired may apply with SEC for the revival of its certificate of incorporation and subject to all of its duties, debts, and liabilities existing prior to its revival c. No, in the absence of court order d. Yes, but only with the consent of the Congress of the Philippines 36. What is the implied minimum authorized capital stock of an ordinary stock corporation? a. P50,000 c. None b. P15,000 d. P200,000 37. ABC Inc. has an authorized capital stock of P60,000. Which of the following comply with the capital requirements of law for valid incorporation? a. Actual subscription of P24,000 and paid up capital of P5,200 b. Actual subscription of P12,000 and paid up capital of P5,000 c. Actual subscription of P15,000 and paid up capital of P3,750 d. Any of the above 38. Statement 1: Certificate of incorporation or registration refers to the document issued by the SEC to a newly formed corporation which evidenced the existence of the juridical personality of the corporation. It is also known as the primary franchise of a corporation Statement 2: By-laws refer to the document that defines the charter of relationships between the State and the corporation, the stockholder and the State, and between the corporation and its stockholders. It must be submitted to Securities and Exchange Commission (SEC) by the incorporators in order for the proposed corporation to obtain its juridical personality Statement 3: Articles of Incorporation refer to the rules of action adopted by a corporation for its internal government and for the regulation of conduct, and it prescribes the rights and duties of its stockholders or  members towards itself and among themselves in reference to the management of its affairs a. All statements are true c. Only two statements are true b. Only one statement is true d. All statements are false 39. Which is the primary government agency authorized to approve or reject the amendment in the articles of incorporation of a corporation? a. Securities and Exchange Commission c. Bureau of Internal Revenue b. Department of Trade and Industry d. Department of Finance 40. Under Revised Corporation Code, for primary registration with the Securities and Exchange Commission, the following are the documents to be submitted by the proponents for the creation of domestic stock corporation, except a. Cover Sheet for Registration b. Articles of Incorporation c. By-Laws d. Treasurer’s Affidavit showing the compliance with minimum subscription and paid-up capital including the certificate of deposit and letter of authority to examine bank deposit 41. The purpose clause must specify the corporation’s primary purpose and which are secondary which need not be related to the main purpose. The significance or reasons of purpose clause in the articles of incorporation are as follows, except a. It confers as well as limits the powers which a corporation may exercise b. It informs prospective investors and creditors of the kind of business the corporation deals with c. It notifies the management of the limits of its actions d. It allows the corporation to engage in any type of business or transactions 42. [SKIP] 43. Under the SEC Revised Guidelines, the corporate name shall contain any of the following words, except a. Corp. c. Inc. b. Incorporated d. Ltd. 44. When a change in the corporate name is approved, the SEC shall issue an amended certificate of incorporation under the amended name. What is the effect of the mere change of the corporate name approved by SEC? a. It will result to dissolution of the previous corporation b. It results to the creation of a new corporation c. It has no effect on the identity of the corporation, or on its property, rights or liabilities d. It will extinguish all the liabilities of the said corporation 45. When does a private corporation formed under the Revised Corporation Code obtain its corporate existence or juridical personality? a. From the date of consent of the incorporators to the articles of incorporation b. From the date of submission of the articles of incorporation to the SEC c. From the date of submission of the by-laws to the SEC d. From the date of issuance by the SEC of the certificate of incorporation under SEC’s official seal 46. What is the mandatory period for a newly formed corporation to formally organize and to commence business transaction from the date of its incorporation to prevent automatic dissolution of the corporation? a. 5 years c. 4 years b. 6 years d. 2 years 47. What is the effect if a corporation does not formally organize and commence the transaction of its business or the construction of its works within five (5) years from the date of its incorporation or issuance of certificate of registration by SEC under SEC’s official seal for causes within the corporation’s control? a. The corporation is ipso facto dissolved by operation of law b. That shall be a non-automatic ground for suspension or revocation of corporate charter or corporate dissolution making such entity a de facto corporation c. The corporation is considered de facto corporation d. The corporation shall be criminally liable 48. What is the effect if a corporation has commenced the transaction of its business five (5) years from the date of its incorporation but subsequently becomes continuously inoperative for a period of at least five (5) years? a. The corporation is ipso facto dissolved by operation of law  b. That shall be a non-automatic ground for suspension or revocation of corporate charter or corporate dissolution making such entity a delinquent corporation c. The corporation is considered an ostensible corporation d. The corporation shall be criminally liable 49. Statement 1: Under the Revised Corporation Code, a delinquent corporation refers to a corporation that becomes continuously inoperative for a period of at least five (5) years after its formal organization within the period provided by law Statement 2: Under the Revised Corporation Code, the period allowed by law to a delinquent corporation to resume its operation from the notice given by SEC in order for SEC to lift the delinquency status of such delinquent corporation is within 2 years a. Both statements are true c. Only Statement 2 is true b. Only Statement 1 is true d. Both statements are false 50. What is the policy-making or governing body of a private corporation? a. General partners c. General manager b. Board of Directors/Trustees d. Council of elders 51. The following are the qualifications of directors of a stock corporation, except a. He must own at least one share of the capital stock of the corporation b. He must be of legal age c. They must not be more than 15 directors d. All of the above are qualifications of directors 52. Under the Revised Corporation Code, what is minimum number of Independent Directors in corporations vested with public interest? a. At least 10% of the directors c. At least 20% of the directors b. At least 1/3 of the directors d. At least 25% of the directors 53. What is the maximum term of office of directors of a stock corporation? a. Term of three years but he may continue to serve until their successors are elected and qualified b. Term of four years but he may continue to serve until their successors are elected and qualified c. Term of two years but he may continue to serve until their successors are elected and qualified d. Term of one year but he may continue to serve until their successors are elected and qualified 54. Which of the following statements concerning number of directors/trustees of a corporation is false? a. Trustees of nonstock educational corporation shall be 5 or 10 or 15 b. In a one person corporation, the number of directors is at least 5 c. In a stock corporation, it must not be more than 15 d. In ordinary non-stock corporation, the board of trustees may exceed 15 members 55. Statement 1: Cumulative voting is defined as a method of concentrating votes devised to give sufficient opportunity to minority shareholders to secure representation in the board. It is the manner of voting required by the Revised Corporation Code for election of board of directors in a stock corporation Statement 2: Straight voting is defined as method of voting wherein a member can only cast one vote per share for each director a. Only Statement 2 is true c. Both statements are true b. Only Statement 1 is true d. Both statements are false 56. It is the manner of voting for election of board of trustees in a non-stock corporation a. Straight voting b. Members of non-stock corporations may cast as many votes as there are trustees elected but may cast not more than one vote for one candidate c. Cumulative voting by distribution d. Cumulative voting for one candidate 57. Which of the following statements concerning the election of directors/trustees is false? a. At any meeting of stockholder or members called for the election of directors or trustees, there must be present either in person or by representative authorized to act by written proxy, the owners of a majority of the outstanding capital stock or majority of members entitled to vote b. The election must be by ballot if requested by any voting member or stockholder c. The candidates receiving the