LAW ON BUSINESS ORGANIZATION

MULTIPLE CHOICE QUESTIONS

ABL3 TTHS 5:30-6:45

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KEY ANSWER................................................................................................................................................................... 30
REFERENCE..................................................................................................................................................................... 31
APPENDIX......................................................................................................................................................................... 32
SEC. 36

1. A corporation does not have the power to sue and be sued.

a. True
b. False
c. Maybe *
d. I don’t know

2. A corporation has the power and capacity to enter into merger and consolidation with other .
a. Partnership
b. Corporation
c. Sole proprietorship *
d. Joint Accounts

3. The power of a corporation to stay for the period stated in the articles of incorporation.
a. Succession*
b. Piercing the veil of business organization
c. Retirement
d. Franchise

4. Stock corporations has the power to sell or issue . .

a. Stocks
b. Watered bonds*
c. None, corporations have no such power
d. Referrals
SEC. 37

5. A corporation has the power to extend or shorten corporate term.

a. Maybe
b. False
c. *True
d. I don’t know

6. How many votes does it need for BOD to ratify the approval of the change in the life of a corporation?
a. 50% + 10
b. 50% + 3
c. *50% + 1
d. 50% + 2

7. Who must represent a majority vote to approve such change in the term?
a. *BOD
b. SEC.retary
c. President
d. Noynoy Aquino

8. The stockholders need ________ of the outstanding capital stock for a stock corporation to ratify the change on term.
a. Majority vote
b. *2/3
c. ¾
d. 50% + 1
SEC. 38

9. Can a corporation increase its capital stock?

a. *Yes, as long as approved by majority of BOD and 2/3 of OCS
b. No, it’s illegal
c. No, the corporation doesn’t have the power
d. Yes, because the corporation has delectus personae

10. Who shall vote for the increase in bonded indebtedness?

a. Officers only
b. BOD only
c. Stockholders only
d. *BOD and stockholders
11. Any increase in capital stock shall be approved by the______.
a. *SEC.
b. President
c. BIR
d. Officers

12. _________issued by the corporation shall be registered with the SEC.

a. *Bonds
b. Cash
c. Legal capital
d. OCS
SEC. 39

13. A corporation has the power to deny pre-emptive right

a. False
b. Maybe
c. *True
d. I don’t know

14. At what amount should the pre-emptive right granted?

a. *In proportion to respective shareholdings
b. To subscribed capital
c. To paid capital
d. 2/3 of the outstanding capital stock
15. Which class of shares pre-emptive right is applicable?
a. *Any class of share
b. No class at all
c. Not applicable
 d. Right is denied

16. Who enjoys pre-emptive right?

a. *All stockholders
b. Public
c. President only
d. None
SEC. 40

17. Which of the following shall be deemed to cover substantially all the corporate property and assets if thereby the corporation would be
rendered incapable of continuing the business?
a. *Sale or other disposition of assets
b. Power to acquire own shares
c. Power to deny pre-emptive right
d. Power to increase or decrease capital stock

18. The requisites for the validity of such sale or other disposition of assets are as follows, except;
a. The sale or other disposition of assets must be approved by the board of directors or trustees
b. The action of the board of directors or trustees must be authorized by the vote of stockholders representing two-thirds of the outstanding
capital stock or two-thirds of the members
c. The authorization must be done at a stockholders’ or members’ meting dully called for that purpose after written notice
d. *Theboard may nevertheless, in its discretion, abandon the transaction without further action or approval by the stockholders or
members

19. The vote of the majority of the trustees in office will be sufficient authorization for the corporation to enter into any transaction authorized by
the sale or other disposition of assets in the case where there are no members with voting rights.
a. *Stock corporations
b. Non-stock corporations
c. Partnership
d. Sole proprietorship

20. Which would render the corporation incapable of continuing the business or accomplishing the purpose for which it was incorporated?
a. *Sale or other disposition of all or substantially all of the corporate assets
b. Elimination of fractional shares
c. Payment of shares of dissenting or withdrawing stockholders
d. Satisfaction of indebtedness to corporation

SEC. 41

21. The corporation must have unrestricted retained earnings in its books to cover the shares to be purchased or acquired, except:
a. To collect or compromise an indebtedness to the corporation, arising out of unpaid subscription, in a delinquency sale, and to purchase
delinquent shares sold during sale.
b. To eliminate fractional shares arising out of stock dividends.
c. To pay dissenting or withdrawing stockholders entitled to payment for their shares.
d. *To purchase its sale accordingly to the weight of authority is subject to its capital not being impaired.

22. Which of the following is a fractional share?

a. *Less than one share
b. More than one share
c. Equal to 10 shares
d. Less than 10 shares

23. Which of the following does not authorized a corporation to arbitrarily purchase the shares it issued to any of its stockholders indebted to it?
a. Elimination of fractional shares
b. Payment of shares of dissenting or withdrawing stockholders
c. *Satisfaction of indebtedness to corporation
d. Legitimate and proper corporate purpose

24. Which of the following refers to instances when a dissenting stockholder is given appraisal right and the right to withdraw from the
corporation?
a. Elimination of fractional shares
b. *Payment of shares of dissenting or withdrawing stockholders
c. Satisfaction of indebtedness to corporation
d. Legitimate and proper corporate purpose

SEC. 42

25. A corporation may be organized with multiple lawful purposes so long as the primary purpose is indicated in the articles of incorporation.
However, the investment of its funds is limited to the primary purpose.
a. Power to acquire own shares
b. *Power to invest corporate funds in another corporation or for other purposes
c. Power to declare dividends
d. Sale or other disposition of assets

26. In order for a private corporation may invest its funds in any other corporation or for any purposes other than primary purpose, it must comply
with these requirements, except;
a. When approved by a majority of the board of directors or trustees
b. When ratified by the stockholders representing at least two-thirds of the outstanding capital stock
c. When at least two-thirds of the members in the case of non-stock corporations, at a stockholders’ or members’ meeting duly called for
the purpose
d. *When a corporation has no general power to purchase its own shares of stock
27. A written notice of the proposed investment and the time and place of the meeting shall be addressed to each stockholder or member,
except;
a. At his place of residence as shown on the books of the corporation
b. When deposited to the addressee in the post office with postage prepaid
c. When served personally
d. *When set aside by the corporation

28. A corporation may invest its funds in another business which is incident or auxiliary to its primary purpose as stated in its articles of
incorporation without the approval of the stockholders or members in such case,
a. *A dissenting stockholder shall have no appraisal right
 b. A dissenting stockholder shall have an appraisal right
c. A corporation having more than one purposes
d. The investment of its funds is limited

SEC. 43

29. The part or portion of the profits of a corporation set aside declared and ordered by the directors to be paid ratably to the stockholders on
demand or at a fixed time.
a. *Dividend
b. Profits
c. Earnings
d. Asset

30. It shall not be issued without the approval of stockholders representing at least two-thirds of the capital stock then outstanding at a regular
meeting of the corporation or at a special meeting duly called for the purpose.
a. Profits
b. Earnings
c. *Stock dividend
d. Corporate funds

31. Stock corporations are not prohibited from retaining surplus profits in excess of 100% of their paid-in capital stock, except;
a. When justified by definite corporate expansion projects or programs approved by the board of directors
b. When the corporation is prohibited under any loan agreement with any financial institution or creditor, whether local or foreign from
declaring dividends without its/his consent, such consent has not yet secured.
c. When it can be clearly shown that such retention is necessary under special circumstances obtaining in the corporation
d. *When any cash dividends due on delinquent stock shall first be applied to the unpaid balance on the subscription plus costs and
expenses

32. These are not dividends until so declared or set aside by the corporation. In the meantime, it is part of the assets of the corporation and do
not belong to the stockholders individually.
a. *Profits
b. Earnings
c. Stock dividend
d. Corporate funds

SEC. 44

33. Corporation has the power to enter into management contract with the following except:
a. Another corporation
b. Natural person
c. Parent corporation
d. *Judicial person
34. The contract must be approved by ______ of quorum of board of directors or trustees.
a. 2/3
b. *Majority
c. Half
d. All

35. The period of the contract must not be longer than ______ for any one term.
a. 3 years
b. *5 years
c. 10 years
d. 15 years

36. No corporation shall conclude a management contract with:

a. *Another corporation
b. Natural person
c. Parent corporation
d. Affiliates

SEC. 45

37. A contract which is beyond the powers that a corporation lawfully exercise
a. *Ultra vires act
b. Trust fund doctrine
c. Doctrine of apparent authority
d. Intra vires act

38. An act which is a contrary to law, moral, good customs and others.
a. Ultra vires act
b. *Illegal corporate at
c. Intra vires act
d. Legal corporate act

39. Where the contract is not illegal per se, it is

a. Void
b. Valid
c. *Voidable
d. Invalid

40. Ultra vires act is

a. Illegal
b. Immoral
c. Unlawful
d. *Not necessarily illegal
SEC. 46

41. Rules of action adopted by the corporation for its internal regulations and for the government of its officers and stockholders or members
a. *By-laws
b. Articles of incorporation
 c. Doctrine of apparent authority
d. Intra vires act

42. By-laws are effective .

a. Upon issuance of certificate of stocks
b. *Upon issuance of the SEC. of a certification
c. After issuance of the SEC. of a certification
d. Before the issuance of certificate of stocks

43. For the government of the corporation, by-law is a .

a. *Continuing rule
b. Repetitive rule
c. Limited rule
d. Unlimited rule

44. SEC. shall not accept for filing the by-laws or any amendment thereto of any .
a. *Educational institution
b. construction
c. Law firms
d. Food corporation

SEC. 47

45. Meetings are held in the .

a. Anywhere
b. *Principal place
c. Philippines
d. Overseas

46. May validly provide for disqualification for the position of directors
a. Stockholders
b. Board of directors
c. *By-laws
d. Court

47. By-laws may not provide compensation to .

a. *Stockholders or members
b. Incorporators
c. Directors or trustees
d. Proxies
48. Disqualifications for the position of director, by-laws may ______ provide.
a. Invalidly
b. *Validly
c. Come to
d. Not

SEC. 48

49. Amendments to by-laws may be made by the following except:

a. The Board of Directors/Trustees, by a majority vote thereof.
b. Owners of at least a majority of the outstanding capital stock.
c. At least a majority of the members of a non-stock corporation.
d. *The Securities and Exchange Commission.
50. Which of the following is correct about when are amended or new by-laws be made effective?
a. *Upon the issuance by the Securities and Exchange Commission of a certification that the amended or new by-laws are not
inconsistent with the Corporation Code.
b. Upon the approval of the stockholders.
c. By the time the Board of Directors/Trustees approve it.
d. Upon the approval of the stockholders owning 2/3 of the outstanding capital stock.

51. When can a corporation exercise the power to make by-laws?

a. *At a regular or special meeting duly called for the purpose.
b. At a certain time which deemed necessary.
c. Upon the decision of the Board of Directors/Trustees.
d. Upon the issuance of Certificate of Incorporation.

52. The following are the distinction of Articles of Incorporation to by-laws except:
a. It constitutes the charter or fundamental law of the corporation.
b. It is executed before incorporation.
c. *It constitutes the rules and regulations adopted by the corporation.
d. It is adopted by the incorporators.

