Question 1

 Which of the following is NOT included in the proprietary rights of a shareholder?

Response: Possess and co-own corporate assets
Feedback: CORRECT! Under the trust fund doctrine, all assets and property belonging to the
corporation held in trust for the benefit of creditors that were distributed or in the possession of the
stockholders, regardless of full payment of their subscriptions, may be reached by the creditor in
satisfaction of its claim.
Score: 1 out of 1 Yes

Question 2
 Which of the following statements describes subscribers?
Response: They are the persons who agreed to take and pay for original and unissued shares of a
corporation formed or to be formed.
Feedback: CORRECT! A subscriber may not be a stockholder. He becomes a stockholder only from the
time his subscription is accepted by the corporation or the corporation’s offer is accepted by him.
Score: 1 out of 1 Yes

Question 3
 Will the workers transferred to the new corporation still form part of the labor union of the original
corporation?
Response: Yes, because it amounts to merger or consolidation.
Feedback: CORRECT! Merger signifies the absorption of one (1) corporation by another which retains
its name and corporate identity with the added capital, franchises, and powers of a merged corporation.
While consolidation signifies a union that necessarily results in the creation of a new corporation and
the termination of the constituent ones.
Score: 1 out of 1 Yes

Question 4
 In the absence of longer period stipulated in the contract of subscription, a pre-incorporation
subscription shall be irrevocable for what period from the date of subscription?
Response: Six (6) months
Feedback: CORRECT! The pre-incorporation subscription is irrevocable for a limited period prior to
submission of the articles of incorporation with the SEC to prevent injustice that may be inflicted on
subscribers who already exerted effort to organize the corporation and who already committed financial
resources therefor.
Score: 1 out of 1 Yes

Question 5
 In which document shall the denial of preemptive right of a stockholder be stated for denial to be valid
and binding?
Response: Articles of incorporation
Feedback: CORRECT! Denial of preemptive right is included only in the Articles of incorporation.
Score: 1 out of 1 Yes

Question 6
 A director, who by virtue of his office, acquired for himself a business opportunity which should belong
to the corporation, thereby obtaining profits to the prejudice of the corporation. Is the director liable?
Response: Yes, the director is liable to refund to the corporation.
Feedback: CORRECT! The director is liable to refund to the corporation all the profits he realized on a
business opportunity which the corporation is financially able to undertake.
Score: 1 out of 1 Yes

Question 7
 Which of the following is a general power of a corporation?
Response: Sue and be sued in its corporate name
Feedback: CORRECT! The power is granted to a duly organized corporation, unless specifically
revoked by another law. The power to sue is exercised by the corporation through the board and/or its
duly authorized officers and agents.
Score: 1 out of 1 Yes

Question 8
 What is the formality required by the Corporation Code for the validity and enforceability of a
subscription contract?
Response: It may be in any form because it is perfected by mere consent.
Feedback: CORRECT! Mere consent is the requirement for a contract to be perfected.
Score: 1 out of 1 Yes

Question 9
 Where should the regular or special meetings of members of a nonstock corporation take place?
Response: At any place even outside the principal office of the corporation
Feedback: CORRECT! As long as provided in the bylaws and within the Philippines
Score: 1 out of 1 Yes

Question 10
 How may a non-stock corporation be converted to a stock corporation?
Response: By dissolving the corporation and forming a new one
Feedback:
CORRECT! This is according to the provisions of the Corporation Code. Instead of conversion
by amendment of the Articles, the corporation may dissolve itself and its members may organize
a stock corporation.
 
The conversion without dissolving it first would be tantamount to distribution of its assets or income to
its members in as much as after its conversion, the asset of the non-stock corporation would now be
treated as payment to the subscriptions of the members who will now become stockholders of the
corporation.
Score: 1 out of 1