higher number of votes shall be declared elected and a majority vote is not necessary as long as there is a quorum during the election  d. Delinquent stocks may be voted 58. What is the number of vote of each director of a corporation regarding act of management or administration? a. It is dependent upon the stocks owned by a director c. One vote for each director b. Five votes for each director d. None 59. Statement 1: Under the Revised Corporation Code, the period for reporting to SEC of non-holding of elections of directors/trustees and the reasons therefore is within 30 days from the date of the scheduled election Statement 2: Under the Revised Corporation Code, the latest period for the holding of new election in case of non-holding of elections of directors/trustees shall not be later than 60 days from the scheduled date or original date a. Only Statement 1 is true c. Both statements are true b. Only Statement 2 is true d. Both statements are false 60. When may the courts exceptionally interfere to the contracts entered into by the board of directors? a. When the contracts are so unconscionable and oppressive as to amount to a wanton destruction of rights of the minority b. When the contracts are considered ultra vires c. Neither A nor B d. Either A or B 61. The following are the three-fold duties of corporate directors, trustees and officers, except a. Duty of diligence c. Duty of obedience b. Duty of loyalty d. Duty of independence 62. The following are the mandatory corporate officers under the Revised Corporation Code, except a. Treasurer who has the authority to receive and keep funds of the corporation and to disburse them in accordance with the authority given to him by Board of authorized officers b. Secretary who is regarded as the custodian of corporate records c. President who is regarded as the highest executive officer in the corporate settings and necessarily brings with him implied powers and apparent authority of the corporation d. All of the above are mandatory corporate officers 63. The following are the qualifications of a corporate president, except a. He must neither be a secretary nor a treasurer of the same corporation b. He must be a resident citizen of the Philippines c. He must be a stockholder of the corporation d. He must be a director of the corporation 64. The following are the qualifications of a corporate secretary, except a. He must be a director of the corporation c. He must be a resident of the Philippines b. He must be a Filipino citizen d. He must not be a president of the same corporation 65. What is the qualification of a corporate treasurer? a. Must be resident-citizen of the Philippines b. Must be a stockholder and must be a Filipino Citizen c. Not the corporate president and must be a resident of the Philippines d. Must be a stockholder and a Director 66. Which of the following corporate officer is required to be a stockholder and a director? a. Secretary c. President and chairman of the board of directors b. Vice-president d. Treasurer 67. Which of the following is allowed concurrent positions to a single person? a. President and Secretary c. President and Treasurer b. Secretary and Treasurer d. None of the above 68. Statement 1: The period for reporting the names, nationalities and residences of directors, trustees and officers elected to the SEC by the corporate secretary or any other officer is within 30 days after the election Statement 2: The period for reporting in writing the death, resignation or ceasing as such of directors, trustees and officers to the SEC by the corporate secretary or any other officer is within 7 days from the knowledge of the said death, resignation or cessation a. Only Statement 1 is true c. Both statements are true  b. Only Statement 2 is true d. Both statements are false 69. Under the Revised Corporation Code, which of the following is/are considered temporary grounds for disqualification of directors, trustees or corporate officers for a period of at least five (5) years? a. Found administratively liable for any offense involving fraudulent acts b. By a foreign court or equivalent foreign regulatory for acts, violations or misconduct similar to those enumerate in letter (b) and (c) above c. Convicted by final judgment of an offense punishable by imprisonment for a period exceeding six (6) years, violation of Revised Corporation Code, and violation of Securities Regulation Code d. All of the above 70. Under Revised Corporation Code, when shall the election to fill-up vacancy in the board of directors/trustees be held if the reason is for causes other than the expiration of term (removal, increase in sits, resignation, abandonment of office, or death)? a. It shall be held no later than 15 days from the time the vacancy arose b. It shall be held no later than 20 days from the time the vacancy arose c. It shall be held no later than 45 days from the time the vacancy arose d. It shall be held no later than 30 days from the time the vacancy arose 71. The following are the reasons for board vacancy which will disqualify the remaining members of the board with quorum to fill up the vacancy in the board, except a. Expiration of term of a director c. Removal of a director b. Disqualification of a director d. Increase in the sits of the board 72. The Articles of Incorporation and By-Laws provide for a maximum of 15 directors for JD, Inc. During 2021: Statement 1: 3 directors resigned and 4 directors died. The vacancies can be filled up either by plurality vote of the majority of the outstanding capital stock entitled to vote or by majority vote of the remaining members of board of directors Statement 2: 3 directors were removed by stockholders’ vote and 2 directors’ term expired. The vacancies can only be filled up by plurality vote of the majority of the outstanding capital stock entitled to vote Statement 3: 2 directors resigned, 2 directors died and 4 directors were disqualified. The vacancies can only be filled up by plurality vote of the majority of the outstanding capital stock entitled to vote a. Only one statement is true c. All statements are true b. Only two statements are true d. All statements are false 73. Statement 1: As a general rule, directors of a corporation are not entitled to receive any compensation except for reasonable per diems or unless the compensation is fixed by by-laws or when granted by the vote of stockholders Statement 2: The maximum amount to be granted as compensation to board of directors in such capacity is 10% of the net income of corporation before tax of the immediately preceding year a. Only Statement 1 is true c. Both statements are true b. Only Statement 2 is true d. Both statements are false 74. What is the liability of a director or officer when he attempts to acquire or acquires, in violation of his duty, any interest adverse to the corporation in respect of any matter which has been reposed in him in confidence? a. He shall be liable as a trustee for the corporation and must account for the profits which otherwise would have accrued to the corporation b. He is not liable to the corporation if the director is the majority stockholder c. He shall not be liable to the corporation d. He is liable but only to the extent of his capital contribution 75. The following are the remedies of the stockholders in case of mismanagement of the corporation, except a. Ask for the involuntary dissolution of the corporation if the abuse amounts to a ground for the institution of a quo warranto proceedings but the Solicitor General refuses to act b. File a derivative suit with RTC or complaint with the SEC c. File an action for receivership d. File a criminal action against the corporation e. File an action for injunction if the act has not yet been done 76. Statement 1: An independent director refers to a person who, apart from shareholdings and fees received from the corporation, is independent of management and free from any business or other relationship which could, or could reasonably be perceived to materially interfere with the exercise of independent judgment in carrying out the responsibilities as a director  Statement 2: A self-dealing director, trustee or officer refers to a director, trustee, or officer who personally contracts with the corporation in which he is director, trustee or officer Statement 3: An interlocking director, trustee or officer refers to a person who is a director, trustee or officer in different corporations a. Only one statement is true c. All statements are true b. Only two statements are true d. All statements are false 77. The following are the essential requisites in order for a contract entered into by self-dealing director/officer with the corporation to be perfectly valid even without requiring ratification from stockholders, except a. That the contract is fair and reasonable under the circumstances b. That the presence of such self-dealing director in the board meeting in which the contract was approved was necessary to constitute a quorum c. In the case of an officer, the contract has been previously authorized by the board of directors d. That the vote of the self-dealing director was not necessary for the approval of the