SEC. 49

53. These are meetings held by the Board of Directors/Trustees and stockholders/members.
a. Regular meeting
b. Special meeting
c. *Both a & b
d. Neither a & b

54. Which of the following meeting is held annually on a date fixed in the by-laws, or if not so fixed, on any date in April of every year as
determined by the Board of Directors/Trustees?
a. *Regular meeting of the stockholders/members.
b. Regular meeting of the Board of Directors/Trustees.
c. Special meeting of the stockholders/members
d. Special meeting of the Board of Directors/Trustees

55. This kind of meeting of the stockholders/members must be sent at least two (2) weeks before the meeting.
a. Special meeting
b. *Regular meeting
c. Call
 d. Notice

56. This kind of meeting of the board is held at any time upon the call of the president or as provided in the by-laws.
a. Special meeting
b. *Regular meeting
c. Call
d. Notice

SEC. 50

57. Who shall be the presiding officer at all meetings?

a. Board of Directors/Trustees
b. *President
c. Stockholders/Members
d. Vice-President

58. All are requisites for a valid meeting of stockholders/members except:

a. It must be held at the proper place.
b. There must be a quorum.
c. *It must be called by the incorporators.
d. There must be a previous notice.

59. These are agents of the corporation who manages the affairs of the corporation.
a. *Board of Directors/Trustees
b. Stockholders/Members
c. Chairman
d. Corporators

60. Notice of any meeting by any stockholder/member may be waived in what manner?
a. Expressly
b. Expressly but not impliedly
c. *Either expressly or impliedly
d. None of the above

SEC. 51

61. This is exercised by the person who has the power to call the meeting.
a. *Call
b. Notice
c. Authority
d. Meeting

62. It is the writing which informs the stockholders/members of the meeting.

a. Call
b. *Notice
c. Authority
d. Meeting

63. What will be the effect of failure to comply with the requisites for meetings?
a. *Valid, provided that all the stockholders/members of the corporation are present or represented the meeting and that it must be within
the powers or authority of the corporation or not ultra vires.
b. Valid, as long as it is properly held.
c. Void, for it does not comply with the requisites of a valid meeting.
d. It shall be automatically void.

64. There are 10 stockholders in X Corp. and 6 of them were present during the meeting. The meeting was held at an unauthorized place. Is A,
one of the stockholders who was not present during the meeting and has a right to complain may take steps to set aside any action taken at
the meeting?
a. Yes, because he was not present during the meeting thus, he does not know about the actions taken.
b. *Yes, because the requisites for a meeting to be valid is not followed.
c. No, because majority of them are present thus, making the meeting enforceable.
d. No, because he does not have the authority to do so.

SEC. 52

65. In Non-stock Corporation, what is the basis for determining the quorum?
a. *the total number of registered members
b. the total number of stockholders
c. the total number of members
d. none of the above

66. Minimum votes required to amend the Articles of incorporation, must be:
a. Not written assent of the members of 2/3 of the outstanding capital stock.
b. *majority vote of the board of directors/trustees
c. enter into a management contract
d. effective for the corporation

67. It is defined as the smallest number of people who must be present at a meeting in order for decisions to be made.
a. *Quorum
b. Meeting of board of directors
c. Election
d. Voting trust agreement

68. Quorum required in stockholders and member’s meetings is needed in the following, except;
a. Less than number required by law
b. Where withdrawal leaves less than a quorum previously declared
c. *Any number but at least 1
d. A majority of outstanding capital stock or members.

SEC. 53

69. What are the requirement/s that must be sent to the director or trustee for the notice of regular or special meetings?
 a. the date of the meeting
b. the name of the meeting
c. the place, name and time of the meeting
d. *the date, time and place of the meeting

70. A director or trustee may waive this requirement,

a. Expressly
b. Impliedly
c. *either expressly or impliedly
d. neither expressly nor impliedly

71. Regular meetings shall be held?

a. Weekly
b. Monthly
c. *Yearly
d. Quarterly

72. Meetings of directors or trustees of corporations may be held?

a. Anywhere in the Philippines only, unless by-laws provide otherwise.
b. Anywhere outside the Philippines, unless by-laws provide otherwise.
c. *Anywhere in or outside the Philippines, unless by-laws provide otherwise.
d. In the Philippines, unless by-laws provide otherwise.

SEC. 54

73. Who shall preside at all meetings of the directors or trustees as well as the stockholders or members, unless the by-laws provide otherwise?
a. the directors
b. the directors and the trustees
c. *the president
d. the vice president

74. Whenever, for any cause, no person is authorized to call a meeting, the petitioning stockholder or member authorized by;
a. President
b. *Securities and Exchange Commission
c. Members
d. Stockholders

75. Unless the contrary is provided by the by-laws, the presiding officer may be selected by __________ vote of the stockholders or members
present.
a. Pro rata
b. *Viva voce
c. Majority
d. Least

76. Who will preside the board meetings instead of the president provided by the by-laws?
a. Secretary
b. Vice president
c. *Chairman
d. Vice chairman

SEC. 55

77. It is a person who borrows money for buying property?

a. Buyer
b. Administrators
c. *Mortgagors
d. Executors

78. The following are duly appointed by the court to attend the vote in behalf of the stockholders or members without need of any written proxy,
except;
a. *Pledgers
b. Executors
c. Administrators
d. Receivers

79. It defines as the person who controls the use of something such as property or money.
a. Stockholder
b. Chairman
c. *Administrator
d. Board member

80. It is a manner of voting wherein the legal owners of the shares in a stock corporation vote directly in any corporate meeting.
a. Indirect voting
b. *Direct voting
c. Stockholder voting
d. Voting trust agreement

SEC. 56

81. Shares of stock owned jointly by two or more persons, wherein the consent of all the co-owners shall be necessary is the concept of:
a. Joint venture
b. Co-ownership
c. *Joint ownership of stock
d. Joint Accounts

82. Which of the following is true with regards to voting in case of joint ownership of stock:
a. Consent of all the co-owners is unnecessary
b. At least one of the partner is connected with the corporation
c. *the shares are owned by the holders, in which any one of the joint owners can vote said shares
d. proxy appointed by a third person

83. The concept of joint ownership is defined as:

 a. *Two or more persons owned solitarily a share of stock.
b. Merchants may interest themselves in the transaction of other merchants.
c. Jointly undertaking some commercial enterprise.
d. Common bond of interest, who have voluntarily joined together.

84. Voting in case of joint ownership of stock is similar to the corporation voting with respect to;
a. *Voting by proxy appointed by the court.
b. Number of voters required
c. At least 2/3 of outstanding capital stock is entitled to vote.
d. One of them must own a share.

SEC. 57

85. It is defined as an issued stock reacquired by a corporation and held as an asset.

a. Preferred Stock
b. *Treasury shares
c. Common stock
d. Paid-up capital stock

86. Treasury shares shall have no voting right, except;

a. *Such shares remain in the treasury.
b. It is acquired by another corporation.
c. The corporation is already insolvent.
d. Shares are carried again by the corporation.

87. Which is true with regards to treasury shares?

a. *These shares are not retired shares.
b. It has the status of outstanding shares, that they do constitute a liability of the corporation.
c. It cannot be resold by the corporation at any price.
d. It always possess voting rights.

88. Treasury shares are entitled to dividends for the reason that;
a. These shares are not retired shares.
b. *Corporation cannot declare dividends to itself, like taking money/stock from one pocket and putting the same in another.
c. It is resold by the corporation at any price.
d. In case of sale, it again becomes outstanding stock.

SEC. 58

89. Proxies are revocable at any time, wherein revocation can be made by the following, except;
a. by signing a new proxy in favor of another
b. by attending the meeting and voting oneself
c. by notifying the proxy-holder
d. *by admitting new proxy in the corporation without notice of the giver

90. It refers to the instrument which evidences the authority of the agent.
a. Stockholder
b. Corporate Secretary
c. *Proxy
d. Board member

91. Which of the following cannot attend/vote by proxy at board meetings;

a. *Directors/Trustees
b. Stockholder
c. Member
d. Proxy

92. The right to vote by proxy is a special form of agency. It is specifically recognized in the election of the board of Directors/Trustees involving
the following, except;
a. in voting in case of joint ownership of stock
b. in voting by trustee under voting trust agreement
c. in voting by members in non-stock corporation
d. *in voting by members in stock corporation

SEC. 59

93. A person or organization that has been given responsibility for managing someone else’s property or money.
a. Transferee
b. Transferor
c. *Trustee
d. member

94. It is a device that may be used with the aim of controlling the votes of the stockholders.
a. Voting Trust Agreement
b. Certificate of Stock
c. Articles of Incorporation
d. *Voting Trust Agreement

95. The following are the differences between proxy and voting trust, except;
a. A proxy unless coupled with interest is revocable at any time, while voting trust, if validly execute is irrevocable.
b. A proxy votes only in the absence of the owner of the stock, while trustee can vote even when the latter is present.
c. Proxy need not be notarized nor a copy filed with SEC, while voting trust must be notarized and a certified true copy filed with the SEC.
d. *A proxy has the right of inspection of corporate books while trustee doesn’t have such right.
96. The following are not limitations of voting trust agreement, except;
a. The agreement is used for purposes of fraud.
b. The agreement need not to be in writing and notarized.
c. *A certified true copy must be filed with SEC.
d. The agreement shall be not subject to any stockholder
SEC. 60

97. Any contract for the acquisition of unissued stock in existing corporation is called?
a. *Subscription contract
b. Power to enter into management contract
c. Purchase of stock
d. Pre-incorporation subscription

98. In a stock corporation, a person may become a shareholder by purchase from the corporation of .
a. stocks
b. dividends
c. *treasury shares
d. treasury bonds

99. In a non-stock corporation, membership is acquired by .

a. by subscription with an existing corporation for the acquisition of unissued shares
b. by purchase from the corporation of treasury shares
c. by transfer from previous stockholder of the outstanding shares or existing subscription of shares
d. *by contract with the corporation the modes of entering into which vary according to charter and by-laws of the particular corporation

100. Under the former law, if the acquisition of unissued shares from a corporation is made after its incorporation, the contract is .
a. Subscription
b. Purchase of stock
c. *Subscription or Purchase of stock
d. Void

SEC. 61

101. A pre-incorporation subscription is revocable for a period of at least ________ from the date of subscription, notwithstanding the any
agreement to the contrary.
a. 3 months
b. 4 months
c. *6 months
d. 1 year.

