Question 31

1pts

B is the owner of 75% of the shares in Bentong Corporation. On one occasion, Bentong Corporation, as represented by B as the President and General Manager, entered into a contract to sell with K involving a townhouse. For failure of Bentong Corporation to build the townhouse, K filed a case of rescission and damages against B and Bentong Corporation. Which is correct?

a. The action filed against B will not prosper because Bentong Corporation has a separate and distinct personality from the former and that when B entered into a contract with K, he was only acting in behalf of the company.

b. The action filed against Bentong Corporation will prosper because this pertain to the company and the company alone should be held liable unless B acted maliciously or in bad faith.

c. The action filed against Bentong Corporation and B will prosper because the latter owns a majority of the shares in former and as such B is personally liable for all the transactions entered into by the corporation.

Group of answer choices

a only

b and c only

a and b only

a and c only

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Question 32

1pts

A, B, C, D and E distributed calling cards identifying themselves as directors of Summit Corporation, to several individuals during a business conference. In reality, however, no such corporation is registered with the Securities and Exchange Commission. X, who received a calling card granted credit amounting to P50.000.00 to "Summit Corporation" believing that such a corporation really existed. When the supposed corporation was unable to pay, X brought a court action against it. At that time, "Summit Corporation" had assets of P30,000.00.

Group of answer choices

"Summit Corporation" is liable only up to P30,000.00, its remaining assets, since it is different from A, B, C, D and E who are not liable in their individual capacities.

X can go after the separate assets of A, B, C, D, and E after exhausting the assets of "Summit Corporation.

X cannot allege the lack of juridical personality on the part of "Summit Corporation" because he is stopped from doing so.

A, B, C, D and E can move for the dismissal of the court action because "Summit Corporation" has no personality of its own.

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Question 33

1pts

Mrs. Baby owns a substantial portion of the outstanding capital of X corporation. Is the mere ownership of substantial portion alone of the outstanding capital in a corporation justify the application of doctrine of piercing the veil of corporate entity?

Group of answer choices

No. Mere ownership by a single stockholder or by any corporation of all or substantially all of the capital stock of the corporation does not justify the application of the doctrine of piercing the veil of corporate entity. There must be other circumstances that must be present.

Yes. A substantial ownership of the outstanding capital stock alone is sufficient for the application of piercing the veil of corporate entity.

Yes. Piercing the veil of corporate entity applies whenever there is parent subsidiary relationship which means that the parent own at least more than 50% of the outstanding capital stock of the subsidiary.

No. It requires that the stockholders must own at least more than 50% of the outstanding capital stock to justify the application of piercing the veil of corporate entity.

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Question 34

1pts

All of the close corporation's issued shares shall be held of record by not more than

Group of answer choices

15 persons

10 persons

5 persons

20 persons

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Question 35

1pts

Which of the following statements pertaining to no-par shares is incorrect?

Group of answer choices

No-par shares may not be issued by banks, trust companies, insurance companies, public utilities and building and loan associations.

Shares without par value may not be issued for a consideration less than P5.00 per share.

Subscriptions to no-par shares are deemed fully paid and non-assessable.

Subscriptions to no-par shares in excess of the issued price shall be available for distribution as stock dividends.

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Question 36

1pts

Which of the following statements is false concerning treasury shares?

Group of answer choices

They have no voting right.

They are not outstanding shares.

They may be disposed of for a price lower than the par value provided such price is reasonable.

They are entitled to dividends.

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Question 37

1pts

The following statements pertaining to the power of a corporation to issue non-voting shares were presented to you for evaluation:

I. Those classified as "redeemable" or "preferred" may be deprived of the voting right.

II. All shares of the corporation may be deprived of the voting right.

III. Non-voting shares may vote in certain corporate acts like in the amendment of the articles of incorporation.

Group of answer choices

II and III are true.

All statements are true.

I and III are true.

I and II are true.

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Question 38

1pts

Which of the following is the disadvantage of forming a corporation? (Phil CPA, 93-2; 94-2; 96-1)

Group of answer choices

Because of the power of succession, the existence of the entity is not affected by the personal vicissitudes of the individual shareholders.

The shareholders are not liable for the debts of the business.

The subservience of minority stockholders to the wishes of the majority subject only to equitable restraint.

The free and ready transferability of ownership

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Question 39

1pts

This share can be acquired by the corporation which issued it even without unrestricted retained earnings:

Group of answer choices

no-par shares

redeemable shares

founder's shares

par value shares

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Question 40

1pts

The following are advantages of no-par value share of stock. Which is the exception? (Phil CPA, 90-1)

Group of answer choices

It allows the issue of stocks in exchange of property.

No-par value shares afford a possible remedy of relief from the evil of over capitalization and stock watering.

The stockholders of n0-par value shares are relieved of personal liability for unpaid stock subscription.

No par value shares allow flexibility in price.