contract 78. What is the status, as a general rule, of a contract entered into by 2 or more corporations, having interlocking directors? a. Voidable at the option of the director b. Voidable at the option of the corporation c. Null and void d. Valid and without defect provided there is no fraud and the contract is fair and reasonable 79. It refers to a body created by the by-laws and composed of not less than three appointed members of the board which, subject to the statutory limitations, has all the authority of the board to the extent provided in the board resolution or by-laws. This body may act, by majority of all its members, on such specific matters within the competence of the board as may be delegated to it in by-laws a. Executive council c. Executive body b. Executive group d. Executive committee 80. How may an executive committee be created? a. The executive committee can be created by the board of directors itself through a simple board resolution even if nothing is stated in the by-laws regarding its creation b. The executive committee can only be created by virtue of a provision in the by-laws c. Either A or B d. Neither A nor B 81. Statement 1: Express powers refer to the powers expressly provided, enumerated and granted by the Revised Corporation Code or special law to a corporation Statement 2: Implied or necessary powers are those powers inferred from or reasonably necessary for the exercise of the provided powers of the Corporation. They flow from the nature of the underlying business enterprise Statement 3: Incidental or inherent powers are powers that attached to a corporation at the moment of its creation without regard to its expressed powers or particular primary purpose and may be said to necessarily arise from its being a juridical person engaged in business. They flow from the nature of the corporation as a juridical person a. Only one statement is true c. All statements are true b. Only two statements are true d. All statements are false 82. The following are examples of implied or necessary powers of a private corporation, except a. To establish a local post office by a mining company b. To issue checks c. To sell, supply or manage advertising materials for an advertising company d. To operate an online casino for a company engaged in amusement center for various computer games e. To operate power plant for cement factory company 83. The following are examples of incidental or inherent powers of a private corporation, except a. Right to succession c. Right to make by-laws for its government b. Right to have corporate name d. All of the above are incidental or inherent powers 84. Statement 1: An ultra vires act refers to act committed outside the object for which a corporation is created as defined by the law of its organization and therefore beyond the express, implied and incidental powers of the corporation Statement 2: The status of ultra vires contracts entered by a corporation which are illegal per se such as crime  are null and void a. Only Statement 1 is true c. Both statements are true b. Only Statement 2 is true d. Both statements are false 85. Statement 1: Pre-emptive right refers to the right of shareholders to subscribe to all issues or disposition of shares of any class in proportion to their present shareholdings in order to preserve their ownership interest in the corporation unless properly denied in the articles of incorporation. It is intended to protect both the proprietary and voting rights of a stockholder in a corporation, since such proportionate interest determines his proportionate power to vote in corporate affairs when the law gives the shareholders a right to affirm or deny board actions. It is a common law right which may be exercised by stockholders even when no provision is stated in the law Statement 2: Right of first refusal provides that a stockholder who may wish to sell or assign his shares must first offer the shares to the corporation or to other existing stockholders of the corporation, under terms and conditions which are reasonable; and that only when the corporation or the other stockholders do not or fail to exercise their option, is the offering stockholder at liberty to dispose of his shares to third parties. It arises only by virtue of contractual stipulations in which case the right is construed strictly against the right of persons to dispose of or deal with their property. It is normally available in a close corporation as stated in its articles of incorporation as a type of transfer restriction a. Only Statement 1 is true c. Both statements are true b. Only Statement 2 is true d. Both statements are false 86. In which document shall the denial of pre-emptive right of a stockholder be stated for denial to be valid and binding? a. By-Laws c. Neither A nor B b. Articles of incorporation d. Either A or B 87. Statement 1: As a general rule and in compliance of trust fund doctrine, dividends can be declared only out of unrestricted retained earnings Statement 2: As a general rule, the maximum surplus profits that can be retained by a stock corporation is 100% of paid up capital a. Only Statement 1 is true c. Both statements are true b. Only Statement 2 is true d. Both statements are false 88. Statement 1: Liquidating dividends are dividends which are actually distributions of the assets of the corporation upon dissolution or winding up of the same Statement 2: Stock dividend is an example of dividends required to be ratified by the stockholders owning at least 2/3 of the outstanding capital stock entitled to vote a. Only Statement 1 is true c. Both statements are true b. Only Statement 2 is true d. Both statements are false 89. Statement 1: A management contract refers to any contract whereby a corporation undertakes to manage or operate all or substantially all of the business of another corporation, whether such contracts are called service contracts, operating agreements or otherwise Statement 2: As a general rule, the maximum period for one term of management contract is 5 years a. Only Statement 1 is true c. Both statements are true b. Only Statement 2 is true d. Both statements are false 90. The following are the purposes of by-laws, except a. It defines the rights and duties of corporate officers and directors and of stockholders toward the corporation and among themselves b. It is a condition precedent before the acquisition of juridical personality of a corporation c. It affects and prejudices the interests of third persons d. It supplements the articles of incorporation e. It regulates the business transactions of the corporation in a particular way 91. The following are the requisites for the validity of by-laws, except a. It must be discriminatory, oppressive and arbitrary b. It must not impair obligations and contracts c. It must not be contrary to the Revised Corporation Code, any law, and Articles of Incorporation d. It must not be contrary to morals and public policy 92. Under Revised Corporation Code, what is the new mode of giving notice to stockholders/members regarding their regular or special meetings?  a. It may now be sent through the use of pigeons b. It may now be sent through the use of animals c. It may now be sent electronically (electronic mail or other manner) in accordance with the rules and regulations of the SEC on the use of electronic data messages d. All of the above 93. Under Revised Corporation Code, when may notice of meetings to stockholders/members be allowed to be given to them electronically in accordance with the rules and regulations of the SEC on the use of electronic data messages? a. When electronic sending is done with the consent of stockholders or members b. When electronic sending is allowed in the by-laws c. Neither A nor B d. Either A or B 94. Under Revised Corporation Code, if a date is not fixed in the by-laws for the regular meeting of shareholders or members, when shall the regular shareholders or members meeting be held? a. On any date after May 15 as determined by Board of Directors or Trustees b. On any date after July 15 as determined by Board of Directors or Trustees c. On any date after April 15 as determined by Board of Directors or Trustees d. On any date after June 15 as determined by Board of Directors or Trustees 95. Mandatorily, where shall the regular and special meeting of stockholders be located? a. In the city/municipality where the principal warehouse is located preferably at the principal warehouse of the corporation b. In the city/municipality where the largest branch is located preferably at the largest branch of the corporation c. In the city/municipality where the principal office is located preferably at the principal office of the corporation d. In the city/municipality where the principal branch is located preferably at the principal branch office of the corporation 96. Statement 1: In case the by-laws is silent, the regular meeting of stockholders shall be held annually Statement 2: In case the by-laws is silent, the regular meeting of board of directors shall be held monthly a. Only Statement 1 is true c. Both statements are true b. Only Statement 2 is true d. Both statements are false 97. Statement 1: In case