1.

A subscriber is entitled to all of the following rights, except –

*
1 point
Appraisal right
Pre-emptive right
Right to a certificate of stock
Right to inspect the books of account
2. The following are the limitations on the right of inspection by a
stockholder, except –
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1 point
The right must be exercised during reasonable hours on business days.
The person demanding the right has not improperly used any information obtained through previous
examination of the books and records of the corporation.
The right can be exercised regardless of the purpose.
The demand is made in good faith or for a legitimate purpose.
3. Which of the following is not a requirement for transfer of stocks?
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1 point
There must be delivery of the stock certificate.
The certificate must be endorsed by the owner or his/her attorney-in-fact or other persons legally
authorized to make the transfer.
To be valid against third parties, the transfer must be recorded in the books of the corporation.
To be valid against third parties, the transfer must be recorded in the SEC.
4. An agreement whereby a corporation delegates the management of
its affairs to another corporation for a certain period of time.
*
1 point
Management contract
Voting trust agreement
Agency contract
Self-dealing contract
5. Statement I: Treasury shares shall have no voting right as long as
such shares remain in the treasury.
Statement II: Directors or trustees cannot attend or vote by proxy at
board meetings but there is no prohibition for them to act as proxies in
stockholders’ meetings.
*
1 point
Both statements are correct.
Both statements are incorrect.
Only statement I is correct.
Only statement II is correct.
6. Refers to an act outside or beyond corporate powers, including
those that may ostensibly be within such powers but are, by general or
special laws, prohibited or declared illegal.
*
1 point
Doctrine of limited capacity
Ultra Vires Act
Illegal Act
Doctrine of piercing the veil of corporate fiction
7. Stock dividends differ from cash dividend in that stock dividend –
*
1 point
Do not increase the legal capital.
Involves the disbursement of corporate funds.
Require the approval of both the board of directors and stockholders.
One received by the stockholders, are beyond the reach of corporate creditors.
8. Which of the following is not correct regarding treasury shares?*
1 point
They have no voting rights as long as they remain in the treasury.
They are considered as part of earned or surplus profit and therefore distributable as dividends.
They are not entitled to dividends.
They may be distributed as property dividend if there are retained earnings arising from the business of
the corporation.
9. Kristine Joy (KJ) is the listed owner of 100,000 shares with par
value of ₱10/share in LDM Corporation. LDM Corporation sued KJ for
the payment of her indebtedness of ₱1,000,000.00. KJ raised as a
defense that such debt must be compensated by her shares in LDM
Corporation. The defense of KJ is –
*
1 point
Valid. Her indebtedness is subject to legal compensation.
Not valid. She is not a creditor of LDM Corporation.
Valid. Her indebtedness is subject to judicial compensation.
Automatically extinguished if the fair market value of her shares in LDM Corporation amounts to
₱1,000,000.00.
10. The duty to make disclosure, where otherwise there would be a
great and unfair relation of directors to stockholders.*
1 point
Doctrine of corporate opportunity
Trust fund doctrine
Grandfather doctrine
Special circumstances doctrine
11. Which of the following statements is not correct?
*
1 point
Treasury shares revert to the unissued shares of the corporation and being in the treasury they don’t have
the status of outstanding shares.
Shares issued without par value shall be deemed fully paid and non-assessable and the holder of such
shares shall not be liable to the corporation or its creditors in respect thereto.
Redeemable shares may be redeemed regardless of the existence of unrestricted retained earning provided
such redemption would not cause insolvency or inability of the corporation to meet its debt as they
mature.
When par value shares are issued above par, the premium or excess is not to be considered as part o the
legal capital
12. A unit of interest in a corporation.
*
1 point
Treasury stock
Shares of stock
Certificate of stock
Par value stock
13. Statement I: Executors, administrators, receivers, and other legal
representatives duly appointed by the court may attend and vote on
behalf of the stockholders or members without the need of any written
proxy.
Statement II: When the shares are owned in an “and/or” capacity by
the holders thereof, any of the joint owners can vote said shares or
appoint a proxy therefor.
*
1 point
Both statements are correct.
Both statements are incorrect.
Only statement I is correct.
Only statement II is correct.
14. Which of the following is a valid consideration for the issuance of
shares of stocks of a corporation?
*
1 point
Promissory note.
Previously incurred indebtedness of the corporation.
Amount transferred from restricted retained earnings.
Service to be performed by a lawyer in the proposed increase of capital stock of the corporation.
15. An action brought by minority stockholders in the name of the
corporation to redress wrongs committed against it for which the
directors refuse to sue.