102. The minimum stocks allowed to be subscribed of the authorized capital stock.
a. 20%
b. *25%
c. 30%
d. 50%

103. The minimum payment of the total subscription

a. 20%
b. *25%
c. 30%
d. 50%

104. No pre-incorporation subscription may be revoked after the submission of the _________ to the Securities and Exchange Commission.
a. By-laws
b. *Articles of Incorporation
c. Corporate name
d. Treasurer's affidavit

SEC. 62

105. The owners of the corporation through their ownership of the corporation's shares of stock.
a. subscribers
b. *shareholders
c. incorporators
d. Board of Directors

106. A written promise by a corporation to pay definite sum of money at future date, at a fixed rate of interest.
a. treasury bond
b. promissory note
c. *corporate bond
d. loans Payable

107. According to property, tangible or intangible, actually received by the corporation and necessary or convenient for its use and lawful purposes
at a fair valuation equal to par or issued value of the stocks issued, the following are consideration for the issuance of stock, except:
a. *cash paid to corporation
b. labor performed for or services actually rendered to the corporation
c. previously incurred indebtedness of the corporation
d. amounts transferred from unrestricted retained earnings to stated capital

108. The issued price of no-par value shares may be fixed in the Articles of incorporation by the .
a. Incorporators
b. Securities and Exchange Commission
c. *Board of directors
d. Government

SEC. 63

109. It is a written instrument signed by the proper officer of a corporation stating or acknowledging that the person named therein is the owner of
a designated number of shares of its stock.
a. Articles of incorporation
b. By-laws
c. *Certificate of stock
d. Subscription contract

110. These are personal property and the owner, as in the case of personal property, has an absolute inherit right as an incident of his ownership,
to sell and transfer the same at will.
 a. stocks
b. *shares of stock
c. land
d. over issued stock

111. This individual has the right to have a proper certificate issued to him as soon as he complied with the conditions which entitle him to one as
by payment for his shares or the like.
a. subscribers
b. shareholders
c. incorporators
d. *stockholders

112. Every certificate of stock must be signed by the president or the vice-president of the corporation, and countersigned amd sealed with the
seal of the corporation by whom?
a. *President
b. Vice-president
c. *Secretary
d. Treasurer

SEC. 64

113. All are rights and remedies of stockholders in general. Except:

a. Right to elect and remove directors.
b. Right to adopt and amend or repeal the by-laws or adopt new by-laws.
c. *Right to enter into a voting contract agreement.
d. Right to pre-emption.

114. A group of stockholders may bring direct suits against a corporation in the form of a _______?
a. Derivative Suit
b. *Representative Suit
c. Individual Suit
d. Contract Suit

115. The wrong is inflicted directly on the corporation and indirectly upon the stockholders.
a. *Derivative Suit
b. Representative Suit
c. Individual Suit
d. Contract Suit

116. The objective is this suit is to protect corporate rights or redress wrongs committed against the corporation.
a. *Derivative Suit
b. Representative Suit
c. Individual Suit
d. Contract Suit

SEC. 65
117. Stock issued for no value at all or for a value less than its equivalent either in cash, property, services, or stock dividends.
a. Preferred Stock
b. Common Stock
c. *Watered Stock
d. Buttered Stock

118. The ______ of the consenting director or officer for the “water” in the stock is solidary.
a. Debt
b. *Liability
c. Expense
d. Revenue

119. It is issued without consideration.

a. *Bonus Share
b. Discount Share
c. Common Share
d. Preference Share

120. It is issued as fully paid when the corporation has received a lesser sum of money than its par or issued value.
a. Bonus Share
b. *Discount Share
c. Common Share
d. Preference Share

SEC. 66

121. If no rate of interest is fixed in the by-laws, such rate shall be deemed to be the ______?
a. *Legal Rate
b. Interest Rate
c. Effective Rate
d. Nominal Rate

122. If the rate of interest is fixed in the by-laws, then such rate shall be ____?
a. *Paid
b. Unpaid
c. Legal Rate
d. Interest Rate

123. If the entire amount on stock subscription has not been paid, _______ for stock shall be liable to the corporation for interest from the date of
subscription.
a. *Subscribers
b. Purchasers
c. Incorporators
d. Consumers

124. The Legal Rate is __?

 a. 12%
b. *6%
c. 2%
d. 10%

SEC. 67

125. A_____ is a declaration officially made by a corporation usually expressed in the form of a resolution of the Board of Directors requiring the
payment of all or a certain prescribed portion of a subscriber’s stock subscription.
a. Assessment
b. Notice
c. *Call
d. Meeting

126. It is used with reference to both paid and unpaid subscriptions.

a. *Assessment
b. Notice
c. Call
d. Meeting

127. Necessary when required by the contract, or when no time is fixed for payment.
a. Assessment
b. Notice
c. *Call
d. Meeting

128. It has been held that a call made upon some of the subscribers is ______?
a. *Void
b. Voidable
c. Valid
d. Enforceable

SEC. 68

129. To whom the notice of the sale and the copy of delinquent stock, with the copy of the resolution are sent?
a. *Delinquent stockholder
b. Governors
c. President
d. Trustees

130. How many times should the notice of the sale and the copy of the resolution be published in a newspaper in a week?
a. *Once
b. Twice
c. Everyday
d. Never

131. To whom the delinquent stockholder pays?

a. *Corporation
b. Partnership
c. President
d. Business

132. The delinquent stockholder pay ________ the date specified for the sale of the delinquent stock.
a. After
b. *On or before
c. On
d. Before

SEC. 69

133. No __________ to recover the delinquent stock sold.

a. *Action
b. Power
c. Possibility
d. Love

134. No such action shall be maintained unless it is commenced by the filling of a complaint within how many months from the date of the sale?
a. 2
b. 4
c. *6
d. 8

135. What kind of stock sold can be sustained?

a. *Delinquent
b. Common
c. Preferred
d. Cash

136. The stock in no. 4 can be sustained upon the ground of irregularity or _________ in the notice of sale.
a. *Defect
b. Sickness
c. Below par value
d. Loss

SEC. 70
137. What action is needed to recover unpaid subscription?
a. BOD power
b. *Court action
c. President action
d. No action

138. What kind of subscription is needed to recover?

 a. Loss
b. *Unpaid
c. Unissued
d. Issued

139. The amount due on any unpaid subscription can be collected by court action of proper _______?
a. Proceedings
b. *Jurisdiction
c. Seal
d. Time

140. Nothing in this _____________ shall prevent the corporation to collect unpaid subscription.
a. SEC.
b. Law
c. Rules
d. *Code

SEC. 71

141. Can delinquent stock be voted for the entitled to vote?

a. Yes
b. *No
c. Sometimes
d. Never

142. What right can a delinquent stockholder have?

a. Right to vote
b. Right to money
c. Right to love
d. *Right to dividends

143. The right of the delinquent stockholder should be in accordance with the provision of the ___________.
a. Law
b. Right
c. *Code
d. Horoscope

144. The subscription of the delinquent stockholder is with the following, except;
a. Accrued interest
b. Costs
c. Expenses
d. *Tax

SEC. 72

145. Holder of subscribed shares shall have the rights of a ____________.

a. President
b. Treasurer
c. Secretary
d. *Stockholder

146. Does holder of subscribed shares, not delinquent can have the right of a president?
a. *No
b. Yes
c. Sometimes
d. Never

147. Holders of subscribed shares, not delinquent shall have the _____________of a stockholder.
a. *Rights
b. Money
c. Jewelry
d. Stocks

148. Holder of ___________ shares not fully paid which are not delinquent shall have the rights of a stockholder.
a. *Subscribed
b. Common
c. Preferred
d. Unpaid

SEC. 73

149. The registered owner of a certificate of stock in a corporation or his legal representative shall file the following in case of lost, stolen or
destroyed, except:
a. The serial number of the certificate and the name of corporation.
b. *The address of the corporation.
c. The number of shares represented by such certificate.
d. The circumstance as to how the certificate was lost, stolen or destroyed.

150. May the corporation be sued for the issuance of new certificates of stock in case of lost or destroyed certificate?
a. *No, the corporation cannot be sued unless there is bad faith, fraud or negligence present.
b. Yes, the corporation can be sued unless there is bad faith, fraud or negligence present.
c. No, the corporation cannot be sued unless there is good faith, fraud or negligence present.
d. Yes, the corporation can be sued unless there is bad faith, fraud or negligence present.

151. What if there are oppositions on the issuance of new certificates, what may the corporation do?
a. *The corporation may file an interpleader proceeding to compel the parties to litigate among themselves.
b. The corporation may not file an interpleader proceeding to compel the parties to litigate among themselves.
c. The corporation shall file with the corporation an affidavit in triplicate setting forth, if possible, the circumstances as to how the certificate
was lost, stolen or destroyed, the number of shares represented by such certificate, the serial number of the certificate and the name of
the corporation which issued the same.
d. The corporation may sue unless there is bad faith, fraud or negligence present.
 152. A stockholder claimed that his stock certificate was lost. After going through with the procedure for the issuance of lost certificate, and no
contest was presented within 1 year from the last publication, the corporation issued a new certificate of stock in lieu of the supposed lost
certificate. The stockholder immediately sold his shares and endorsed the replacement certificate to a buyer. It turned out that the original
certificate was not lost, but sold and endorsed to another person. (1) May the corporation be made liable by the aggrieved party?
a. *No
b. Yes
c. Maybe
d. It depends

SEC. 74
153. Under the corporation code, it requires every private corporation stock or non-stock to keep books and records at its principal office are as
follows, except:
a. A record of all business transaction.
b. Minutes of all meetings of stockholders or members.
c. *Minutes of all meetings of all incorporators.
d. Minutes of all meetings of directors or trustees.

154. What is the arrangement in keeping the records of all stocks in names of the stockholders?
a. *Alphabetically
b. Highest to lowest
c. Chronological
d. Lowest to highest

155. All of following are the persons given the right to inspect corporate books, except:
a. Any director, trustee, stockholder or member
b. Stockholder of sequestered company
c. Beneficial owners of shares
d. *Creditors of the corporation

156. What are the contents of a stock and transfer book?

a. *Amount paid and unpaid on all stocks and the date of payment of any installment.
b. All stocks in the name of the stockholders chronological arranged.
c. Amount paid on all stocks and the date of payment of any installment.
d. Alienation, buy or sale of stocks.

SEC. 75

157. In the financial report of the operation of the corporation which shall include financial statement, duly signed and certified by an:
a. Lawyer
b. President
c. BOD/BOT
d. *CPA

158. Within _____ day, from receipt of a written request of any stockholders or members, the corporation shall furnish him its most recent financial
statement.
a. 11
b. 12
c. 14
d. *10

159. Which of the following include in the financial statement?

a. Statement of comprehensive income and balance sheet
b. Notes to financial statement and statement of comprehensive income
c. *Balance sheet and profit and loss statement
d. Statement of change in equity and balance sheet

160. What kind of meeting where stockholders and members, the board of directors or trustees shall present to such stockholders or members a
financial report of the operation for the preceding year?
a. Special meeting
b. *Regular meeting
c. Minutes of meeting
d. Sponsored meeting

SEC. 76

161. How many corporations can merge into single corporation?

a. one
b. two only
c. *two or more
d. three only

162. Two or more corporations unite, one corporation which remains in being absorbing or merging itself ,the other which disappears as a
separate corporation.
a. *Merger
b. consolidation
c. partnership
d. sole proprietorship

163. Two or more corporation unites, giving rise to a new corporate body and dissolving the constituent corporations as a separate corporation.
a. Partnership
b. Merger
c. *Consolidation
d. sole proprietorship

164. The names of the corporations proposing to merge or consolidate is called

a. *constituent corporations
b. merging corporations
c. consolidating corporations
d. partnership

SEC. 77
 165. Who shall approve the plan of the constituent corporations to merge or consolidate?
a. Secretary
b. President
c. *majority of directors or trustees
d. majority of members

166. Notice of the meetings shall be given to_______.

a. 1 week after the meeting.
b. *2 weeks prior to the date of the meeting.
c. 3 weeks before the meeting.
d. 5 days before the meeting.