the by-laws is silent, the President has the authority to order the calling of regular and special meeting of board of directors and regular meeting of stockholders Statement 2: In case the by-laws is silent, the Chairman of the Board shall preside the regular meeting of board of directors or regular meeting of shareholders Statement 3: In case the by-laws is silent, the Secretary has the obligation to call the regular and special meeting of board of directors or regular meeting of stockholders after being properly authorized a. Only one statement is true c. All statements are true b. Only two statements are true d. All statements are false 98. Under Revised Corporation Code, in case the by-laws is silent, what is the minimum number of days of giving notice in case of meeting of stockholders or board of directors? Regular meeting of Special meeting of Meeting of stockholders stockholders Directors a. At least two weeks At least one week At least one day b. At least three days At least two days At least five days c. At least 21 days At least one week At least two days d. At least four days At least five days At least six days 99. In case the by-laws is silent, where shall the meeting of the board of directors be held? a. In the principal office of the corporation c. Anywhere provided within the Philippines b. In the principal operation of the corporation d. Anywhere in or out of the Philippines 100. In which meeting is proxy allowed? a. Meeting of shareholders/members c. Both A and B b. Meeting of board of directors/trustees d. Neither A or B 101. The following shares are not entitled to vote, except  a. Delinquent shares c. Treasury shares b. Unpaid subscribed shares not yet declared delinquent d. Fractional shares c. Escrow shares before the fulfillment of suspensive condition 102. Statement 1: A proxy refers to a written authorization given by one person to another so that the second can act for the first and it also refers to the holder of authority or person authorized by an absent stockholder or member to vote for him at a stockholders’ meeting Statement 2: A voting trust agreement refers to the agreement whereby stockholders (trustors) of a stock corporation confers upon a trustee the right to vote and other rights pertaining to the shares and it should not be used to circumvent the law against monopolies and illegal combinations in restraint of trade or for fraud purposes. It may be pre-terminated through a court petition by the trustors when their rights are trampled upon by the trustee a. Only Statement 1 is true c. Both statements are true b. Only Statement 2 is true d. Both statements are false 103. The following are the requisites for validity of proxy, except a. It shall be filed before the scheduled meeting with the corporate secretary b. It shall be valid only for the meeting which is was intended unless the proxy is a continuing proxy c. It shall be in writing d. It shall be valid and effective even for a period longer than 10 years at any one time e. It shall be signed by the shareholder/member concerned 104. Statement 1: The effectivity or validity period of a proxy at any one time is for a period not exceeding 5 years Statement 2: The effectivity and validity period of voting trust agreement at any one time with the exception of voting trust specifically required as a condition in a loan agreement whose period depends upon the term of the loan is for a period not exceeding 5 years a. Only Statement 1 is true c. Both statements are true b. Only Statement 2 is true d. Both statements are false 105. The following are the correct differences between proxy and voting trust agreement, except a. There is no transfer of title to proxy while there is transfer of title to trustee b. All of the above are differences between proxy and voting trust agreement c. Proxy need not be notarized while voting trust agreement need to be notarized d. The proxy must vote in person while the trustee may vote in person or by proxy 106. How may a stockholder or member vote in election of directors or trustees of a corporation? a. By personal voting c. Through a proxy b. By remote communication or in absentia d. Any of the above 107. It refers to any contract for the subscription or acquisition of unissued stock in an existing corporation or the shares of the corporation still to be formed a. Promotion contract c. Sales contract b. Acquisition contract d. Subscription contract 108. It refers to a stock issued for a consideration less than their par or issued price a. Gaseous stock c. Watered stock b. Secret reserves d. Solidified shares 109. The following are the possible effects of watered stocks, except a. The total assets of the corporation are overstated b. The total contributed capital of the corporation is understated c. The total stockholders’ equity of the corporation is overstated d. The total liability of the corporation is understated 110. Which of the following statements concerning shares of stocks is incorrect? a. It constitutes intangible personal property of the shareholder b. It represents an inchoate interest or a sheer expectancy of a right in the management of the corporation and to share in the profits and net assets of the corporation after payment of corporate debts c. It represents proprietary right of stockholder to the assets of the corporation or proprietary claim of co- ownership in the assets of the corporation d. It represents aliquot parts of the corporation’s capital and this interest is indirect, contingent, remote, conjectural, consequential and collateral 111. Statement 1: A derivative suit refers to a suit brought by one or more stockholders or members in the name and on behalf of the corporation to redress wrongs committed against it or to protect or vindicate corporate rights, whenever the officials of the corporation refuse to sue or are the ones to be sued or hold control of the corporation. The corporation is a necessary party to the suit. It is a suit filed by a person who must be a shareholder to enforce a corporation’s cause of action Statement 2: An individual suit is an action brought by a stockholder against the corporation for direct violation of his contractual rights Statement 3: A representative suit refers to an action brought by a person in his own behalf or on behalf of all similarly situated a. Only one statement is true c. All statements are true b. Only two statements are true d. All statements are false 112. When may a corporation charge an interest on unpaid subscription not yet declared delinquent? a. From the date of subscription regardless of provision in the by-laws and subscription contract b. Only from the moment there is judicial or extrajudicial demand c. It cannot charge any interest d. From the date of subscription when required by subscription contract or by-laws at the rate fixed in the by-laws or legal rate (which is 6% on or after July 1, 2013 or 12% before July 1, 2013) if no rate is stated. The agreement to pay interest must be made in writing to be valid 113. Under the Revised Corporation Code, what is the interest rate on unpaid subscription? a. Legal interest rate b. Market rate c. Rate of interest fixed in the subscription contract or legal interest rate in the absence of rate fixed in the subscription contract d. Rate of interest fixed in the by-laws or legal interest rate in the absence of rate fixed in the by-laws 114. How many days shall lapse from the due date fixed in the subscription contract or from the date fixed in the call made by the Board of Directors for the shares to be delinquent if still unpaid? a. 20 days c. 30 days b. 15 days d. 60 days 115. Who shall be considered the highest bidder in a delinquency sale/public auction? a. The person participating in the delinquency sale who offers to pay the full amount of the balance of the subscription together with the accrued interest, costs of advertisement and expenses of sale, for the highest number of shares b. The person participating in the delinquency sale who offers to pay the full amount of the balance of the subscription excluding the accrued interest, costs of advertisement and expenses of sale, for the smallest number of shares c. The person participating in the delinquency sale who offers to pay the full amount of the balance of the subscription together with the accrued interest, costs of advertisement and expenses of sale, for the smallest number of shares d. The person participating in the delinquency sale who offers to pay the full amount of the balance of the subscription excluding the accrued interest, costs of advertisement and expenses of sale, for the highest number of shares 116. The rights of delinquent shareholder are suspended at the time of delinquency. What right is still available to a delinquent shareholder? a. Right to cash dividends to be offsetted to his balance and right to stock dividends which will be withheld until full payment of the subscription balance b. Right to inspect corporate books c. Right to vote at stockholders’ meeting d. Right to exercise appraisal right 117. The following are the property rights of a shareholder, except a. To transfer of stock in the corporate book b. To receive dividends