*
1 point
Individual suit
Representative suit
Class suit
Derivative suit
16. LDM Inc.’s Articles of Incorporation (AOI) provides for 7 directors.
Thus, the following directors were elected: Antonio, Bernardo, Ciriaco,
Domingo, Ermitanio, Felicidad, and Geronimo. On 02 January 2024,
Antonio, Bernardo, Ciriaco, Domingo, and Ermitanio (remaining
directors) held a meeting to fill the vacancies caused by the removal
Felicidad for disloyalty and death of Geronimo. In the same meeting,
the remaining directors voted for Leonardo to replace Felicidad, and
Mamerto to replace Geronimo. Which of the following statements is
correct?
*
1 point
The election by the remaining directors of Mamerto is not valid while of Leonardo is a valid exercise of
the power of the Board of Directors
The election by the remaining directors of Leonardo is not valid while of Mamerto is a valid exercise of
the power of the Board of Directors.
The election by the remaining directors of Leonardo and Mamerto is a valid exercise of the power of the
Board of Directors.
The election by the remaining directors of Leonardo and Mamerto is not a valid exercise of the power of
the Board of Directors.
17. Statement I: A director is removed from office by a vote of the
stockholders holding or representing at least 2/3 of the outstanding
capital stock. The vacancy occasioned by such removal can be filled
by the vote of at least a majority of the remaining directors if still
constituting a quorum.
Statement II: Treasury shares sold for less than par or issued value are
considered watered stock and is violative of the Trust Fund Doctrine.
*
1 point
Both statements are correct.
Both statements are incorrect.
Only statement I is correct.
Only statement II is correct.
18. A director of a corporation may be removed from office by a vote of
–
*
1 point
Majority of the members of the board of directors
Majority of the stockholders present in the meeting called for the purpose
2/3 of the stockholders presented in the meeting called for the purpose
2/3 of the outstanding capital stock
19. 20 Spanish doctors are planning to set up a corporation engaged in
the practice of their profession and rendition of modern medical
services. What is the maximum foreign interest that may be allowed
under prevailing laws?
*
1 point
60%
40%
20%
0%
20. Which of the following corporate acts will not require the approval
of the stockholders or members of a private corporation?
*
1 point
Amending bylaws
Increasing capital stock
Investing corporate funds in another corporation or business
Election of officers of the corporation
21. One of the following corporations does not need a legislative
franchise or grant for it to be bound by a contract*
1 point
De jure corporation
De facto corporation
Ostensible corporation
Corporation aggregate
22. Which of the following is an incidental power of a corporation?*
1 point
Right to sue and be sued
Right to declare dividends
Right to enter into merger or consolidation with another entity
Right to make donation to politician or political party
23. Shortening or extending corporate term requires approval of
*
1 point
Majority of the members of the Board of Directors
Majority of the members of the Board of Directors and stockholders representing majority of the
outstanding capital stock
Majority of the members of the Board of Directors and stockholders representing 2/3 of the outstanding
capital stock
Majority of the members of the Board of Directors and stockholders representing 2/3 of the outstanding
capital stock entitled to vote
24. In a meeting called by the members of the Board of Directors (BOD)
of LDM Corporation, Aislyn, Beatrice, Candice, Denise, and Eunice
were present. The Articles of Incorporation (AOI) of LDM Corporation
provides for 9 members of the BOD. The agenda for the meeting is the
election of a new treasurer. When the voting took place, Candice,
Denice and Eunice voted for the election of Kelsey. Which of the
following statements is correct?
*
1 point
The election of Kelsey is not valid as she was not elected by all members of the board constituting a
quorum.
The election of Kelsey is valid notwithstanding that she was not elected by all members of the board
constituting a quorum.
The election of Kelsey is not valid notwithstanding her election by the majority of the members of the
BOD constituting a quorum.
The election of Kelsey is valid as she was elected by the majority of the members of the BOD constituting
a quorum.
25. The maximum number of shares that the corporation is legally
allowed to issue without amending the articles of incorporation.
*
1 point
Outstanding Capital Stock
Authorized Capital Stock
Subscribed Capital Stock
Paid-Up Capital Stock
26. Cawa Wah suffered an injury while riding the bus of XXX Bus Lines
Corporation. After recovery, she instituted a case in court against XXX
Bus Lines Corporation for damages. She also intends to file a separate
case against XXX Bus Lines’ owners and Board of Directors. Which of
the following is correct?
*
1 point
Ms. Wah cannot validly institute separate suits against XXX Bus Lines and its owners and directors under
the Doctrine of Corporate Entity.
