NAME: _________________________________

CORPORATION FINAL EXAM (SUMMER 2015)

MULTIPLE CHOICE. CHOOSE THE CORRECT/BEST ANSWER. WRITE THE
LETTER OF YOUR CHOICE ON THE SPACE PROVIDED BEFORE THE
NUMBER.
______1. XY is a recreational club which was organized to operate a
golf course for its members with an original authorized capital stock of
P100,000,000. The articles of incorporation and by-laws did not provide
for distribution of dividend although there is a provision that after its
dissolution, the assets shall be given to a charitable corporation. Is
XY a stock corporation?
a. XY is a stock corporation because it has an authorized capital stock
divided into shares of stock.
b. It is not a stock corporation because the articles of incorporation and
the by-laws do not provide for the distribution of dividends.
c. It is a stock corporation because of the provision in the articles of
incorporation that after dissolution, the assets shall be given to a
charitable corporation.
d. It is not a stock corporation because the purpose is to operate a golf
course for its members only as a recreational club.
______2. Corporation A passed a board resolution removing X as manager
of the corporation. X objected to his removal by mere majority vote of
the board of directors alleging that 2/3 of the outstanding capital is
necessary for the removal of the manager. Decide.
a. The removal of a manager requires a mere board resolution as an act
of management by the board of directors.
b. The removal must be with the concurrence of 2/3 of the outstanding
capital stock.
c. The removal by 2/3 vote of the outstanding capital stock refers only
to corporate officers.
d. The removal by 2/3 vote of the outstanding capital stock refers to
directors but there must be cause for removal.
______3. For the past three years, Corporation X has been earning
tremendously in excess of 100% of the corporations paid in capital. All
of the stockholders have been claiming that they share in the profits of
the corporation by way of dividends but the board of directors failed to
lift its finger. Is the corporation obliged to declare dividends?
a. No, because the corporation can retain surplus profits in excess of
100% of its paid-up capital
b. Yes, because a corporation cannot retain surplus profits in excess of
100% of its paid-up capital always.
c. Yes, because a corporation as a rule cannot retain surplus profits in
excess of 100% of its paid-in capital.
d. No, because it is a management prerogative of the board of directors
whether or not it will declare dividends.
______4. A is the registered owner of Stock Certificate No. 0007. He
entrusted the possession thereof to B who borrowed the said endorsed
certificate to support Bs application for passport (or for a purpose
other than transfer). But B sold the certificate to X, a bona fide
purchaser who relied on the endorsed certificate and believed him to be
the true owner. Can A claim the shares of stocks from X?
a. No, because X is an innocent purchaser for value of shares of stock
evidenced by a duly endorsed stock certificate.
b. No, if X has registered the sale with the corporation.
c. Yes, because A did not sell the shares of stock to B and therefore the
latter cannot transfer title to X.

d. Yes, because the transfer of shares was not registered with the
corporation and hence it is not valid even between B and X.
_______5. A corporation acquires juridical personality
a. Upon the filing of the articles of incorporation
b. Upon the filing of the by-laws
c. Upon the issuance of the certificate of incorporation
d.Within 30 days from receipt of notice of the issuance of the certificate
of incorporation
_______6. A delinquent stockholder is not entitled to the following rights,
except the right:
a. To be voted
b. To vote or be represented in the meetings of stockholders
c. To dividends
d. He is not entitled to all the rights of a stockholder
______7. A corporation is deemed dissolved if
a. Ceased operation for at least five years
b. No commencement of business transactions within 2 years from
issuance of certificate of incorporation
c. A member of the board is convicted of an offense
d. Majority of the members of the board are dead
_______8. Which of the following corporate acts requires the approval of
the majority of the outstanding capital stock or of the members of the
private corporation
a. To invest corporate funds in another corporation or business.
b. To amend the articles of incorporation.
c. To adopt by-laws
d. To dissolve the corporation
______9. Except for one, every corporation whose character expires by its
own limitation, or annulled by forfeiture or otherwise, or whose
corporate existence for other purpose is terminated in any other
manner shall nevertheless be continued as a body corporate for three
years after the time when it would have been dissolved for the purpose
of the following. The exception is
a. Prosecuting and defending suits by or against it and enabling it to
settle and close its affairs.
b. To dispose and convey its property
c. To distribute its assets
d. Continuing the business for which it was established
______10. Where a director by virtue of his office, acquired for himself
opportunity which belongs to the corporation, thereby obtaining profits
to the prejudice of such corporation, must account to the latter for all
such profits by refunding the same, unless his act is ratified by
a. A vote at a regular or special meeting by stockholders owning or
representing a majority of the outstanding capital stock.
b. A vote of the stockholders owning or representing at lease one-third
of the outstanding capital stock
c. A unanimous vote of all the stockholders of the corporation
d. A vote of the stockholders owning or representing at least two-thirds
of the outstanding capital stock
______11. A distribution by a corporation of shares of stock held by it in
another corporation is
a. Case of declaration of stock dividend
b. Situation equivalent to a sale of assets
c. Situation equivalent to a merger or consolidation
d. Property dividend or an actual distribution of corporate assets
______12. The following are the qualifications of directors in a
corporation. Choose the exception:
a) Majority of the directors must be Filipino citizens.

b) He must at least own one share of stock in his own name in the books
of the corporation.
c) Majority of the directors must be residents of the Philippines.
d) He must not be convicted by final judgment of an offense with
imprisonment of more than 6 years.
______13. The right of the corporation to continue as a juridical entity for
the term stated in the articles of incorporation despite the death of the
stockholders:
a) right of existence
c) right of succession
b) pre-emptive right
d) right of appraisal
______14. The minimum requirement of the corporation to incorporate:
Authorized Capital
Subscribed Capital
Paid In Capital
a)
P50,000
P10,000
P5,000
b)
P16,000
P 4,000
P4,000
c)
P20,000
P 5,000
P5,000
d)
P48,000
P16,000
P4,000
_______15. This forms part of the outstanding shares:
a) treasury shares
c) delinquent shares
b) redeemed redeemable shares
d) unissued shares
______16. The voting requirement in case of incurring or increasing
bonded indebtedness.
a) majority of the board and majority of the outstanding capital stock
b) majority of the board and 66 2/3% of the outstanding capital stock
c) 2/3 majority of the board and majority of the outstanding capital
stock
d) 2/3 majority of the board and 2/3 of the outstanding capital stock
_______17. ABC Corporation is engaged in investment of funds as shown
in its primary purpose. If today, ABC Corporation decides to invest in
XYZ Corporation, what is the voting requirement?
a) majority of the board and majority of the outstanding capital stock
b) majority of the board and 66 2/3% of the outstanding capital stock
c) 2/3 majority of the board and majority of the outstanding capital
stock
d) 2/3 majority of the board and 2/3 majority of the outstanding capital
stock
e) majority of the board and none of the outstanding capital stock
f) none of the board and none of the outstanding capital stock.
_______18. A day after the issuance of the certificate of incorporation of
XYZ Inc., M, one of the directors discovered that the paid in capital was
only 24% of the subscribed capital stock. Nevertheless, it organized
itself and represented to the public as a corporation. What kind of
corporation is XYZ Inc.?
a) de jure corporation
c) de facto corporation
b) corporation by estoppel
d) corporation by prescription
______19. Define Corporation.
______20. Define Watered Stocks.
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