when declared by board of directors c. To issuance of certificate of stock/other evidence of stock ownership d. All of the above are property rights of a shareholder 118. The following are the remedial rights of a shareholder, except a. To demand payment in the exercise of appraisal right  b. To recover stock unlawfully sold for delinquency c. To inspect corporate books d. All of the above are remedial rights of a shareholder 119. The following are the books or records to be kept by the corporation, except a. Annual financial statements b. Book of minutes of all meetings c. Stock and transfer book in case of stock corporation d. All of the above are books or records to be kept by the corporation 120. Statement 1: Under the Revised Corporation Code, unless the by-laws provide for a longer period, the stock and transfer book or membership shall be closed at least twenty (20) days before the scheduled date of the regular meeting of stockholders Statement 2: Under the Revised Corporation Code, unless the by-laws provide for a longer period, the stock and transfer book or membership shall be closed at least seven (7) days before the scheduled date of the special meeting a. Only Statement 1 is true c. Both statements are true b. Only Statement 2 is true d. Both statements are false 121. Under the Revised Corporation Code, unless changed by Department of Finance Secretary, how much is the total assets or total liabilities of the corporation for the financial statements to be required to be audited by CPA? a. At least P1,000,000 of total assets or total liabilities b. At least P500,000 of total assets or total liabilities c. At least P600,000 of total assets or total liabilities d. At least P100,000 of total assets or total liabilities 122. Statement 1: Consolidation refers to a business combination whereby one or more existing corporations are absorbed by another corporation which survives and continues the combined business Statement 2: Merger refers to a business combination whereby two or more existing corporations form a new corporation different from the combining corporation a. Only Statement 1 is true c. Both statements are true b. Only Statement 2 is true d. Both statements are false 123. Which of the following is not a requisite for merger or consolidation? a. There must be ratification by vote of stockholders representing at least 2/3 of outstanding capital stock or members b. There must be approval by the Securities and Exchange Commission c. It must be approved by the board of directors of each corporation by at least majority vote d. All of the above are requisites for merger or consolidation 124. What is the effectivity date of the merger or consolidation? a. Upon publication of the articles of merger or consolidation b. 2 weeks after the publication of the articles of merger or consolidation c. Date of submission of the articles of merger or consolidation to the SEC d. Date of issuance by SEC of certificate of merger or consolidation 125. It refers to the right to demand payment of the fair value of his shares, after dissenting from a proposed corporate action involving a fundamental change in the corporation in the cases provided by law. This right may be waived by a shareholder if he has done so knowingly and intelligently a. Pactum right c. Pre-emptive right b. Demandable right d. Appraisal right 126. Statement 1: The period for making a written demand on the corporation by a dissenting stockholder for the exercise of his appraisal rights is within 30 days after the date on which the vote was taken Statement 2: The period for submission of certificate of stocks to the corporation for notation as being dissenting stocks in the exercise of appraisal right by a stockholder is within 10 days from his written demand to withdraw a. Only Statement 1 is true c. Both statements are true b. Only Statement 2 is true d. Both statements are false 127. The following are the effects of exercise of appraisal right, except a. All rights accruing to such shares shall be suspended from time of demand for payment of the fair value  of the shares until either the abandonment of the corporate action b. The dissenting stockholder shall be entitled to receive payment of the fair value of shares thereof as of the day prior to the date on which the vote was taken, excluding any appreciation or depreciation in anticipation of such corporate action c. Upon payment of the fair value of shares, all the rights of dissenting stockholders are terminated and not merely suspended. However, presence of unrestricted retained earnings is necessary before payment to dissenting stockholders d. A dissenting shareholder who demands payment of fair value of his shares is allowed to withdraw from his decision even without the consent of the corporation 128. Who shall bear the cost and expenses of appraisal of the fair value of the shares of a dissenting shareholder? a. The corporation as a general rule, except when the price offered by the corporation approximates the fair value determined by the appraiser, in which case, the dissenting stockholder will now be liable b. Always corporation c. Dissenting stockholder unless stipulated d. Always dissenting stockholder 129. Which of the following are the requisites of a non-stock corporation? a. No part of whose income is, during its existence, distributable as dividends to its members, trustees, or officers c. Neither A nor B b. It does not have capital stock divided into shares d. Both A and B 130. Unless otherwise provided in the articles of incorporation or by-laws, what is the number of the board of trustees of ordinary nonstock corporation? a. The number of trustees shall be fixed in the articles of incorporation or bylaw which may or may not be more than 15 c. It should be not less than 5 but not more than 20 b. It should be not less than 5 but not more than 15 d. It should be not less than 5 but not more than 10 131. What is the term of office of the Board of Trustees of an ordinary non-stock corporation? a. One year c. Three years b. Two years d. Four years 132. What is the location of the regular or special meetings of members of a non-stock corporation? a. The place shall be in the principal office of the corporation b. At any place even outside the principal office of the corporation as long as provided in the by-laws and within the Philippines c. The place shall be in the residence of the founding members d. The place shall be in the residence of the President 133. What is the nature of transferability of membership in a nonstock corporation? a. Membership in a non-stock corporation and all rights arising therefrom are not personal and transferable, unless the articles of incorporation or the by-laws otherwise provide b. Membership in a non-stock corporation is a property right that can be transferred automatically c. Membership in a non-stock corporation and all rights arising therefrom are personal and non- transferable, unless the articles of incorporation or the by-laws otherwise provide d. None of the above 134. Statement 1: A close corporation is a type of stock corporation whose stockholders must not exceed the maximum limit of 20 and whose transfer of shares is normally subject to restriction normally a right of first refusal Statement 2: The maximum number of stockholders in a close corporation is 20 a. Only Statement 1 is true c. Both statements are true b. Only Statement 2 is true d. Both statements are false 135. It happens when the directors or stockholders of a close corporation are so divided respecting the management of the business and affairs of the corporation that the votes required for any corporate action cannot be obtained and as a result, business and affairs can no longer be conducted to the advantage of the stockholder a. Equal c. Deadlock b. Tie d. Same 136. Statement 1: Corporate dissolution refers to the extinguishment of the corporate franchise and the termination of corporate existence. It legally affects more the nature and capacity of the juridical being of the  corporate being Statement 2: Corporate liquidation refers to the process by which all the assets of the corporation are converted into liquid assets in order to facilitate the payment of obligations to creditors, and the remaining balance, if any, is to be distributed to the stockholders or members a. Only Statement 1 is true c. Both statements are true b. Only Statement 2 is true d. Both statements are false 137. The following are involuntary methods of dissolution. Which one is voluntary? a. Legislative dissolution meaning by a law filed by congress in case of public corporation b. Failure to formally organize and commence business within 2 years from the date of issuance of the certificate of incorporation by SEC c. Expiration of the corporate term d. All of the above are involuntary methods of dissolution 138. After the dissolution of a corporation, what is the remaining period of the corporate body? a. 2 years from the time it is dissolved for the purpose of liquidation of its corporate affairs but not for entering into new business b. 1 years from the time it is dissolved for the purpose of liquidation of its corporate affairs but not for