167. The affirmative vote of stockholders in a stock corporation should be at least ______ of the outstanding capital stock of each corporation.
a. *2/3
b. 50%
c. 1/3
d. 25%

168. Any dissenting stockholder may exercise his _______ .

a. pre-emptive right
b. power
c. *appraisal right
d. apparent authority

SEC. 78

169. Who shall signed the Articles of merger or Articles of consolidation?

a. Stockholders
b. Members
c. Secretary
d. *president or vice president

170. Who shall certified the Articles of merger or Articles of consolidation?

a. Board of Directors
b. *secretary or assistant secretary
c. president
d. treasurer

171. What should be included in the Articles of merger or Articles of consolidation as to stock corporation?
a. *number of shares outstanding
b. number of members
c. number of unissued shares
d. number of capital stock

172. What should be included in the Articles of merger or Articles of consolidation as to non-stock corporation?
a. *number of members
b. number of unissued shares
c. number of capital stock
d. number of shares outstanding

SEC. 79

173. The Articles of merger or Articles of consolidation should be submitted to the _________.
a. *SEC
b. BIR
c. DTI
d. BOD

174. How many copies of Articles of merger or Articles of consolidation shall be submitted for approval?
a. *4
b. 2
c. 3
d. 5

175. Written notice of the date, time, and place of hearing shall be given to each constituent corporation at least _________.
a. 1 week
b. 3 weeks
c. 4 weeks
d. *2 weeks
176. Who shall conduct a hearing with a proper notice if upon investigation it has a reason to believe that the proposed merger or consolidation is
contrary to the existing law?
a. BIR
b. BOD
c. *SEC
d. DTI

SEC. 80

177. Which of the following is not considered as a procedure for effecting a plan of merger or consolidation?
a. Approval of plan of board of directors
b. Conduct of hearing by SEC
c. Issuance of certificate by SEC
d. *Consent of creditors

178. Which of the following statement is true?

a. *The sale of assets for stock followed by dissolution, has the effect of merger.
b. The constituent corporations shall become a double corporation.
c. The separate existence of the constituent corporations shall not cease.
d. In case, of consolidation, the surviving corporation shall be designated in the plan of consolidation.
 179. Which of the following statements is not correct?
a. *The rights of creditors or liens upon the property of any such constituent corporation shall be impaired by such merger.
b. The surviving corporation is responsible and liable for all the liabilities of each constituent corporation.
c. The separate existence of the constituent corporations shall cease.
d. In case of merger, the surviving corporation shall be designated in plan of merger.

180. C Inc. and B Inc. are existing corporations. C Inc. transfers all its assets to B Inc. There is no winding up of the affairs or liquidation of the
assets C Inc. B Inc. absorbs and acquires all the property, rights and liabilities of A Inc. which is dissolved. B Inc. , the surviving corporation,
continues the corporate existence. Which corporation continues the combined business?
a. C Inc.
b. *B Inc.
c. C and B Inc.
d. none

SEC. 81

181. This refers to stockholders right to demand payment of the par value of his shares after dissenting from a proposed corporate action involving
a fundamental change in the charter or Articles of incorporation in the cases provided by law.
a. Presumptive right
b. *Appraisal right by a stockholder
c. Right by a dissenting stockholder
d. Rights of voting trustees

182. In which of the following cases is the right referred to appraisal right not available to a dissenting stockholder?
a. Merger or consolidation
b. shortening the term of corporate existence
c. Amendment to extend corporate term
d. *Amendment to change corporate name

183. Which of the following is not true regarding instances of appraisal right?
a. Amendment to the Articles of incorporation has the effect of shortening the term of corporate existence
b. Merger or consolidation
c. *Amendment to change corporate name
d. Sale of all or substantially all of the corporate property and assets

184. Under which of the following conditions are stockholders most likely to be entitled to appraisal rights?
a. *A board resolution that eliminates the dividend rights of all stockholders
b. The election of board of directors
c. Changing the location of the firm’s offices
d. Changing the corporate name

SEC. 82

185. Failure to make such demand on the corporation for the payment of the fair value of his shares within 30 days after the date on which the
vote was taken shall be deemed:
a. Acknowledgement of his appraisal right
b. *A waiver of his appraisal right
c. Confirmation of his appraisal right
d. Admission of his appraisal right

186. Bob is a stockholder in Y Corp. He has decided that he would like to assert appraisal rights. Which of the following would pose a problem for
his being able to assert those rights?
a. The transaction did not provide Y Corp. shareholders with the deal.
b. Bob sent a letter to Y Corp’s secretary prior to the shareholders meeting
c. *Bob voted for the transaction at the annual shareholder meeting
d. The acquiring firm is a former competitor of Y Corp.

187. Shareholders of X Co. have decided to sue for appraisal rights. The courts are now trying to determine a price for the shares that the
shareholders decided not to sell. Such a trial is a determination of:
a. Discounted cash flow
b. *Fair market value
c. Shareholders right
d. Price is right

188. If the withdrawing stockholder and the corporation cannot agree on the fair value of shares, it shall be determined by:
a. Votes of stockholder
b. Approval of board of directors
c. Decision of members
d. *Arbitration

SEC. 83

189. If the proposed corporate action is abandoned, the rights and status of the stockholder shall thereupon be:
a. *Permanently restored
b. Terminated
c. Demanded
d. Determined

190. Which of the following statements is true?

a. *A stockholder losses the ability to exercise the appraisal right by voting in favor of the proposed action.
b. All rights accruing to such shares excluding voting rights.
c. All rights accruing to such shares excluding dividend rights.
d. Dissenting stockholder is not entitled to receive payment of the fair value of his shares

191. 735. All rights accruing to the dissenting stockholders shares including voting and dividend rights shall be:
a. Terminated
b. Restored
c. *Suspended
d. Declared

192. Upon such payment to the dissenting stockholder, all his rights are:
a. Restored
 b. Demanded
c. Approved
d. *Terminated

SEC. 84

193. What is the general rule when right to payment ceases?

a. The stockholder who demands payment of his shares are allowed to withdraw from his decision.
b. The stockholder who demands payment of his shares have 20 days to withdraw from his decision.
c. The stockholder who demands payment of his shares have 30 days to withdraw from his decision.
d. *The stockholder who demands payment of his shares is no longer allowed to withdraw from his decision.

194. Which of the followings is an exception when right to payment ceases?

a. The stockholder withdraws his demand for payment with the consent of majority number of other stockholders.
b. The stockholder withdraws his demand for payment with the consent of SEC.
c. *The stockholder withdraws his demand for payment with the consent of the corporation.
d. The stockholder withdraws his demand for payment without any consent.

195. Which of the followings does not have effect of extinguishing the withdrawing stockholder’s right to payment of his shares?
a. The stockholder withdraws his demand for payment and the corporation consents thereto.
b. The proposed corporate action is abandoned or rescinded by the corporation.
c. *The proposed corporate action is approved by SEC where its approval is necessary.
d. The Commission determines that such stockholder is not entitled to appraisal right.

196. What happens when the right of the stockholder to be paid the fair value of his shares ceases?
a. *His status as a stockholder shall thereupon be restored.
b. His status as a stockholder shall thereupon be removed.
c. All dividend distributions which would have accrued on his shares shall be shared to other stockholders
d. None of the above

SEC. 85

197. Who bears costs of appraisal?

a. *The corporation
b. Any of the stockholders
c. All the stockholders
d. Directors

198. How should the liability for costs and expenses of appraisal be borne by the corporation?
a. Where the price which the corporation offered to pay the dissenting stockholder is higher than the fair value as determined by the
appraisers named by them.
b. *Where the price which the corporation offered to pay the dissenting stockholder is lower than the fair value as determined by the
appraisers named by them.
c. Where the price which the corporation offered to pay the dissenting stockholder is same as the fair value as determined by the
appraisers named by them.
d. Any of the above.

199. When does the corporation not bear the cost of appraisal?
a. When the fair value ascertained by the appraisers is lower than the price which the corporation may have offered to pay the stockholder.
b. When the fair value ascertained by the appraisers is higher than the price which the corporation may have offered to pay the
stockholder.
c. *When the fair value ascertained by the appraisers is approximately the same as the price which the corporation may have offered to
pay the stockholder.
d. When the fair value ascertained by the appraisers is higher or lower the price which the corporation may have offered to pay the
stockholder.

200. Where an action is filed by the dissenting stockholder to recover such fair value and the refusal of the stockholder to receive payment is
found by the court to be justified, who shall bear the cost and expenses of appraisal?
a. The dissenting stockholder.
b. *The corporation.
c. Either the dissenting stockholder or the corporation.
d. Both the dissenting stockholder and the corporation.

SEC. 86

201. What happens if the stockholders fail to submit the certificate?

a. *His rights under Title X is terminated.
b. His rights under Title X is postponed till he can submit the certificate.
c. There if no effect to his rights.
d. None of the above

202. With the notation, the secretary of the corporation will be guided accordingly for under SEC. 83 al rights accruing to such shares including:
a. Voting rights
b. Dividend rights
c. Voting or Dividend rights
d. *Voting and Dividend rights

203. The shares represented by the certificate(s) bearing such notation may be transferred or sold by the dissenting stockholder. In such case:
a. The transferee shall become a regular stockholder with the right to receive all dividend distributions which would have accrued to such
shares.
b. The right of the transferor as a dissenting stockholder to be paid fair value of the shares shall cease. By transferring his shares, he
ceases to be a stock.
c. *Both A and B
d. Neither A and B

204. If shares represented by the certificate bearing such notation are transferred, and the certificate consequently cancelled:
a. The rights of the transferor as a dissenting stockholder under Title X shall cease.
b. The transferee shall have all the rights of a regular stockholder.
c. All dividend distributions which would have accrued on such shares shall be paid to the transferee.
d. *All of the above.
SEC. 87

205. The corporation where no part of its income is distributable as dividends to its members, trustees, or officers:
a. Stock corporation
b. *Non-stock corporation
c. Close corporation
d. There is no corporation like that

206. Any _____which it may obtain as an incident to its operations shall whenever necessary or proper, be used in furtherance of the purpose or
purposes for which it was organized.
a. loss
b. Liability
c. *Profit
d. Gain

207. Which of the following is one of the characteristics of a non‐stock corporation?

a. *It does not have capital stock divided into shares
b. Part of its income during its existence is distributable as dividends to its members, trustees, or officers
c. It does have capital stock divided into shares
d. Allotments of the surplus profits on the basis of the shares held

208. Is a non-stock corporation governed by the same rules established for stock corporation, subject however, to special provisions governing
non‐stock corporations?
a. No
b. *Yes
c. Maybe
d. Depends

SEC. 88

209. Non-stock Corporation may be formed or organized in the following choices, except;
a. Charitable
b. Religious
c. Professional
d. *Non- Professional
210. Under SEC. 88 of Non-stock corporations, which of the following distinguishes that a non-stock corporation may be form or organized for
charitable, religious, educational, professional, cultural, recreational, fraternal, literary, scientific, social, civic service, or similar purposes.
a. *Purposes
b. Definition
c. Non-transferability of membership
d. Termination of membership

211. Non-stock Corporation may be formed or organized in the following choices, except;
a. Educational
b. Civic Service
c. Fraternal
d. *Responsibility

212. A Non-stock corporations may be form or organized for charitable, religious, educational, professional, cultural, recreational, fraternal, literary,
scientific, social, civic service, or similar purposes like ______.
a. *Trade
b. Exchange
c. Harbor
d. Cooperative

SEC. 89

213. Voting by mail or other similar means by members of non-stock corporations may be authorized by the by laws of non-stock corporations with
the approval of and under such conditions which may be prescribed by what agency?
a. *Securities and Exchange Commission
b. Philippine Regulation Commission
c. Board of Directors
d. Department of Justice

214. The others are rights of the members of any class or classes to vote, except;
a. Limited
b. Broadened
c. *Expose
d. Denied

215. 759. Unless otherwise provided by the Articles of incorporation or the by-laws, a member may vote.
a. Vote by Straight vote
b. Vote by Distribution
c. *Vote by Proxy
d. Vote by Majority

216. 760. Unless so limited, broadened or denied, each member, regardless of class, shall be entitled to how many votes.
a. three
b. *one
c. two
d. four

SEC. 90

217. Membership in a Non-stock corporation and all rights arising therefrom are.
a. Impersonal and transferable
b. Personal and transferable
c. *Personal and non-transferable
d. Impersonal and non-transferable
 218. Under SEC. 90 of a non-stock corporation where membership in a non-stock corporation, and all rights arising therefrom, are personal and
non-transferable, unless the Articles of incorporation or the by0laws otherwise provided.
a. Purposes
b. *Non-transferability of membership
c. Termination of membership
d. Election and term of trustees

219. Which is not included in the sec.90 of Non-stock Corporation wherein membership in a Non-stock corporation and all rights arising therefrom.
a. Personal
b. Non-transferable
c. *Election
d. by-laws

220. Non-transferability of membership in a non-stock corporation, and all rights are

a. *personal and non-transferable
b. Transferable
c. Impersonal
d. Impersonal and transferable

SEC. 91

221. Membership shall be terminated in the manner and for the causes provided in the.
a. By laws or Articles of Corporation
b. *Articles of Incorporation or by laws
c. Articles of Corporation
d. Articles of Partnership

222. It is under non-stock corporation SEC. 91 wherein membership shall be terminated in the manner and for the causes provided in the Articles
of incorporation or the by-laws. Termination of membership shall have the effect of extinguishing all rights of a member in the corporation or
in its property, unless otherwise provided in the Articles of incorporation or the by-laws.
a. Plan of distribution of assets
b. Rules for distribution
c. Place of meetings
d. *Termination of membership

223. 767. All of the choices are provided in termination of membership except.
a. Articles of Incorporation
b. by-laws
c. Articles of incorporation or by-laws
d. *Articles of corporation

224. 768. It is under non-stock corporation SEC. 91 wherein membership shall be terminated in the manner and for the causes provided in the
Articles of incorporation or the by-laws. Termination of membership shall have the effect of extinguishing all rights of a member in the
corporation or in its property, unless otherwise provided in the Articles of incorporation or the by-laws.
a. Place of meetings
b. Plan of distribution of assets
c. *Termination of membership
d. Rules for distribution

SEC. 92

225. The Board of Trustees of Non-stock Corporation may be.

a. *More than 15
b. More than 10
c. More than 14
d. More than 5

226. No person shall be elected as trustee unless he is a

a. secretary of the corporation
b. *member of the corporation
c. president of a corporation
d. treasurer of a corporation

227. Unless otherwise provided in the Articles of incorporation or the by-laws the board of trustees shall soon _________
a. disorganize
b. *organize
c. fixed
d. prepare

228. Unless otherwise provided in the Articles of incorporation or the by-laws, the board of trustees of non-stock corporations, which may be more
than 15 in number as may be fixed in their Articles of incorporation or by-laws, shall, as soon as organized, so classify themselves that the
term of office of ________ of their number shall expire every year.
a. 3/5
b. 2/3
c. *1/3
d. 3/4

SEC. 93

229. It provides that the members of non-stock may hold their regular or special meeting even outside the principal office of corporation.
a. *By-laws
b. AOI
c. Notice of meetings
d. B.P 68

230. The place of meeting shall be

a. Outside the Philippines
b. *Within the Philippines
c. Anywhere
d. Even outside the Philippines
 231. It must be sent to all members indicating the place, date and time.
a. By-laws
b. *Proper notice
c. AOI
d. Notice

232. All of the following are provided by by-laws of non-stock corporations about their meeting except for
a. They may be held outside where the principal office is located
b. It must be within the Philippines
c. Proper notice must sent to all members
d. *It may held outside the Philippines

SEC. 94

233. In case of _____, assets shall be applied and distributed with certain specific rules laid down by law.
a. Termination
b. *Dissolution
c. Liquidation
d. Winding up

234. All of the following are the use permits by asset received and held by corporation subject to limitation, except for
a. Charitable
b. Benevolent
c. *Religious
d. Societies

235. These assets require their return, transfer or conveyance

a. *Assets held upon condition
b. Assets held subject to limitation
c. Assets distributed to members in accordance with their distributive rights
d. Assets to be distributed

236. Assets may distribute to all of the following, except

a. Persons
b. Societies
c. *Companies
d. organizations

SEC. 95

237. Which of the following is not correct with the rules applicable to non-stock corporation?
a. No part of its income is distributable as dividends
b. It cannot engage in business with the object of making profits
c. *A member cannot vote by proxy
d. Voting by mail or other similar terms may be authorized.

238. A plan of distribution shall be adopted upon approval of ____ of the members having voting rights
a. 2/3
b. *At least 2/3
c. 1/2
d. At least 1/2

239. By majority vote, they shall adopt a resolution recommending a plan of distribution
a. BOD
b. *BOT
c. Stockholders
d. Incorporators

240. Through their Articles of incorporation or their by-laws, may designate their governing boards by any name other than as board of trustees.
a. Stock Corporation
b. Corporations
c. *Non-stock corporations
d. Incorporation

SEC. 96

241. In a close corporation, they owe to one another the same duty of utmost good faith and diligence that partners owe one another.
a. *Stockholders
b. Trustees
c. Controlling stockholders
d. Directors

242. The issued stocks of a close corporation shall be held of record by a specified number of persons of
a. more than 20
b. *less than 20
c. less than 15
d. more than 15

243. Which of the following is not correct with close corporation

a. *All its issued stock shall be held of record by a specified numbers of persons exceeding 20.
b. All its issued stock shall be subject to one or more restrictions on transfer permitted by the code.
c. Stock is held in few hands, or in few families and stocks are not dealt in buying or selling
d. Any of the stock shall not be listed in any stock exchange or offered to the public.

244. Close corporation has been often referred as

a. *Incorporated Partnership
 b. De facto Partnership
c. Stock Corporation
d. De jure Corporation

SEC. 97

245. They shall be subject to all liabilities of directors.

a. Managers
b. Incorporators
c. Corporators
d. *Stockholders

246. Which of the following is correct concerning on the effect of provision under AOI of a close corporation
a. A meeting of stockholders need to be called to elect directors
b. *The stockholders of the corporation shall be deemed to be a director
c. The stockholders of a corporation shall not be subject to all liabilities of directors.
d. A close corporation shall not be managed by the stockholders.

247. In a _____, the management or conduct of the business and affairs thereof is entrusted to the BOD and not with stockholders
a. *Corporation
b. Non-stock Corporation
c. Stock Corporation
d. Special corporations

248. Which of the following do not fall under classification of directors into one or more classes?
a. Where the Articles of incorporation provides 2 classes of stocks
b. The holders of each class would be elected to the BOD solely by holders of the same class.
c. *The holders shall be liable of all liabilities
d. A unanimity requirement for stockholders' and directors' resolution would seem to be valid

SEC. 98

249. Which is not a condition for the validity of a restriction on the right to transfer shares?
a. Restrictions must appear in the Articles of incorporation
b. Restrictions must appear in the certificate of stock
c. Restrictions must appear in the by-laws
d. *Restrictions must appear in the Articles of partnership

250. What will happen if the restrictions did not appear in the Articles of Incorporation, by-laws, and in the certificate of stock?
a. *The restriction will not bind any purchaser in good faith.
b. The restriction is imposed
c. The restriction will bind the purchaser.
d. The corporation is illegal.

251. What is the right being restricted which should be written in the Articles of Incorporation, by-laws, and certificate of stock?
a. *Right to transfer shares
b. Right to vote
c. Right to supply shares
d. Right to issue shares

252. If the existing stockholder or corporation fails to exercise the option to purchase within the period stated, the transferring stockholder:
a. *may sell his shares to any third persons
b. his shares are invalid
c. the shares cannot be sold
d. the shares are not transferred properly

SEC. 99

253. What will happen if a person is conclusively presumed to have notice of the fact of his ineligibility to be a stockholder?
a. *the certificate of stock conspicuously shows the qualifications of the persons entitled to be holders of record
b. he is a resident in the Philippines
c. he passed the qualifications of the other corporations
d. he is in good faith

254. What if a stock certificate of any close corporation conspicuously shows a restriction on the transfer of stock?
a. *the transferee of stock is conclusively presumed to have notice of the fact that he has acquired the stock in violation of the restriction, if
the acquisition violates the restriction
b. the transferee of stock has no notice of the restriction
c. the stock certificate does not show any written restriction
d. the stocks are redeemable

255. If the transferee is conclusively presumed to have notice of the restriction

a. *He is not allowed to prove lack of notice
b. The presumption is invalid
c. The presumption is void
d. He is allowed to change the restriction

256. What will happen if there is a written qualification for a person entitled to a stock in a stock certificate of a closed corporation?
a. *It is presumed that the person receiving such certificate has notice of the fact of his ineligibility to be a stockholder
b. The stock is considered to be unissued.
c. The certificate is not authorized.
d. The holder has no notice of the qualification.

SEC. 100

257. May a provision between parties be invalidated if there is a provision related to any phase of the corporate affairs, in any written agreement
signed by stockholders?
a. *No, because its effect is to make them partners among themselves
b. No, because it is a written agreement and not signed by the parties
c. Yes, because it is not related to any affairs of the business
d. Yes, because it is written by the parties only.
 258. Stockholders actively engaged in the management or operation of the business affairs of a close corporation shall be of the following, except:
a. Stockholders shall be held to strict fiduciary duties to each other
b. They shall be personally liable for corporate torts unless the corporation has obtained reasonably adequate liability insurance.
c. Stockholders shall be held to strict fiduciary duties among themselves
d. *They shall be sued since they cannot participate in the management affairs of the business

259. Agreements signed by all stockholders, executed before the formation and organization of a closed corporation, and survived the
incorporation, shall be which of the following?
a. *Be binding between and among the stockholders
b. Not be binding between and among the stockholders
c. Be ultra-vires
d. Not be considered

260. An agreement between two or more stockholders, if in writing and signed by the parties, may provide that in exercising any voting rights,
except:
a. That the shares held by them shall be voted as provided
b. That the shares held by them shall be voted as they may agree
c. That the shares held by them shall be voted as determined accordingly
d. *The shares held by them and third persons shall be voted as determined by an unknown party.

SEC. 101

261. Unless the by-laws provide, any action by the directors of a close corporation without a meeting shall be deemed valid if:
a. *Before or after such action is taken, written consent thereto is signed by all the directors
b. The consent has been orally agreed upon
c. The director did not receive any authorization from other directors
d. If there is no action taken for the consent of other directors

262. Who can make a prompt objection in writing when a board meeting is improperly held?
a. Directors only
b. Stockholders only
c. *Directors and Stockholders
d. None of the above

263. Who are accustomed to take informal action with express or implied acquiescence of all the stockholders?
a. *Directors
b. Stockholders
c. Third Parties
d. None of the above.

264. What cannot take place where the action taken at a meeting held, without proper call or notice, is beyond the corporate powers of the
corporation?
a. *Ratification
b. Incorporation
c. By-laws
d. Articles of Partnership

SEC. 102

265. Pre-emptive right of stockholders in a close corporation shall extend to all stocks to be issued including what?
a. Reissuance of treasury shares
b. Shares in payment of corporate debts
c. *All of the above
d. None of the above

266. Pre-emptive right is an absolute right on the part of the stockholders. What is the exception?
a. *When limited by the Articles of Incorporation
b. When there is no pre-emptive right offered by the corporation to a stockholder
c. There is no exception because pre-emptive right is invalid
d. When stockholders does not hold any stock of the corporation

267. In a closed corporation, pre-emptive right of stockholders extends to:

a. Common Stocks
b. Preferred Stocks
c. *Both
d. Cannot be determined

268. This is of vital importance in closely held corporations to keep the association intact and prevent the shifting of control from one faction to
another or to unwelcome outsiders and thus, avoid deadlocks in the management of the corporation.
a. Non-voting Right
b. *Pre-emptive Right
c. Preferred Right
d. Authorized Right

SEC. 103

269. What is the required affirmative vote to reduce a quorum or voting requirement stated in the Articles of incorporation?
a. *at least 2/3
b. less than 2/3
c. at least 1/2
d. less than 1/2

270. 814. Which of the following is true?

a. *Mere written assent of the stockholders which is allowed under sec.16 is insufficient.
b. Less than 2/3 of affirmative vote of outstanding capital stock is needed to reduce a quorum said in the Articles of incorporation.
c. The amendment may not be approved by stockholders.
d. Amendment of Articles of incorporation may not comply with the requirements prescribed by sec. 103.

271. What is the effect of amendment of the Articles of incorporation?

a. *To terminate the status of the corporation as a close corporation.
b. To terminate the status of the corporation as an open corporation.
 c. To terminate the status of the corporation as a de jure corporation.
d. To terminate the status of the corporation as a de facto corporation.

272. Which of the following is true?

a. *Any amendment of the ART. of incorporation must comply with the requirements prescribed by the provision.
b. Mere written assent of the stockholders which is allowed under sec.16 is sufficient.
c. The amendment may not be approved by stockholders.
d. Amendment of Articles of incorporation may not comply with the requirements prescribed by sec. 103.

SEC. 104

273. Which of the following is not included in the order that the commission shall have authority to make such as it deems appropriate?
a. Cancelling or altering any provision contained in the Articles of incorporation.
b. *Allowing any act of the corporation or its BOD, stockholders, officers or other persons party to the action.
c. cancelling, altering, or enjoying any resolution or act of the corporation or its BOD, stockholders or officers.
d. Appointing a provisional director.

274. Which of the following is false?

a. The commission have authority to cancel, or alter any provision contained in the Articles of incorporation, by-laws, or any stockholders
agreement.
b. *the commission does not have authority on cancelling , altering or enjoying any resolution or act of incorporation or its board of
directors, stockholders, or officers.
c. the commission has authority on directing or prohibiting any stockholder, officer or other persons party to the action.
d. the commission has authority to appoint a provisional director.

275. Which of the following is true?

a. A provisional director is a receiver of the corporation.
b. *A provisional director does not have a title and powers of a custodian.
c. Provisional director have the title and power of a receiver.
d. A provisional director does not have all the rights and powers of a duly elected director of the corporation.

276. How is the compensation of the provisional director determined?

a. Agreement between him and the commission, subject to the approval of the corporation.
b. *Agreement between him and the corporation, subject to the approval of the commission.
c. predetermined percentage of profit as agreed by the corporation and commission.
d. predetermined percentage of profit as agreed by him and the commission.

SEC. 105

277. Which of the following is an act of director, officer, or those in control of the corporation that may give the right to a stockholder to compel the
dissolution of such corporation?
a. legal
b. honest
c. *oppressive
d. fairly judicial

278. What is the requisite before a corporation may be compelled by the stockholder to purchase his share?
a. The corporation has sufficient assets to cover its capital, exclusive of liabilities.
b. The corporation has sufficient liabilities to cover its capital, exclusive of assets.
c. *The corporation has sufficient assets to cover its liabilities, exclusive of capital.
d. The corporation has sufficient liabilities to cover its assets, exclusive of capital.

279. Which of the following is not an act that can give the stockholder the reason to compel the dissolution of the corporation?
a. fraudulent
b. dishonest
c. *fairly judicial
d. illegal

280. Which is not allowed by the law with regards to the withdrawal of stockholder?
a. purchase of shares by the corporation at more than par value.
b. purchase of corporation at more than issued value.
c. *purchase of corporation at less than par value.
d. purchase of corporation at more than par value or stated value.

SEC. 106

281. ______________ corporation shall be governed by special laws and by general provision of the code.
a. Eleemosynary Corporation
b. open corporation
c. close corporation
d. *educational corporation

282. The code classified educational corporation as:

a. open corporation
b. de jure corporation
c. de facto corporation
d. *special corporation

283. What governs educational corporation?

a. special law only
b. general provision of code only
c. neither special law nor general provision of code
d. *both special law and general provision of code.

284. What is an educational corporation?

a. stock corporation
b. non stock corporation
c. neither stock or non-stock corporation
d. *either stock or non-stock corporation
SEC 107

285. What is the governing body that is prohibited to accept or approve the Articles of incorporation?
a. *SEC
b. Special laws
c. General provisions of the corporation code
d. All of the above

286. Who shall govern the incorporation of educational corporations?

a. *Special laws
b. SEC
c. Incorporation code
d. All of the above

287. As to the pre-requisites to incorporation, SEC can accept or approve the Articles of incorporation with the permission of the Ministry of _____
and______?
a. Ministry of educational and culture
b. Ministry of religious and culture
c. Ministry of culture and sport
d. *None of the above

288. Which of the following is the exception wherein SEC shall not accept or approve the Articles of incorporation and by-laws of any educational
institution?
a. Favorable by recommendation of the department of education
b. Favorable by recommendation of culture
c. Favorable by recommendation of sports
d. *Favorable by recommendation of the department of education, culture and sports

SEC 108
289. For a non-stock educational corporation, how many term shall a trustee be subsequently elected?
a. 6
b. *5
c. 3
d. 4

290. For a non-stock educational corporation, how many trustees shall compose of the corporation?
a. *Not more than 5 nor less than 15
b. Not more than 4 nor less than 12
c. Not less than 5 nor more than 15
d. Not less than 4 nor more than 12

291. Which of the following is not a rule for non-stock educational corporations?
a. Trustees subsequently elected shall have a term of 5 years.
b. *Through the Articles of incorporation, designate their governing boards by any name other than as board of trustees.
c. Majority of the trustees shall constitute a quorum for the transaction of business
d. Power and authority of trustees shall be defined in the by-laws

292. Which of the following is a rule for non-stock educational corporation?

a. *Trustees elected to fill vacancies occurring before expiration of a particular term, shall hold office only for the unexpired period
b. Number and term of directors shall be governed by the provisions on stock corporations
c. Powers and authority of trustees is defined by the state
d. All of the above

SEC 109

293. How many persons may religious corporation be incorporated?

a. *1 or more
b. 5 or more
c. 10 or more
d. 5 only

294. Religious corporation shall be governed by what chapter?

a. *Chapter I, religious corporations
b. Chapter II, religious corporations
c. Chapter III, religious corporations
d. Chapter IV, religious corporations

295. This is a type of non-profit organization which is incorporated under the law often tis types of corporation are recognize under the law on
subnational level
a. *Religious corporation
b. Publicly health corporation
c. Professional corporation
d. Quasi-public corporation

296. Which of the following is a ground for classes of religious corporation

a. *Religious corporation maybe incorporated by one or more persons
b. Religious corporations can be govern by stock corporations
c. It has a capital stock divided into shares
d. Created and operated for the purpose of profit

SEC 110

297. This may be formed by the chief archbishop, bishop, priest, minister, rabbi or other presiding elder?
a. *Corporation code
b. Corporation aggregate
c. Corporation capacity
d. Corporate by chapter

298. What is the purpose of corporation sole?

a. *Administering and managing
b. Develop the operational competency of individual
 c. Receive and administer funds
d. None of the above

299. This is a legal entity incorporated by one person and consist one member or corporator only and his successor (bishop etc,)
a. *corporation sole
b. Corporate by chapter
c. Corporation sole
d. Corporation aggregates

300. Contract made with a corporation sole may continuous from?

a. *One officeholder to his or her successor
b. Two officeholder to his or her successor
c. Three officeholder to his or her successor
d. Four officeholder to his or her successor

SEC. 111
301. The following are needing in setting forth the Articles of Incorporation, except;
a. That the rules, regulations and discipline of his religious denomination, sect or church are not inconsistent with his becoming a
corporation sole and do not forbid it.
b. *The place where the principal office of the corporation sole is to be established and located, which place must be within and outside the
Philippines.
c. That he is the chief archbishop, bishop, priest, minister, rabbi or presiding elder of his religious denomination, sect or church and that he
desires to become a corporation sole
d. The manner in which any vacancy occurring in the office of chief archbishop, bishop, priest, minister, rabbi of presiding elder is required
to be filled, according to the rules, regulations or discipline of the religious denomination, sect or church to which he belongs.

302. Where can the principal office of the corporation sole is to be established and located?
a. Within and Outside the Philippines
a. *Within the Philippines only
b. Outside the Philippines only
c. None of the Above

303. What is held responsible for such chief archbishop, bishop, priest, minister, rabbi or presiding elder of his religious denomination, sect or
church within his territorial jurisdiction?
a. *Administration of the temporalities and the management of the affairs, estate and properties.
b. Management of the business including acts not in the ordinary course of business.
c. Filing of vacancy in accordance with the sect which he is not part of.
d. None of the above

304. Which manner occurring in the office of chief archbishop, bishop, priest, minister, rabbi of presiding elder is required to be filled, according to
the rules, regulations or discipline of the religious denomination, sect or church to which he belongs?
a. Management
b. Voting
c. Election
d. *Vacancy

SEC. 112

305. Who may verify the Articles of Incorporation of a Corporate Sole as to Religious Corporation?
a. *Chief Archbishop, Bishop, Priest, Minister, Rabbi or Presiding Elder
b. President, Vice-President, Secretary and Treasurer
c. Presiding Officers of a Non-Stock Corporation
d. Board of Directors

306. What else must be attach in the Articles Of Incorporation of a Corporate Sole for its submission?
a. Copy of the commission
b. Certificate of election
c. Letter of appointment of such chief archbishop, bishop, priest, minister, rabbi or presiding elder, duly certified to be correct by any notary
public.
d. *All of the Above

307. Who shall be held in trust for the use, purpose, behalf and sole benefit of his religious denomination, sect or church, including hospitals,
schools, colleges, orphan asylums, parsonages and cemeteries thereof of a Corporate Sole?
a. *Chief Archbishop, Bishop, Priest, Minister, Rabbi or Presiding Elder
b. President, Vice-President, Secretary and Treasurer
c. Presiding Officers of a Non-Stock Corporation
d. Board of Directors

308. Are religious groups required to be registered with the SEC?

a. No, the Corporation Code does not require any religious groups to be registered as a corporation same is applied in the case of
Educational Corporations.
b. *No, the Corporation Code does not require any religious groups to be registered as a corporation but if it wants to acquire legal
personality, its members should incorporate under the Code.
c. Yes, the Corporation Code requires any religious groups to be registered as a corporation but not in the case of Educational
Corporations.
d. Yes, the Corporation Code requires any religious groups to be registered as a corporation but if it wants to acquire legal personality, its
members should incorporate under the Code.

SEC. 113

309. May a Corporation Sole, as determined to be a kind of Religious Corporation, acquire property?
a. *Yes, a corporate sole may acquire property even without court intervention by purchase, donation and other lawful means.
b. Yes, a corporate sole may acquire property, provided however, it is intended for casual sale.
c. No, a corporate sole may not acquire property even without court intervention by purchase, donation and other lawful means.
d. No, a corporate sole may not acquire property intended for church, benevolent or educational purposes.

310. Where can a Corporate Sole obtain an order for alienating a property?
a. From the Regional Trial Court as to where the residence of the presiding officer is located.
b. *From the Regional Trial Court as to where the province is situated.
c. From the Court of First Instance as to where the principal place of the corporation is positioned.
d. From the Court of First Instance as to where the incorporation was held.
 311. 855. Can a member of the religious denomination represented by corporation sole oppose the application for leave to sell or mortgage?
a. No, even if it complied with the rules which regulate the acquisition, mortgage, and selling of real estate and personal property, in which
case such rules shall control;
b. No, once it is verified it can no longer be opposed by any member of the religious denomination.
c. *Yes, provided it complied with the rules which regulate the acquisition, mortgage, and selling of real estate and personal property, in
which case such rules shall control.
d. Yes, even if it is verified it can still be opposed by any member of the religious denomination, without complying with the rules which
regulate the acquisition, mortgage, and selling of real estate and personal property, in which case such rules shall control.

312. How does the application for leave to sell or mortgage of a Corporate Sole must be presented after obtaining the order?
a. Notice of the application for leave to sell or mortgage has been petitioned by the Presiding officer.
b. Notice of the application for leave to sell or mortgage has been verified by the Board of Directors and likewise be circulated in the public
c. Notice of the application for leave to sell or mortgage has been circulated in the public.
d. *Notice of the application for leave to sell or mortgage has been given by publication or otherwise in such manner and for such time as
said court may have directed, and that it is to the interest of the corporation that leave to sell or mortgage should be granted.
SEC. 114.

313. Which may form part on the filing with the SEC in order to permit successors in office of any chief archbishop, bishop, priest, minister, rabbi
or presiding elder in a corporation sole shall become the corporation sole on their accession to office?
a. Copy of their commission, Stock Certificate, by-laws
b. Copy of their by-laws, Incorporation Code and Stock Certificate
c. *Copy of their commission, certificate of election, or letters of appointment, duly certified by any notary public.
d. Copy of certificate of election, or letters of appointment, duly certified by any notary public, Incorporation Code

314. May a successors in office of any chief archbishop, bishop, priest, minister, rabbi or presiding elder in a corporation sole, permitted in the
corporation sole on their accession to office and transaction of business?
a. *Yes, provided it complied with the filing of Securities and Exchange Commission of a copy of their commission, certificate of election, or
letters of appointment, duly certified by any notary public.
b. Yes, provided it complied with the filing of Securities and Exchange Commission of a copy of their by-laws, Incorporation Code and
Stock Certificate
c. No, because it complied with the filing of Securities and Exchange Commission of a copy of their commission, certificate of election, or
letters of appointment, duly certified by any notary public.
d. No, because it complied with the filing of Securities and Exchange Commission of a copy of their by-laws, Incorporation Code and Stock
Certificate

315. What can the person or persons authorized and empowered by the rules, regulations or discipline of the religious denomination, sect or
church represented by the corporation sole shall exercise to administer the temporalities and manage the affairs, estate and properties of the
corporation sole during the vacancy?
a. Exercise issuing of stocks
b. Exercise voting trust agreement
c. Exercise limited powers and authority of the corporation sole
d. *Exercise all the powers and authority of the corporation sole

316. Which of the following is/are needed in order to authorize and empower the person or persons person or persons discipline of the religious
denomination, sect or church represented by the corporation sole to administer the temporalities and manage the affairs, estate and
properties of the corporation sole during the vacancy?
a. By-laws
b. Notice
c. *Rules, Regulations and Discipline
d. Meetings

SEC.115

317. A Corporation sole may be dissolved and its affairs settled voluntarily by submitting to where?
a. *Security and Exchange commission
b. Commission on Audit
c. Department of Justice
d. all of the above

318. Upon approval of such declaration of dissolution by the Security and Exchange Commission, the corporation shall cease to carry on its
operations except for the purpose of?
a. Liquidation of its Affairs
b. *winding of its Affairs
c. Liquidation and winding up of its affairs
d. all of the above

319. The first to appear in the declaration of dissolution is?

a. The name of the member
b. The name of the stockholder
c. *The of the Corporation
d. all of the above

320. The second to appear in the declaration of dissolution is?

a. *The reason for dissolution and winding up
b. The purpose of dissolution
c. The effect of dissolution
d. All of the above

SEC. 116

321. It is define as a corporation composed entirely of spiritual persons and which is erected for the furtherance of a religion or for perpetuating
the rights of the church or for the administration of the church or religious work or property.
a. congregation corporation
b. catholic corporation
c. *religious corporation
d. evangelical corporation

322. In order to be a corporate sole, the chief archbishop must file where?
A. *Security and exchange Commission
B. To the pope
C. City Hall where the church is situated
D. commission on election
 323. The two classes of corporation may be classified into corporation sole and ___________?
E. religious group
F. catholic group
G.*religious society
H. all of the above

324. Corporate sole is incorporated by how many persons?

a. *one
b. two
c. three
d. four

SEC. 117

325. It is define as the extinguishment of its franchise to be a corporation and the termination of its corporate existence?
a. Liquidation
b. winding up
c. *Dissolution
d. All of the above

326. Under SEC. 117, a private corporation organized under the Law may be dissolved in two methods, what are these?
a. *voluntarily and involuntarily
b. orally and impliedly
c. public and privately
d. none of the above

327. Voluntary dissolution may be effective according to the following except one.
a. by the vote of the board of directors/trustees and the stockholders/members where no creditors are affected.
b. by the judgment of the Security and Exchange Commission after hearing of petition for voluntary dissolution, where creditors are
affected.
c. *by amending the Articles of incorporation to shorten the corporate term.

328. Involuntary dissolution may be effective according to the following except one.
a. by the expiration of the term provided for in the original Articles of incorporation.
b. by legislative enactment.
c. by failure to formally organize and commence the transaction of its business within(2) two years from the date of incorporation.
d. *by amending the Articles of incorporation to shorten the corporate term.

SEC.118

329. When will a voluntary dissolution is effective even without the necessity of the Security and Exchange Commission or the court?
a. *when rights of creditors are not affected.
b. when all rights of creditor are affected.
c. when some right of creditors are affected.
d. all of the above

330. In voluntary dissolution where no creditors are affected. The dissolution is effected by mere vote of the following except one.
a. board of directors
b. board of trustees
c. *creditors
d. stockholders or members

331. There is a qualification of a stockholders before he can vote, he must owe at least how many outstanding capital stock?
a. 1/3
b. 2/5
c. *2/3
d. any of the choices

332. Who will certify the copy of the resolution authorizing the dissolution?
a. members
b. creditors
c. *majority of the board of directors or trustees
d. secretary

SEC. 119

333. In case the dissolution of a corporation affects the rights of any creditor having a claim against the corporation:
a. A hearing before the supreme court is required
b. *A hearing before the securities and exchange commission is required
c. A hearing before the supreme court and securities and exchange commission is required
d. There is no hearing required in case the dissolution of a corporation affects the rights of any creditor having a claim against the
corporation

334. In case a petition for dissolution shall be filed with the securities and exchange commission, which of the following statements are incorrect:
a. The petition shall be signed by a majority of BOD/T or other officers having the management of its affairs
b. The petition shall be verified by the president or secretary or one of its directors or trustees
c. Its dissolution was resolved by the affirmative vote of the stockholders representing at least 2/3 of outstanding capital stock
d. *Its dissolution must be resolved by the affirmative vote of the members at a meeting of its stockholders or members called for that
purpose representing the majority

335. Which statement is incorrect regarding the dissolution by order of the securities and exchange commission?
a. In case of deadlocks in a close corporation respecting the management of its affairs, the SEC, upon written petition of any stockholder,
shall have authority to make such order.
b. Any stockholder of a close corporation may, by written petition to the SEC, compel the dissolution of such corporations whenever
corporate assets are being misapplied or wasted.
c. *The SEC may either suspend, or revoke, even without proper notice and hearing, the franchise or certificate of registration of
corporations, partnerships or associations, upon any of the grounds provided by law.
d. Any stockholder of a close corporation may, by written petition to the SEC, compel the dissolution of such corporations whenever any of
the acts of the directors, officers or those in control of the corporation is within the illegal or fraudulent.

336. Which of the following is true regarding the effect of dissolution.

a. *A dissolved corporation continues to exist but only for a limited time and purpose.
b. The corporation continues as a body corporate to continue the business for which it was established
 c. The corporation continues as a body corporate for 5 years for the purpose of winding-up or liquidation.
d. Upon the expiration of the winding-up period of 5 years, the corporation ceases to exist for all purposes and can no longer sue and be
sued.

SEC. 120

337. Which is incorrect regarding the collateral attack of a dissolved corporation.

a. The legal existence of a corporation can be collaterally attacked in any private suit to which the said corporation may be a party.
b. *A corporation which had duly organized but failed to exercise its corporate rights and franchise within 5 years from incorporation is
automatically dissolved.
c. A corporation that failed to exercise its corporate rights and franchise within 5 years from incorporation may only be dissolved by quo
warrantor proceedings instituted by the solicitor general.
d. The continuous inoperation of a corporation for a period of at least 5 years is a ground for suspension or revocation.

