Title 7 Flashcards
(34 cards)
It is the unit of interest in a corporation.
Shares of stock
It is the evidence of the holder’s ownership of the stock and of his right as a shareholder.
Certificate of stock
I. As a rule, the doctrine of corporate opportunity is violated where the stocks are issued by the corporation for a consideration which is less than its par value.
II. Subscribers for stock shall pay to the corporation interest on all unpaid subscriptions from the date of subscription, if so required by and at the rate of interest fixed in the by-laws.
Only II is true
Bidder who shall offer to pay the full amount of the balance on the subscription together with accrued interest, costs of advertisement and expenses of sale, for the smallest number of shares or fraction of a share.
Highest bidder
I. A subscription of shares in a corporation still to be formed shall be irrevocable for a period of at least six (6) months from the date of subscription.
II. No pre-incorporation subscription may be revoked after the articles of incorporation is submitted to the Commission.
Both are true
Consideration for the issuance of stock may be:
Previously incurred indebtedness of the corporation (All given options are valid considerations under the RCC.)
I. In stock corporations, shareholders may generally transfer their shares.
II. Membership in and all rights arising from a nonstock corporation are personal and non-transferable.
Both are true
It is an action brought by minority shareholders in the name of the corporation to redress wrongs committed against it, for which the directors refuse to sue.
Derivative suit
Where the wrong is done to a group of stockholders, as where preferred stockholders’ rights are violated, a class suit will be proper for the protection of all stockholders belonging to the same group.
Representative suit
Any contract for the acquisition of unissued stock in an existing corporation or a corporation still to be formed shall be deemed a subscription notwithstanding the fact that the parties refer to it as a purchase or some other contract.
Subscription contract
I. The rule is that the endorsement of the certificate of stock by the owner or his attorney-in-fact or any other person legally authorized to make the transfer shall be sufficient to effect the transfer of shares only if the same is coupled with delivery.
II. The delivery of the stock certificate duly endorsed by the owner is the operative act of transfer of shares from the lawful owner to the new transferee.
Both are true
I. The general rule is that obligations incurred by the corporation, acting through its directors, officers and employees, are their joint liabilities.
II. It is basic that a corporation is a juridical entity with legal personality separate and distinct from those acting for and in its behalf and, in general, from the people comprising it.
Only II is true
The following, except one, are the exceptional circumstances warranting the disregard of the doctrine of separate personality:
A. When a director, trustee or officer is made, by specific provision of by-laws, personally liable for his corporate action.
I. As long as the shares are not considered delinquent, stockholders are entitled to all rights granted to it whether or not subscribed capital stocks are fully paid.
II. Shares of stock shall not be issued in exchange for promissory notes or future service.
Both are true
I. Stocks shall not be issued for a consideration less than the par or issued price thereof.
II. Where the consideration is other than actual cash, or consists of intangible property such as patents or copyrights, the valuation thereof shall initially be determined by the incorporators or the board of directors, subject to approval of the SEC.
Both are true
I. The stock and transfer book is the basis for ascertaining the persons entitled to the rights and subject to the liabilities of a stockholder.
II. On the death of a shareholder, the executor or administrator duly appointed by the Court is vested with the legal title to the stock but not entitled to vote it.
Only I is true
Where a stockholder or member is denied the right of inspection, his suit would be because the wrong is done to him personally and not to the other stockholders or the corporation.
Individual
I. The certificate of stock itself once issued is a continuing affirmation or representation that the stock described therein is valid and genuine.
II. Stock issued without authority and in violation of law is voidable and confers no rights on the person to whom it is issued and subjects him to no liabilities.
Both are true
I. A certificate of stock is one, entire, and divisible contract.
II. The stockholder shall not be entitled to a certificate until he has remitted the full payment of his subscription together with any interest or expenses, if any is due.
Both are true
Owners of stock in a corporation, considered risk-takers entitled to profits after debts are paid.
Shareholders
Have voting rights and residual claims after preferred shareholders.
Common Shareholders
Have priority in dividends and liquidation; may have limited or no voting rights.
Preferred Shareholders
A legal action by a stockholder on behalf of the corporation to enforce rights when the board refuses.
Derivative Suit
Filed for personal wrongs against a specific shareholder.
Individual Suit