entering into new business c. 4 years from the time it is dissolved for the purpose of liquidation of its corporate affairs but not for entering into new business d. 3 years from the time it is dissolved for the purpose of liquidation of its corporate affairs but not for entering into new business 139. May a dissolved corporate enforce its rights against another person despite its dissolution and even after the expiration of the three-year liquidation period? a. No, because it must be filed within the 3-year prescriptive period b. No, because the corporation has no legal standing in a court of law c. Yes, because Revised Corporation Code provides that no right or remedy in favor of or against any corporation shall be removed or impaired either by the subsequent dissolution of said corporation d. Yes, but only if the case is filed within the three-year liquidation period 140. In determining the nationality of a corporation in the Philippines, whether domestic or foreign, what is the test applied by the Revised Corporation Code? a. Residency test c. Control test b. Grandfather rule test d. Incorporation test 141. How can a foreign corporation be allowed to transact or do business in the Philippines? a. By submitting by-laws to the SEC b. By asking for permission from the Bureau of Internal Revenue c. By registering with Department of Trade and Industry d. By securing a license for that purpose from the SEC and a certificate of authority from appropriate government agency 142. What is the period for the submission of the General Information Sheet of the Corporation to the SEC? a. Within 90 calendar days from date of the actual annual stockholders’ or members meeting b. Within 120 calendar days from date of the actual annual stockholders’ or members meeting c. Within 30 calendar days from date of the actual annual stockholders’ or members meeting d. Within 60 calendar days from date of the actual annual stockholders’ or members meeting 143. The following can be the single stockholder of a one person corporation (OPC), except a. Natural person who must be of legal age b. Estate of a deceased person c. Partnership or corporation or cooperative or association d. Trust who does not refer to a trust entity (company or corporation) but the subject being managed by a trustee 144. As a general rule, what is the term of existence of one person corporation (OPC)? a. 50 years subject to unlimited times of renewal c. 50 years renewable for another term b. 20 years renewable for another term d. Perpetual existence 145. Where shall the suffix “OPC” be indicated by the one person corporation in its corporate name? a. At the end of its corporate name c. Neither A nor B  b. Below its corporate name d. Either A or B 146. Statement 1: The director of the one person corporation (OPC) is the single stockholder of the one person corporation Statement 2: The president of the one person corporation (OPC) is the single stockholder of the one person corporation Statement 3: In case the single stockholder of the one person corporation (OPC) becomes incapacitated, the nominee can take over the management of the OPC as its director and president a. Only one statement is true c. All statements are true a. Only two statements are true d. All statements are false 147. What document must be attached in the application for incorporation by single stockholder of the one person corporation (OPC)? a. The PSA CENOMAR of both the nominee and alternate nominee b. None of the above c. The written consent of both the nominee and alternate nominee to the designation d. The PRC ID of both the nominee and alternate nominee 148. Who will replace the single stockholder of the one person corporation (OPC) in case of his death and/or incapacity? a. Alternate Nominee designated in the Articles of Incorporation c. Neither A nor B b. Nominee designated in the Articles of Incorporation d. Either A or B 149. Unless provided by special law, what is the minimum authorized capital stock of one-person corporation (OPC)? a. P5,000 c. P25,000 b. P5 d. No minimum authorized capital stock 150. Statement 1: Within 15 days from the issuance of its Certification of Incorporation by SEC, the OPC shall appoint a treasurer, corporate secretary and other officers Statement 2: At any time, a single stockholder of the one person corporation (OPC) can change its nominee and alternative nominee a. Only Statement 1 is true c. Both statements are true b. Only Statement 2 is true d. Both statements are false 151. The following are the reports that must be submitted by OPC to SEC within the period required by SEC, except a. A report on all explanations or comments by the president on the qualification, reservation or adverse remarks made by the auditor in the financial statements b. Corporate by-laws c. Annual audited financial statements or if total assets and total liabilities are less than P600,000, the financial statements shall be certified under oath by the corporation’s treasurer d. A disclosure of all self-dealings and related transactions entered into between the OPC and the single stockholder 152. Under the Revised Corporation Code, when may an ordinary corporation be allowed to convert to one person corporation? a. When a single stockholder becomes the controlling stockholder of an ordinary stock corporation b. When a single stockholder acquires all the stocks of an ordinary stock corporation c. When a single stockholder becomes the majority stockholder of an ordinary stock corporation d. Any of the above Part II: VOTING REQUIREMENTS 153. What is required vote for fundamental amendment of the articles of incorporation? a. At least majority vote of the board of directors/trustees provided in Articles of Incorporation and the vote or written assent of the stockholders representing at least majority of the outstanding capital stock or the vote or written assent of at least majority of the members if it be a non-stock corporation b. At least majority vote of the board of directors/trustees provided in Articles of Incorporation and the ratification of the stockholders representing at least majority of the outstanding capital stock or the ratification of at least majority of the members if it be a non-stock corporation c. At least majority vote of the board of directors/trustees provided in Articles of Incorporation and the vote or written assent of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock or the vote or written assent of at least two-thirds (2/3) of the members if it be a non-stock  corporation d. At least majority vote of the board of directors/trustees provided in Articles of Incorporation and the ratification vote of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock or the ratification of at least two-thirds (2/3) of the members if it be a non-stock corporation 154. What is the quorum or required number of present stockholders for validity of election of board of directors in a stock corporation? a. Owners of at least 100% of the outstanding capital stock b. Owners of at least 25% of the outstanding capital stock c. Owners of at least majority of the outstanding capital stock allowed to vote d. Owners of at least majority of the outstanding capital stock 155. In the absence of quorum stipulated in the articles of incorporation, what is required quorum for the validity of the meeting conducted by Board of Directors regarding a corporate act or act of administration or management? a. At least 2/3 of the number of directors as fixed in the articles of incorporation b. At least majority of the number of directors as fixed in the articles of incorporation c. At least 2/3 of the number of directors filled up d. At least majority of the number of directors filled up 156. For the validity of the decision of the Board of Directors regarding corporate acts or acts of administration, what is the required vote? a. At least 2/3 of the number of directors as fixed in the articles of incorporation b. At least majority of the number of directors as fixed in the articles of incorporation c. At least majority of the present members of board of directors in a meeting where there is a quorum d. At least majority of the number of directors filled up 157. What is the quorum required for the election of corporate officers by the Board of Directors to be valid? a. At least 2/3 of the number of directors as fixed in the articles of incorporation b. At least 2/3 of the number of directors filled up c. At least majority of the number of directors as fixed in the articles of incorporation d. At least majority of the number of directors filled up 158. What is the vote necessary for the valid election of the mandatory corporate officers by the Board of Directors? a. At least 2/3 of the number of directors as fixed in the articles of incorporation b. At least majority of the present members of board of directors in a meeting where there is a quorum c. At least majority of the number of directors as fixed in the articles of incorporation d. At least majority of the number of directors filled up 159. What is the required vote for the removal of incumbent director or trustee? a. At least majority vote of the members of the board and at least 2/3 of the