Ms. Wah can validly institute suits against XXX Bus Lines and its owners and directors under the
Doctrine of Piercing Veil of Corporate Fiction.
Ms. Wah cannot validly institute suits against XXX Bus Lines and its owners and directors under the
Doctrine of Limited Liability.
Ms. Wah can validly institute suits against XXX Bus Lines and its owners and directors under the
Doctrine of Corporate Opportunity.
27. If the remaining directors constitute a quorum, they can fill up the
vacancy
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1 point
In case of removal of a director.
In case of expiration of term of a director.
If there is an increase in the number of directors.
In case of resignation of a director.
28. The Articles of Incorporation of LDM Corporation was
inadvertently approved by the SEC because of the negligence of one of
its employees. It appears that the incorporators of LDM Corporation
has not completely satisfied all the requirements provided under the
Revised Corporation Code. Which of the following is not correct?*
1 point
The Solicitor General has the right to question the corporate existence of LDM Corporation.
LDM Corporation has no legal personality, and the incorporators may be held liable for damages.
LDM Corporation’s right to exercise corporate powers can be inquired in any private suit to which it may
be a party.
LDM Corporation shall be considered as a de facto corporation.
29. Which of the following shares can be deprived of voting rights?
*
1 point
Common shares
Founders’ shares
Redeemable shares
Treasury shares
30. Corporations vested with public interest shall have independent
directors constituting _____ of such board.
*
1 point
At least 10%
10%
At least 20%
20%
31. LDM Corporation is 60% owned by LAAM Corporation, 25% owned
by Filipinos, and 15% owned by South Koreans. On the other hand,
LAAM Corporation is 55% owned by Filipinos and 45% owned by North
Koreans. If LDM Corporation is a public utility, is the corporation
compliant with the provisions of the Philippine Constitution on Filipino
ownership?
*
1 point
Yes, applying the grandfather rule
No, applying the grandfather rule
No, applying the incorporation test
Yes, applying the incorporation test
32. To be eligible for election, a person who wants to be a corporate
treasurer must be
*
1 point
A director
A resident of the Philippines
A citizen of the Philippines
A resident and citizen of the Philippines
33. Shares of stock which have been issued and fully paid for, but
subsequently reacquired by the issuing corporation through purchase,
redemption, donation or some other lawful means. Such shares may
again be disposed of for a reasonable price fixed by the board of
directors.
*
1 point
Redeemable shares
Treasury shares
Preferred shares
Delinquent shares
34. Includes the properties and assets of the corporation that are
used for its business or operation.*
1 point
Stock
Capital
Shares
Dividend
35. Iñigo, a minor, is an owner of 50,000 shares with ₱10.00 per share
par value of a soon to be incorporated IDK Corporation. He plans to an
incorporator and the youngest director in IDK Corporation. Which of
the following is correct?
*
1 point
Iñigo can be an incorporator as he is considered as a major shareholder of soon to be incorporated IDK
Corporation.
Iñigo can be a director of IDK Corporation having sufficient number of shares to earn a seat.
Iñigo can neither be an incorporator nor a director due to his minority.
Iñigo can be an incorporator but not a director due to his minority.
36. The following are ways of enforcing payment of unpaid
subscription, except –
*
1 point
Sale at public auction of delinquent stock.
Denying delinquent stock cash dividend.
Filing a court action to recover unpaid subscription.
Denying delinquent stock the right to vote and be voted upon
37. Articles of incorporation as distinguished from by laws –
*
1 point
The rules or action adopted by a corporation for its internal government.
Adopted before or after incorporation.
A condition precedent in the acquisition by a corporation of a juridical personality.
Approved by the stockholders if adopted after incorporation.
38. A written authorization given by one person to another where the
second person can act for the first such as that given by the
shareholder to someone else to represent him/her and vote his/her
shares at a shareholders’ meeting.*
1 point
Voting Trust Agreement
Voting Agreement
Proxy
Voting in absentia
39. LDM Corporation’s Board of Directors (BOD) consists of 9 members
where 2 were removed and 2 have resigned. Who fills up the vacancy?
I: the remaining members of the BOD.
II: the stockholders
*
1 point
Both statements are correct.
Both statements are incorrect.
Only statement I is correct.
Only statement II is correct.
40. Which of the following statements is correct?
*
1 point
When a vacancy in the board of directors arises, such vacancy maybe filled by the remaining directors
provided they still constitute a quorum.
The officers of a non-stock corporation maybe elected directly by the members instead of by the board of
trustees.
The number of trustees in a non-stock corporation may be 5 but not more than 15.
A director individually and acting as such can bind the corporation being an agent of the corporation.