ALTERNATE RESPONSE. Write "TRUE" if the statement is correct, and write "FALSE" if otherwise.

1. There can be no distribution of assets among the stockholders without first paying corporate creditors. Hence,

any disposition of corporate funds to the prejudice of creditors is rescissible.

2. Unless the by-laws provide for a longer period, the stock and transfer book or membership book shall be

closed at least 20 days for regular meetings and 7 days for special meetings before the scheduled date of

the meeting.

3. When so authorized in the by-laws or by a majority of the board of directors, the stockholders or members of

corporations may also vote through remote communication or in absentia.

4. Membership in and all rights arising from a non-stock corporation are personal and non-transferrable.

5. Stock issued without authority and in violation of law is voidable and confers rights on the person to whom it

is issued and subjects him to no liabilities.

6. Merger or consolidation becomes effective upon the mere agreement of the constituent corporations.

7. If, upon investigation, the SEC has reason to believe that the proposed merger or consolidation is contrary

to the provisions of the Corporation Code or existing laws, it shall set a hearing to give the corporations

concerned the opportunity to be heard.

8. The right of appraisal may be exercised when there is a minor change in the charter or articles of

incorporation substantially prejudicing the rights of the stockholders.

9. In stock corporations, shareholders may generally transfer their shares.

10. Unless otherwise provided in the Articles of Incorporation or the by-laws, officers of a non-stock corporation

may be directly elected by the members.

11. For the purpose of administering and managing, as trustee, the affairs, property and temporalities of any

religious denomination, sect or church, a corporation sole may be formed by the chief archbishop, bishop,

priest, minister, rabbi, or other presiding elder of such religious denomination, sect or church.

12. The board of trustees of educational corporation shall not be less than 5 nor more than 15 provided that the

number of trustees shall be in multiples of 3.

13. A foreign corporation must first obtain a license and a certificate from the SEC before it can transact business

in the Philippines.

14. If a foreign corporation does not transact such kind of business in the Philippines, even if it exports its

products to the Philippines, the Philippines has no jurisdiction to require such foreign corporation to secure

a Philippine business license.

15. A foreign corporation without a license is not ipso facto incapacitated from bringing an action in Philippine

courts. A license is necessary only if a foreign corporation is "transacting" or "doing business" in the country.

II. MULTIPLE CHOICE. Write the letter of the BEST answer.

1. The following are the requirements of increase or decrease of authorized capital stock, EXCEPT:

A. No decrease of the capital stock shall be approved if its effect shall prejudice the rights of corporate

creditors.

B. Approval by a majority vote of the board of directors.

C. Ratification by the stockholders holding at least 2/3 of outstanding capital stock.

D. Approval thereof by the DTI.

2. Corporate profits set aside, declared, and ordered to be paid by the directors for distribution among

stockholders at a fixed time.

A. Income

B. Revenue

C. Dividends

D. Sales

3. It refers to an act outside or beyond corporate powers, including those that may ostensibly be within such

powers but are, by general or special laws, prohibited or declared illegal.

A. Intra vires act

B. Ultra vires act

C. Doctrine of limited capacity

D. Doctrine of piercing the veil of corporate fiction

4. Where a majority of the members of the board of directors of the managing corporation also constitute a

majority of the members of the board of directors of the managed corporation.

A. Interlocking stockholders

B. Interlocking board of directors

C. Interlocking members

D. None of the above

5. The following are the requirements imposed on a voting trust agreement, EXCEPT:

A. The agreement must be in writing and notarized and specify the terms and conditions thereof.

B. A certified copy of such agreement shall be filed with the corporation and with the SEC; in case of

non-compliance, the said agreement is effective and enforceable.

C. The certificate or certificates of stock covered by the voting trust agreement shall be cancelled and a

new one shall be issued pursuant to said agreement.

D. It shall be noted that the transfer in the name of the trustee or trustees is made pursuant to said voting

trust agreement.

6. What are the requisites of a derivative suit?

I. The party bringing suit should be a shareholder as of the time of the act or transaction complained of, the

number of his shares not being material.

II. He has tried to exhaust intra-corporate remedies, i.e., has made a demand on the board of directors for

the appropriate relief but the latter has failed or refused to heed his plea.

III. The cause of action actually devolves on the corporation, the wrongdoing or harm having been, or being

caused to the corporation and not to the particular stockholder bringing the suit.

A. I and II only

B. II and III only

C. I and III only

D. I, II, and III

7. Solidary liabilities may be incurred and the veil of corporate fiction may be pierced when directors and

trustees or, in appropriate case, the officers of a corporation does the following, EXCEPT:

A. Vote for or assent to patently unlawful acts of the corporation.

B. Act in bad faith or with gross negligence in directing the corporate affairs.

C. Are guilty of conflict of interest to the prejudice of the corporation, its stockholders or members, and

other persons.

D. Habitual absence in the directors' meeting.

8. Stock corporations must also keep a stock and transfer book, which shall contain:

A. A record of all stocks in the names of the stockholders alphabetically arranged.

B. The installments paid and unpaid on all stocks for which subscription has been made, and the date

of payment of any installment.

C. A statement of every alienation, sale, or transfer of stock made, the date thereof, by and to whom

made.

D. All of the choices

9. It is a union whereby one or more existing corporations are absorbed by another corporation that survives

and continues the combined business.

A. Merger

B. Consolidation

C. Acquisition

D. Business combination

10. The following are characteristics of a close corporation, EXCEPT:

A. Any action by the directors of a close corporation without a meeting shall nevertheless be deemed

valid.

B. Pre-emptive right does not extend to all stock issuances.

C. Deadlock in the board is settled by the SEC upon the written petition by any stockholder.

D. A stockholder may withdraw and avail of his right of appraisal.

11. An action by the directors of a close corporation without a meeting shall not be deemed valid:

A. Before and after such action is taken, written consent thereto is signed by a majority of the directors.

B. All the stockholders have actual or implied knowledge of the action and make no prompt objection

thereto in writing.

C. The directors are accustomed to take informal action with the express or implied acquiescence of all

the stockholders.

D. All the directors have expressed or implied knowledge of the action in question and none of them

makes prompt objection thereto in writing.

12. An impartial person who is neither a stockholder nor a creditor of the corporation or any subsidiary or affiliate

of the corporation, and whose further qualifications, if any, may be determined by the SEC.

A. Provisional stockholder

B. Provisional member

C. Provisional trustee

D. Provisional director

13. The articles of incorporation of a close corporation provides:

I. 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 20

II. All the issued stock of all classes shall be subject to 1 or more specified restrictions on transfer

III. The corporation shall not list in any stock exchange or make any public offering of its stocks of any class

A. I and II only

B. II and III only

C. I and III only

D. I, II, and III

14. Any person to whom stock of a close corporation has been issued or transferred has, or is conclusively

presumed to have notice:

I. That he is a person not eligible to be a holder of stock of the corporation

II. That transfer of stock to him would cause the stock of the corporation to be held by more than the number

of persons permitted by its articles of incorporation to hold stock of the corporation

III. That the transfer of stock is in violation of a restriction on transfer of stock

A. I and II only

B. II and III only

C. I and III only

D. I, II, and III

15. A corporation sole must have an articles of incorporation setting forth the following:

A. That the applicant chief archbishop, bishop, priest, minister, rabbi or presiding elder represents the

religious denomination, sect or church which desires to become a corporation sole.

B. That the rules, regulations, and discipline of his religious denomination, sect or church are consistent

with becoming a corporation sole and do not forbid it.

C. That such chief archbishop, bishop, priest, minister, rabbi, or presiding elder, is charged with the

administration of the temporalities and the management of the affairs, estate and properties of the

religious denomination, sect or church within the territorial jurisdiction.

D. All of the choices

16. In addition to the functions designated by the One Person Corporation, the corporate secretary shall:

A. Be responsible for maintaining the minutes book and/or records of the corporation.

B. Notify the nominee or alternate nominee of the death or incapacity of the single stockholder, which

notice shall be given no later than 5 days from such occurrence.

C. Notify the SEC of the death of the single stockholder within 5 days from the occurrence and stating

in such notice the names, residence addresses, and contact details of all known legal heirs.

D. All of the choices

17. The One Person Corporation shall submit the following within such period as the SEC may prescribe:

A. Annual financial statements audited by an independent certified public accountant

B. A report containing explanations or comments by the president on every qualification, reservation, or

adverse remark or disclaimer made by the auditor in the latter's report.

C. A disclosure of all self-dealings and related-party transactions entered into between the One Person

Corporation and the single stockholder.

D. All of the choices.

18. The following are voluntary modes of dissolution of a corporation, EXCEPT:

A. By the vote of the board of directors or trustees and the resolution adopted by the stockholders or

members where no creditors are affected.

B. By legislative enactment.

C. By amending the articles of incorporation to shorten the corporate term.

D. In case of a corporation sole, by submitting to the SEC a verified declaration of the dissolution for

approval.

19. The following are involuntary modes of dissolution of a corporation, EXCEPT:

A. By expiration of corporate term provided for the articles of incorporation.

B. By legislative enactment.

C. By failure to formally organize and commence the transaction of its business within 5 years from the

date of incorporation.

D. By the judgment of the SEC after hearing of petition for voluntary dissolution where creditors are

affected.

20. The following may be grounds for involuntary dissolution of the corporation:

A. Non-use of corporate charter.

B. Continuous inoperation of a corporation

C. Upon receipt of a lawful court order dissolving the corporation

D. All of the choices

21. One formed, organized, or existing under any laws other than those of the Philippines and whose laws allow

Filipino citizens and corporations to do business in its own country or state.

A. Foreign corporation

B. Domestic corporation

C. Government-owned and -controlled corporation

D. None of the choices

Refers to any person who provides truthful information relating to the SEC or possible commission of any

offense or violation under the Revised Corporation Code.

A. Whistle blower

B. Intermediary

C. Mediator

D. Conciliator

23. Every corporation, domestic or foreign, doing business in the Philippines shall submit to the SEC:

A. Annual financial statements audited by an independent certified public accountant

B. A general information sheet

C. Both documents mentioned

D. Any one of the documents can suffice

24. The SEC shall have the power and authority to, EXCEPT:

A. Exercise supervision and jurisdiction over all corporations and persons acting on their behalf.

B. Impose sanctions for the violation of the Revised Penal Code, its implementing rules and orders of

the SEC.

C. Promote corporate governance and the protection of minority investors, though, among others, the

issuance of rules and regulations consistent with international best practices.

D. All of the choices

25. The SEC shall have the power and authority to, EXCEPT:

A. Issue corrections to clarify the application of laws, rules, and regulations.

B. Issue cease and desist order ex parte to prevent imminent fraud or injury to the public.

C. Hold corporations in direct and indirect contempt.

D. All of the choices.