outstanding capital stock entitled to vote or at least 2/3 of members b. At least majority vote of the members of the board c. Owners of at least majority of the outstanding capital stock or at least majority of members d. Owners of at least 2/3 of the outstanding capital stock entitled to vote or at least 2/3 of members entitled to vote 160. Under the Revised Corporation Code, what is the required vote for the granting of compensation to board of directors in such capacity other than reasonable per diems? a. At least majority vote of the directors and at least 2/3 of the outstanding capital stock b. Owners of at least 2/3 of the outstanding capital stock c. At least majority vote of the directors and at least majority vote of the outstanding capital stock d. Owners of at least majority of the outstanding capital excluding the directors concerned 161. What is the required vote for the ratification of the voidable contract entered into by a self-dealing director if the essential requisites for a contract entered into by self-dealing director/officer with the corporation to be perfectly valid even without requiring ratification from stockholders are not complied with? a. Owners of at least majority of the outstanding capital stock b. At least majority vote of the directors and at least 2/3 of the outstanding capital stock c. At least majority vote of the directors and at least majority vote of the outstanding capital stock d. Owners of at least 2/3 of the outstanding capital stock 162. If the interlocking director’s interest in one corporation is substantial (more than 20% of outstanding capital stock) and his interest in the other corporation is merely nominal (20% or less of outstanding capital stock), then all the requisites for contracts with self-dealing directors must all be present to be perfectly valid. If either of the first two first requires are absent, the contract can be ratified by how many votes? a. At least majority vote of the directors and at least 2/3 of the outstanding capital stock b. Owners of at least majority of the outstanding capital stock c. At least majority vote of the directors and at least majority vote of the outstanding capital stock d. Owners of at least 2/3 of the outstanding capital stock in the corporation where the interlocking director has nominal interest 163. What is the required vote for the ratification of disloyalty conducted by a director against the corporation? a. At least majority vote of the directors and at least 2/3 of the outstanding capital stock b. Owners of at least 2/3 of the outstanding capital stock c. At least majority vote of the directors and at least majority vote of the outstanding capital stock d. Owners of at least majority of the outstanding capital stock 164. What is the required vote for the extension/shortening of corporate term? a. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing at least majority of the outstanding capital stock or members b. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing at least 2/3 of the outstanding capital stock or at least 2/3 of members c. Approval by at least majority vote of the board of directors/trustees d. Approval by stockholders representing at least 2/3 of the outstanding capital stock or members 165. What is the required vote for the increase/decreasing of authorized capital stock? a. Approval by at least majority vote of the board of directors and ratification by stockholders representing at least majority of the outstanding capital stock b. Approval by at least majority vote of the board of directors c. Approval by at least majority vote of the board of directors and ratification by stockholders representing at least 2/3 of the outstanding capital stock d. Approval by stockholders representing at least 2/3 of the outstanding capital stock 166. What is the required vote for incurring, creating or increasing bond indebtedness? a. Approval by stockholders representing at least 2/3 of the outstanding capital stock or members b. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing at least 2/3 of the outstanding capital stock or at least 2/3 of members c. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing at least majority of the outstanding capital stock or members d. Approval by at least majority vote of the board of directors/trustees 167. What is the required vote for validity of denial of pre-emptive right? a. Approval by at least majority vote of the board of directors and ratification by at least 2/3 of stockholders b. Approval by at least majority vote of the board of directors and ratification by stockholders representing at least majority of the outstanding capital stock c. Approval by at least majority vote of the board of directors d. Approval by stockholders representing at least 2/3 of the outstanding capital stock 168. What is the required vote for the sale, disposal, lease or encumbrance of all or substantially all of corporate assets? a. Approval by stockholders representing at least 2/3 of the outstanding capital stock or members b. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing at least 2/3 of the outstanding capital stock or at least 2/3 of members c. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing at least majority of the outstanding capital stock or members d. Approval by majority vote of the board of directors/trustees 169. What is the required vote for acquisition of treasury shares? a. Approval by at least majority vote of the board of directors and ratification by stockholders representing at least majority of the outstanding capital stock b. Approval by at least majority vote of the board of directors and ratification by at least 2/3 of stockholders c. Approval by stockholders representing at least 2/3 of the outstanding capital stock d. Approval by at least majority vote of the board of directors 170. What is the vote required for the investment of corporate funds in another corporation or for purposes other than the primary purpose? a. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing at least majority of the outstanding capital stock or members b. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing at least 2/3 of the outstanding capital stock or at least 2/3 of members c. Approval by at least majority vote of the board of directors/trustees d. Approval by stockholders representing at least 2/3 of the outstanding capital stock or members 171. When the investment of corporate funds is reasonably necessary to accomplish the corporation’s primary purpose as stated in the articles of incorporation, what is the required vote necessary for its validity? a. Approval by at least majority vote of present members the board of directors/trustees in a meeting where there is quorum b. Approval by stockholders representing at least 2/3 of the outstanding capital stock or members c. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing at least 2/3 of the outstanding capital stock or at least 2/3 of members d. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing at least majority of the outstanding capital stock or members 172. Statement 1: The required vote for declaration of cash or property dividends is the approval by at least majority vote of the board of directors Statement 2: The required vote for declaration of stock dividends is the approval by at least majority vote of the board of directors and ratification by stockholders representing at least 2/3 of the outstanding capital stock a. Only Statement 1 is true c. Both statements are true b. Only Statement 2 is true d. Both statements are false 173. As a general rule, what is the required vote for validity of management contract or what is the required vote for validity of management contract in the absence of interlocking directors between the managed corporation and managing corporation? a. Approval by stockholders representing at least 2/3 of the outstanding capital stock of both managed and managing corporation b. Approval by at least majority vote of the board of directors c. Approval by at least majority vote of the board of directors and ratification by stockholders representing at least majority of the outstanding capital stock of both managed and managing corporation d. Approval by at least majority vote of the board of directors and ratification by stockholders representing at least 2/3 of the outstanding capital stock of both managed and managing corporation 174. What is the required vote for the adoption of new pre-incorporation by-laws? a. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing at least majority of the outstanding capital stock at least 2/3 members b. Approval by all of the incorporators c. Approval by stockholders representing at least 2/3 of the outstanding capital stock or at least 2/3 members d. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing at least 2/3 of the outstanding capital stock or at least 2/3 members 175. As a general rule, what is the required vote for the amendment, repeal and adoption of post-incorporation by-laws? a. Approval by at least majority of the board of directors/trustees b. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing at least majority of the outstanding capital stock or at least majority of members c. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing at least 2/3 of the outstanding capital stock or at least 2/3 members d. Approval by stockholders representing at least 2/3 of the outstanding capital stock or at least 2/3 members 176. What is the required vote for the adoption or amendment of by-laws if this power has already been validly delegated to the Board of Directors/Trustees by the stockholders/members? a. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing at least 2/3 of the outstanding capital stock or at least 2/3 members b. Approval by at least majority of the board of directors/trustees c. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing at least majority of the outstanding capital stock at least 2/3 members d. Approval by stockholders representing at least 2/3 of the outstanding capital stock or at least 2/3 members  177. What is the required vote for the valid delegation by the stockholders/members to the board of directors of the power to amend or repeal by-laws or adopt new one? a. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing at least majority of the outstanding capital stock at least majority members b. Approval by at least majority of the board of directors/trustees c. Approval by at least majority vote of the board of directors/trustees and ratification by stockholders representing at least 2/3 of the outstanding capital stock or at least 2/3 members d. Approval by stockholders representing at least 2/3 of the outstanding capital stock or at least 2/3 members 178. What is the required vote for the revocation of the delegated power of board of directors to amend or repeal by-laws or adopt new one? a. Stockholders owning at least majority of the outstanding capital stock or at least majority of members b. Stockholders owning at least 75% of the outstanding capital stock or at least 75% of members c. Stockholders owning at least 2/3 of the outstanding capital stock or at least 2/3 of members d. Stockholders owning at least 60% of the outstanding capital stock or at least 60% of members 179. What is the quorum for validity of meetings of shareholders/members? a. Stockholders representing at least majority of the outstanding capital stock or majority of members b. Stockholders representing at least 2/3 of the outstanding capital stock or at least 2/3 of members c. Stockholders representing 100% of the outstanding capital stock or all members d. Stockholders representing at least 75% of the outstanding capital stock or at least 75% of members 180. Under the Revised Corporation Code, what is the required vote for the voluntary dissolution of a private corporation where creditors are not affected? a. Approval by at least majority vote of the trustees and ratification by at least majority of the members having voting rights b. Approval by at least majority of the members c. Approval by at least majority vote of the trustees and ratification by at least 2/3 of the members having voting rights d. Approval 2/3 of the members having voting rights 181. Under the Revised Corporation Code, what is the required vote for the voluntary dissolution of a private corporation where creditors are affected? a. Approval by at least majority vote of the trustees and ratification by at least majority of the members having voting rights b. Approval by at least majority of the members c. Approval by at least majority vote of the trustees and ratification by at least 2/3 of the members having voting rights d. Approval 2/3 of the members having voting rights 182. What is the required vote for the approval of the resolution recommending a plan of distribution of non-stock corporation’s assets? a. Approval by at least majority vote of the trustees and ratification by at least majority of the members having voting rights b. Approval by at least majority of the members c. Approval by at least majority vote of the trustees and ratification by at least 2/3 of the members having voting rights d. Approval 2/3 of the members having voting rights PART III: SITUATIONAL 183. X Corporation posted a P1M profit in its realty business and its real estate has appreciated in value in the amount of P4M despite the drought that struck the northern and southern Philippines. The board then declared dividends to its stockholders computed on the basis of P5M representing profits and appreciation in the value of its real estate. Is the dividend declaration valid? a. Not valid because there was no approval of 2/3 of the outstanding capital stock b. Not valid because dividends must only come from the unrestricted retained earnings c. Valid if no creditors shall be prejudiced and approved by the required votes of the directors and stockholders d. Valid because it was based on profit and increment in the value of corporate asset 184. A, B, C, D, E, F and G are the duly elected directors for 2021 of Maginhawa Corporation whose articles of incorporation provide for 7 directors. On August 1, 2021, Directors A, B, C, D, and E met to fill the 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 directors is a. Not valid for both X and Y c. Valid with respect to Y, not valid with respect to X b. Valid for both X and Y d. Valid with respect to X, not valid with respect to Y 185. In the meeting of the board of directors of Maginhawa Corporation, a construction company held on March 31, 2021, directors, A, B, C, D, and E were present among 9 directors. The meeting had for its agenda the following: I. The appointment of Y a new manager as allowed by the by-laws II. The approval of the contract for the purchase of office supplies worth P130,000 from X Supplies Co When voting took place, directors A, B, C, and D voted for the election of Y as the new manager, and directors A, B, and C voted for the approval of the contract with X Supplies a. The election of Y as a manager is valid; the approval of the contract with X Supplies is not valid b. Both corporate acts are valid c. The election of Y as a manager is not valid; the approval of the contract with X Supplies is valid d. Both corporate acts are not valid 186. Subscriber X has a total 1,000 delinquent share at P10 par value, to be sold at public auction sale. Total amount recoverable includes: Total amount of the delinquent shares, P10,000 and total expenses of the sale, P5,000. Who will be declared the highest bidder among the following bidders in the public sale? a. N who is willing to pay the P15,000 for 970 shares b. P who is willing to pay the P15,000 for 900 shares c. O who is willing to pay the P15,000 for 920 shares d. M who is willing to pay the P15,000 for 950 shares 187. At the annual meeting of ABC Corporation for the election of five directors, A, B, C, D, E, F and G were nominated. A, B, C, D and E received the highest number of votes and proclaimed elected. F received ten votes less than E. Subsequently, E sold his shares to F, the transfer of shares having been registered with the corporation. Who between E and F has the right to attend as director in the board meeting? a. Either of them shall be the director b. Neither of them shall be the director c. E is the director because his term is one year until his successor is elected and qualified d. F is the director for he has acquired all the shares of E 188. X sold all his shares in Maginhawa Corporation to Y. X owns 99% of Maginhawa Corporation. As the new owner, Y wanted a reorganization of the company which is to include primarily the separation of all existing employees and hiring of new employees. Which statement is most accurate? a. For as long as the existing employees are given their separation pay, they can be terminated b. With the change in ownership, in effect there is a new juridical entity and therefore all employees are considered separated c. Despite the change in shareholder, there is actually no change in the juridical entity and therefore existing employees cannot automatically be considered separated d. Y, as the new shareholder, has the right to retain only those employees who in his judgment are qualified 189. Maginhawa Corporation has an authorized capital stock of P1 million divided into 50,000 common shares and 50,000 preferred shares. At its inception, the corporation offered for subscription all the common shares. However only 40,000 shares were subscribed. Recently, the directors thought of raising additional capital and decided to offer to the public all the authorized shares at their market value. Would X, the stockholder of 4,000 shares, have pre-emptive right to the remaining shares? a. Yes, because all stockholders have the pre-emptive rights to all issues of shares of any class in proportion to their shareholdings b. No, because he was waived this right when he subscribed to a part only of the issuance of shares c. No, because pre-emptive right does not apply to unissued shares to be issued d. Yes, because pre-emptive right applies only to the issuance of unissued shares 190. Canadian Airlines is a foreign airline company. Canadian Airlines tickets are sold in the Philippines though Philippine Airlines as their agent. Canadian Airlines is not registered to do business as such with the Philippine