Business Laws and Regulation

The close corporation has the option to refuse to register the transfer of the stock in the name of the transferee when he is conclusively presumed to have notice

• a. That the transfer to him was in violation of the restrictions on transfer which restrictions are shown in the stock certificate
• b. That the transfer to him would cause the number of stockholders to exceed that which is shown in the article of incorporation and stock certificate
• c. All of the answers correct
• d. That he is ineligible to be a holder of stock of the corporation if the articles of incorporation and stock certificate show the qualifications to be a holder

As a rule, a limited partner shall be liable as a general partner if he allows the use of his surname to be included in the partnership name.

• True
• False

Which is not the characteristic of regular corporation.

• a. There are no classification of board of directors
• b. Stockholder are not subject to liabilities
• c. Fixed by the corporation code
• d. Preemptive right extends to treasury shares.

The sharing of gross returns does not of itself establish a partnership even if the persons sharing them have a joint or common interest in the property from which the returns are derived.

• True
• False

Under the Foreign Investment act of 1991, doing business covers the following, except

• a. Participating in the management, supervision or control of any domestic business, firm or entity or corporations in the Philippines
• b. Service contracts
• c. Having a nominee or officer to represent interest in a corporation
• d. Opening offices, whether called liaison offices or branches

A corporation sole may be dissolved and its affairs settled voluntarily by submitting to the Securities and Exchange Commission a _____________________.

• a. Letter of discontinuance of operations
• b. Verified Declaration of Dissolution
• c. Detailed Letter of Liquidation
• d. Resignation letter

Arrange the following steps in order to exercise appraisal right

• a. B, A, C, D
• b. A, B, D, C
• c. D, B, C, A
• d. B, D, A, C

A partnership begins from the moment of the execution of the contract unless a different date is stipulated.

• True
• False

Statement 1. A person who is already a stockholder of a corporation may acquire additional shares when the corporation declares dividends

• a. Statement 1 is false: Statement 2 is true
• b. Statement 1 is true: Statement 2 is false
• c. Statement 1 is false{: Statement 2 is false
• d. Statement 1 is true: Statement 2 is true

The records of all business transactions of the corporation and the minutes of any meetings shall be open to inspection by ___________________________ of the corporation at reasonable hours on business days and he may demand, in writing, for a copy of excerpts from said records or minutes, at his expense.

• a. Any trustee and member
• b. Any director, trustee, stockholder or member
• c. