Corporation RESA MCQ

Question 1

An ultra vires act is an act or a transaction of a corporation which:
A. Is considered illegal
B. Is contrary to morals, public policy, good customs
C. Not within the express, implied or incidental powers of the corporation
D. All of the above

Answer 1

C. Not within the express, implied or incidental powers of the corporation

Question 2

Under the Revised Corporation Code, a foreign corporation has power and capacity to do all of the following, except:
A. Form joint ventures
B. Adopt and use a corporate seal
C. Give aid for political partisan activities
D. Acquire properties in its own name

Answer 2

C. Give aid for political partisan activities

Question 3

Under the Revised Corporation Code, the number of directors in the Articles of Incorporation:
A. 5 to 15
B. 5 to 10
C. Not exceeding 15
D. Not exceeding 10

Answer 3

C. Not exceeding 15

Question 4

If a corporation is classified as de facto,
A. It does not have a separate juridical personality.
B. It complied with all the requirements for a valid incorporation.
C. It can be the subject of a collateral attack.
D. Its personality can be questioned via a direct attack called quo warranto.

Answer 4

D. Its personality can be questioned via a direct attack called quo warranto.

Question 5

Mr. X invested his property in exchange for shares in ABC Corporation. Later on, the same property mortgaged as security for the loan of ABC Corporation from M Bank. For failure to pay, the mortgage was foreclosed and proceeds were less than the amount of the outstanding balance of the loan which M Bank sought from Mr. X contending that the property was invested by him. Mr. X cannot be made liable under which principle:
A. Corporate Entity Theory
B.Piercing the Veil of Corporate Entity
C. Limited Liability Principle
D. All of the above

Answer 5

A. Corporate Entity Theory

Question 6

Under the Revised Corporation Code, a corporation has:
A. A maximum of 50 years of existence
B. A maximum of 50 years of existence but renewable not earlier than 5 years prior to expiration of the term
C. A maximum of 50 years of existence but renewable not earlier than 3 years prior to expiration of the term
D. Perpetual existence

Answer 6

D. Perpetual existence

Question 7

Which of the following is still a requirement that applies to incorporators under the Revised Corporation Code:
A. Majority must be residents of the Philippines
B. Must be natural persons
C. Natural persons must be of legal age
D. None of the choices

Answer 7

C. Natural persons must be of legal age

Question 8

A, B, C, D and E is organizing a corporation whose Authorized Capital Stock is P64,000. How much is the minimum paid-up capital requirement under the Revised Corporation Code for the corporation to incorporate?
A. P0
B. P4,000
C. P5,000
D. P16,000

Answer 8

A. P0

Question 9

A restriction as to transfer of shares in an ordinary stock corporation must be indicated in:
I. Articles of Incorporation
II. By-Laws
III. Certificate of Stock
A. I, II and III
B. I and II
C. I and III
D. II and III

Answer 9

C. I and III

Question 10

The existence of a corporation sole begins from:
A. The time the parties came to an agreement to form a corporation and contribute money or property.
B. Filing of the verified articles of incorporation.
C. Issuance of a certificate of registration.
D. First day of the year following the filing of the Articles of Incorporation

Answer 10

B. Filing of the verified articles of incorporation.

Question 11

Which of the following is an incorrect requirement for a director of a corporation?
A. They must own at least 1% share
B. They meet all the qualifications under the by-laws
C. They do not possess any of the disqualifications under the Corporation Code
D. All of the choices are correct

Answer 11

A. They must own at least 1% share

Question 12

A, is a stockholder of Silver Corporation, who holds 10,000 shares thereof. A stockholders meeting was called to elect members of a 5-man Board. How many votes can A cast in favor of B if they employ cumulative voting?
A. 10,000 votes
B. 25,000 votes
C. 50,000 votes
D. 100,000 votes

Answer 12

C. 50,000 votes

Question 13

A, B, C, D and E are members of the Board of Directors. D retired and E died. In this case, who shall fill-up the vacancy?
A. Stockholders in a meeting called for the purpose, regardless if the directors still have a quorum
B. A, B and C, since they still constitute a quorum
C. A, B and C, regardless if they still constitute a quorum
D. Stockholders in a meeting called for the purpose since the directors no longer have a quorum

Answer 13

B. A, B and C, since they still constitute a quorum

Question 14

A, B, C, D, E, F, G, H, I are members of the Board of Directors. In the meeting to appoint corporate officers, only A, B, C, D and E are present. How many votes are required to elect corporate offices?
A. 2
B. 3
C. 4
D. 5

Answer 14

D. 5

Question 15

A, B, C, D and E are directors of REALTY CORP., Z wanted to sell his property with a fair market value of P100M for P90M. Z offered the property first to A, who acquired it for P90M and eventually sold the same for P100M. In this case,
A. A can keep the profits provided the sale is ratified by the stockholders.
B. A can keep the profits because it was offered to him and not to REALTY CORP.
C. The sale is not subject to ratification and A may be required to remit the profits to REALTY CORP
D. None of the choices is correct

Answer 15

A. A can keep the profits provided the sale is ratified by the stockholders.

Question 16

Mr. X is a Director of both XYZ Corporation and ABC Corporation. XYZ and ABC entered into a contract of sale, the contract between XYZ and ABC, is considered valid absent fraud and provided it is reasonable under the circumstances. But it is considered voidable if the shareholdings of Mr. X in the two corporations are:
A. ABC - 25% XYZ - 25%
B. ABC - 5% XYZ - 5%
C. ABC - 25% XYZ - 5%
D. ABC - 3% XYZ - 20%

Answer 16

C. ABC - 25% XYZ - 5%

Question 17

Which of the following corporate officer position may be held by the same person?
A. President and Secretary
B. Treasurer and Secretary
C. President and Treasurer
D. None of the above

Answer 17

B. Treasurer and Secretary

Question 18

Mr. X, as the president of ABC Corporation, signed the check in his official capacity. Later on, the check bounced due to insufficiency of funds and he is now being sued for violation of BP Blg. 22. Can Mr. X be made personally liable?
A. Yes, because he acted in bad faith in allowing the issuance of a worthless check
B. No, because he merely signed in his official capacity
C. Yes, because he is made personally liable by law
D. No, because of the corporate entity theory

Answer 18

C. Yes, because he is made personally liable by law

Question 19

Which of the following is false with regards preferred shares?
A. Preferred share is a stock that gives the holder preference over the holder of common stocks with respect to the payment of dividends and/or with respect to distribution of capital upon liquidation.
B. A preferred share can be issued without a par value provided it is not issued for less than P5.
C. The preference must be stated in the Articles of Incorporation and the Certificate of Stock.
D. None of the choices is false

Answer 19

B. A preferred share can be issued without a par value provided it is not issued for less than P5.

Question 20

As a general rule, preferred shares do not give the holder the right to vote. However, they shall have the right to vote on the following, except:
A. Amendment of the Articles of Incorporation
B. Adoption and amendment of the by-laws
C. Sale of all or substantially all of the inventories
D. Increase or decrease of capital stock

Answer 20

C. Sale of all or substantially all of the inventories

Question 21

X Co. has P10M Authorized Capital Stock divided into: (1) 5M shares at P1.00 par value; and (2) 1M no par value shares with issued value at P5.00. If A acquired 100,000 no par value shares at P4.00 and the same were issued. In this case,
A. There is no issuance of watered stocks
B. A and the directors of X Co. are solidarily liable for the P1.00 per share difference.
C. Only A is liable for the P1.00 per share difference.
D. Only the directors of X Co. is liable for the P1.00 per share difference

Answer 21

D. Only the directors of X Co. is liable for the P1.00 per share difference

Question 22

Mr. A subscribed to 10,000 shares of P1 par value for P10 per share. He was able to pay 50% of the subscription price. In this case, which of the following is not a right granted to Mr. A?
A. He can receive dividends attributable to the whole 10,000 shares
B. He has the right to vote equivalent to the 10,000 shares
C. He can demand the issuance of certificate of stock for the 5,000 shares already paid
D. None of the choices.

Answer 22

C. He can demand the issuance of certificate of stock for the 5,000 shares already paid

Question 23

Which of the following grounds to deny pre-emptive right requires the approval of 2/3 of the outstanding capital stock?
A. Shares to be issued in order to comply with the laws requiring stock offering or minimum stock ownership by the public
B. Shares issued in good faith in exchange for property needed for corporate purposes
C. In case the right is denied in the By-Laws
D. None of the choice

Answer 23

B. Shares issued in good faith in exchange for property needed for corporate purposes

Question 24

The appraisal right of a stockholder may be exercised in the following actions of the corporation, except:
A. In case of merger or consolidation.
B. Sale of all or substantially all the assets of the corporation.
C. Investment of funds in another corporation or business or for any other purpose other than the primary purpose.
D. Amendments to the Articles of Incorporation to change the name of the corporation

Answer 24

D. Amendments to the Articles of Incorporation to change the name of the corporation

Question 25

Under the revised corporation code, which of the following is a valid requirement for the validity of the annual stockholders’ meeting? A. If there is no date fixed in the by-laws, it can be held on any date in April B. There must be notice 2 weeks prior to the meeting C. It must be held in the city where the principal office is located D. It must be called by the proper party

Answer 25

D. It must be called by the proper party

Question 26

The delegation of the power to amend the by-laws would require _ vote of the stockholders, while its revocation would require _ vote. A. Majority; Majority B. Majority; 2/3 C. 2/3; 2/3 D. 2/3; Majority

Answer 26

D. 2/3; Majority

Question 27

A Corp. and B Corp. agreed to a business combination. In the agreement, A. Corp. will absorb all the assets and liabilities of B Corp. and the latter will cease to exist. The business combination entered into is a: A. Merger B. Consolidation C. Reorganization D. Quasi-reorganization

Answer 27

A. Merger

Question 28

The merger or consolidation is deemed effective: A. On the date the parties agreed to a consolidation or merger B. On the date the stockholders ratified the Board resolution for consolidation or merger C. Upon submission of the articles of merger or consolidation to the SEC D. Upon issuance of the certificate of merger or consolidation

Answer 28

D. Upon issuance of the certificate of merger or consolidation

Question 29

As a general rule, ____ of the outstanding capital stock is required to constitute a quorum; and majority of ____________ is the voting requirement. A. Majority; outstanding capital stock B.Majority; those present C. 2/3; outstanding capital stock D. 2/3; those present

Answer 29

B.Majority; those present

Question 30

The regular meetings of ____ are to be held monthly: A. Stockholders B. Members C. Board of Directors D. All of the choices

Answer 30

C. Board of Directors

Question 31

The following does not apply to an OPC, **except**: A. Articles of Incorporation B. By-Laws C. Authorized Capital Stock D. Minutes of the Meetings of BOD

Answer 31

A. Articles of Incorporation

Question 32

What will be the term of the nominee in case of temporary incapacity of the sole stockholder? A. Until declaration of the court of the sole stockholder’s capacity to take over B. Upon self-determination of the sole stockholder that he regained capacity C. Until the legal heirs of the stockholder have been determined D. Once the heirs have designated one of them to take over management

Answer 32

B. Upon self-determination of the sole stockholder that he regained capacity

Question 33

The place of meetings of trustees in a non-stock corporation: A. Anywhere B. Anywhere in the Philippines C. The principal office D. The city or municipality where the principal office is located

Answer 33

A. Anywhere

Question 34

In order to be considered as a close corporation, the following are required to appear in the Articles of Incorporation, except: A. All the corporation's issued stock of all classes, exclusive of treasury shares, shall be held of record by not more than a specified number of persons, not exceeding twenty. B. All the issued stock of all classes shall be subject to one or more specified restrictions on transfer permitted by this Title. C. The corporation shall not list in any stock exchange or make any public offering of any of its stock of any class. D. None of the choices is an exception.

Answer 34

D. None of the choices is an exception.

Question 35

Which of the following business is allowed to incorporate as a close corporation? A. Banks and insurance companies B. Mining companies C. Educational institutions D. Hospitals

Answer 35

D. Hospitals

Question 36

To qualify as a foreign corporation, the consideration is A. Ownership of the shares of stock B. Appointment of a resident agent C. Agreement of the parties D. Under what country’s law it was incorporated

Answer 36

D. Under what country’s law it was incorporated

Question 37

The following are effects of dissolution, **except**: A. The corporate entity ceases to exist except for liquidation purposes. B. It can no longer enter into contracts for furthering its purpose C. It can no longer apply for a secondary franchise D. Existing contracts are deemed terminated

Answer 37

D. Existing contracts are deemed terminated

Question 38

In case the corporation has been continuously inoperative for a period of 5 years, under the Revised Corporation Code, it: A. Is automatically dissolved B. Provides for a ground to dissolve the corporation C. Will be placed under delinquent status by the SEC D. Shall no longer be allowed to operate

Answer 38

C. Will be placed under delinquent status by the SEC

Question 39

Under the Revised Corporation Code, any asset distributable to any creditor or stockholders or members who is unknown or cannot be found shall be escheated in favor of: A. The national government B. The city or municipality where the asset is located C. A charitable institution designated by the corporation D. The other stockholders

Answer 39

A. The national government

Question 40

A corporation doing business in the Philippines without the requisite license: A. Can sue and be sued in Philippine courts B. Can sue but cannot be sued in Philippine courts C. Can be sued but cannot sue in Philippine courts D. Cannot sue and be sued in Philippine courts

Answer 40

C. Can be sued but cannot sue in Philippine courts