338. Which statement is incorrect regarding dissolution by failure to formally organize.

a. If a corporation does not formally organize and commence transaction of its business within 2 years from the date of its incorporation,
the corporation shall be deemed dissolved.
b. The cessation of the corporate powers operates as a dissolution.
c. *At attempted completion of organization after such time is effective and will only be given the status of a de facto corporation.
d. A complete organization from the very beginning is necessary in order to give it a legal existence.

339. The following statements regarding dissolution by shortening corporate term are true except.
a. *This method is the one widely used to dissolve a corporation.
b. A voluntary dissolution may be effected by amending the Articles of incorporation to shorten the corporate term pursuant to the
provisions of this code
c. A copy of the an amended Articles of incorporation shall be submitted to the securities and exchange commission and to the regional
trial court.
d. Upon approval of the amended Articles of incorporation of the expiration of the shortened term, as the case may be, the corporation
shall be deemed dissolved without any further proceedings, subject to the provisions of this code on liquidation.

340. Liquidation is the winding-up of affairs of the corporation by means of all except.
a. Reducing its assets into money
b. Settling with creditors and debtors
c. *Final distribution of dividends to its stockholders
d. Apportioning the amount of profit and loss

SEC. 121

341. Which state is incorrect regarding the priority of application of asset in a corporate dissolution.
a. When the corporation is insolvent, the creditors of the corporation must be paid first.
b. After the first payment, stockholders/members, directors/trustees or officers of the corporation who are also its creditors must be paid
next.
c. *After second payment, the remaining assets are then to be distributed among the stockholders or members equally in the absence of
any provision to the contrary.
d. Upon winding-up of the corporate affairs, any asset distributable to any creditor or stockholder or member who is unknown or cannot be
found shall be escheated to the city or municipality where such assets are located.

342. Which an involuntary form of dissolution.

a. Dissolution by legislative enactment
b. *Dissolution by order of Securities and exchange commission
c. Dissolution by shortening the terms
d. Dissolution by expiration of term

343. The securities and exchange commission my order dissolution of a corporation on the following grounds except.
a. Violations by a corporation
b. Mismanagement of a close corporation
c. *Insolvency or bankruptcy on corporate existence
d. Deadlocks in a close corporation

344. All statements regarding liquidation by a receiver is true except.

a. The receivership, unless otherwise specifically limited in its formation, shall exist indefinitely until the affairs of dissolved corporation
shall have been completely settled and liquidated.
b. *The appointment of a receiver is non-discretionary with the court and securities and exchange commission and is made upon proper
showing that such appointment is necessary.
c. Where corporate directors are guilty of breach of trust, minority stockholders may ask for receivership.
d. The liquidation by receivership is authorized by virtue of which upon the dissolution of the corporation, the SEC "may appoint a receiver
to collect its assets and pay the debts of the corporation.

SEC. 122

345. If the petition for dissolution is sufficient in form and substance, the following are true except.
a. The commission, shall, by an order reciting the purpose of the petition, fix a date on or before which objections thereto may be filed by
any person.
b. *The date which the commission shall fix shall not be less than 60 days nor more than 90 days.
c. Before such date given by the commission, a copy of the order shall be published at least once a week for 3 consecutive weeks in a
newspaper of general circulation in the municipality where corporation is situated.
d. A copy of the order shall be posted for 3 consecutive weeks in 3 public places in such municipality or city.

346. As to liquidation by the corporation itself, which statement is incorrect.

a. The normal method or procedure is for the corporation through the directors or trustees and executive officers to have charge of the
winding-up operations.
b. *The members and stockholders can also file for petition for the liquidation of the corporation.
c. As the law grants it a period of 3 years after the time when it would have been so dissolved within which to wind-up its affairs, the claims
by and against it not presented and settled within that period becomes unenforceable.
d. There is nothing which bars an action for the recovery of the debts of the corporations against the liquidator after the lapse of the
winding-up period of 3 years.

347. All statements regarding dissolution by order of securities and exchange commission are true except.
a. A corporation may be dissolved and its affairs settled voluntarily by submitting a verified declaration of dissolution.
b. If a verified declaration of dissolution is approved, the corporation shall cease to carry on its operations except for the purpose of
winding-up its affairs.
c. The law does not specify where proceedings should be instituted, whether with Securities and exchange commission or Regional trial
 court.
d. *A solicitor General is authorized by the corporation code to bring a quo warranto proceedings against a (de jure) corporation claiming in
good faith to be a corporation to oust it from the exercise of corporate powers, and to have it dissolved.

348. The following statements are true regarding the “trust fund doctrine” except.
a. Subscribed capital as a trust fund for the payment of the debts of the corporation, to which the creditors look for satisfaction.
b. Dividends must never impair the subscribed capital.
c. *The corporation can buy its own shares using subscribed capital as the consideration.
d. Subscription commitments cannot be condoned or remitted.
 KEY ANSWER

1. C 60. C 119. A 178. A 236. C 291. B

2. C 61. A 120. B 179. A 237. C 292. A
3. A 62. B 121. A 180. B 238. B 293. A
4. B 63. A 122. A 181. B 294. A
239. B
5. C 64. B 123. A 182. D 295. A
6. C 65. A 124. B 183. C 240. C 296. A
7. A 66. B 125. C 184. A 241. A 297. A
8. B 67. A 126. A 185. B 242. B 298. A
9. A 68. C 127. C 186. C 243. A 299. A
10. D 69. D 128. A 187. B 244. A 300. A
11. A 70. C 129. A 188. D 245. D 301. B
12. A 71. B 130. A 189. A 302. B
246. B
13. C 72. C 131. A 190. A 303. A
14. A 73. C 132. B 191. C 247. A 304. D
15. A 74. B 133. A 192. D 248. C 305. A
16. A 75. B 134. C 193. D 249. D 306. D
17. A 76. C 135. A 194. C 250. A 307. A
18. D 77. C 136. A 195. C 251. A 308. B
19. A 78. A 137. B 196. A 252. A 309. A
20. A 79. C 138. B 197. A 253. A 310. B
21. D 80. B 139. B 198. B 254. A 311. C
22. A 81. C 140. D 199. C 255. A 312. D
23. C 82. C 141. B 200. B 256. A 313. C
24. B 83. A 142. D 201. A 314. A
257. A
25. B 84. A 143. C 202. D 315. D
258. D
26. D 85. B 144. D 203. C 316. C
259. A
27. D 86. A 145. D 204. D 317. A
28. A 87. A 146. A 205. B 260. D 318. B
29. A 88. B 147. A 206. C 261. A 319. C
30. C 89. D 148. A 207. A 262. C 320. A
31. D 90. C 149. B 208. B 263. A 321. C
32. A 91. A 150. A 209. D 264. A 322. A
33. D 92. D 151. A 210. A 265. C 323. C
34. B 93. C 152. A 211. D 266. A 324. A
35. B 94. D 153. C 212. A 267. C 325. C
36. A 95. D 154. A 213. A 268. B 326. A
37. A 96. C 155. D 214. C 269. A 327. C
38. B 97. A 156. A 215. C 270. A 328. D
39. C 98. C 157. D 216. B 271. A 329. A
40. D 99. D 158. D 217. C 272. A 330. C
41. A 100. C 159. C 218. B 273. B 331. C
42. B 101. C 160. B 219. C 274. B 332. C
43. A 102. B 161. C 220. A 275. B 333. B
44. A 103. B 162. A 221. B 276. B 334. D
45. B 104. B 163. C 222. D 277. C 335. C
46. C 105. B 164. A 223. D 278. C 336. A
47. A 106. C 165. C 224. C 279. C 337. B
48. B 107. A 166. B 225. A 280. C 338. C
49. D 108. C 167. A 226. B 281. D 339. A
50. A 109. C 168. C 227. B 282. D 340. C
51. A 110. B 169. D 228. C 283. D 341. C
52. C 111. D 170. B 229. A 284. D 342. B
53. C 112. C 171. A 230. B 285. A 343. C
54. A 113. C 172. A 231. B 286. A 344. B
55. B 114. B 173. A 232. D 287. D 345. B
56. B 115. A 174. A 288. D 346. B
233. B
57. B 116. A 175. D 289. B 347. D
58. C 117. C 176. C 234. C 348. C
290. A
59. A 118. B 177. D 235. A
 REFERENCE
The Law on Partnership and Private Corporations – Hector S. De Leon
Merriam Webster Dictionary
UST GOLDEN NOTES 2011(PDF)
Note in Business Law (For Accountancy Students and CPA Reviewer) 2011 Edition -- Fidelito R. Soriano
Pointers in Business Law For CPA Reviewer – Carlos Suarez and Alexander Suarez
 APPENDIX
ART. 1767-1771 ESPINOSA, ELA JOY C.
ART. 1772-1776 GAHID, KAYE CELINE D.
ART. 1777-1781 MANA-A, ALPHA
ART. 1782-1786 RAGUINDIN, JAYSOS G.
ART. 1787-1791 RAMOS, ANGELINA
ART. 1792-1796 SIMALONG, FRANCS
ART. 1797-1801 SHEILA NAHIWAN
ART. 1802-1806 EMEROSE FERARO
ART. 1807- 1811 LEMAR ESTOQUE
ART. 1812-1816 DRAEZEN CATIYAN
ART. 1817-1821 BEVERLY SAYAN
ART. 1822-1826 LEALYN VILLANUEVA
ART. 1827-1831 JORDAN PAGA
ART.1832-1836 RAYCIA FE SATSAT
ART.1837-1841 NICOLE MARIE LASTIMOSA
ART. 1842-1846 LOIS GABRIELLE TAMAYO
ART. 1847-1851 JUDY MAE CABANG
ART. 1852-1856 JANINE AUBREY TONGDO
ART. 1857-1861 ANTONIO, PHOEBE
ART. 1862-1866 BALUSCANG, JUNIE ROSE
ART. 1867- SEC. 4 CAPSUYEN, MICAH
SEC. 5-9 LAROCO, LOUISE
SEC. 10-14 LINGLINGON, NESZUELA
SEC. 15-19 VITEÑO, EUCRAICK
SEC. 20-23 JOJO CATRO
SEC. 24-27 WALLY CALAGAN
SEC. 28-31 DONNA PAGTAILAN
SEC. 32-35 ROCKLYN JOSE
SEC. 36-39 JOHN BOLA JR.
SEC. 40-43 BLESSING SUBAGAN
SEC. 44-47 TUBEREIN LOPEZ
SEC. 48-51 ANABEL BANGSOY
SEC. 52-55 CALABIAS, AIREZ JANE
SEC. 56-59 ABELLERA, SHANNA
SEC. 60-63 MARTIN, DENISE
SEC. 64-67 GAYO, JAY-LORD
SEC. 68-71 CALIMODAG, JENELYN
SEC. 72-75 DAMPILAG, JEZREEL
SEC. 76-89 ESCOBAL, ALYZZA
SEC. 80-83 PALONAN, APRILYN
SEC. 84-87 DOAN, THAI HUYEN
SEC. 88-92 NICOLE ILAO
SEC. 93- 97 VALERIE CAMERO
SEC. 98-102 JAYSHIELLE BERAY
SEC. 103-106 JAMIE PACAN
SEC. 107-110 FRETZIE TOBIAS
SEC. 111-114 COLEEN CANDELARIO
SEC. 115-118 MHIZTY OPLAS
SEC.119-122 KARL MENGOTE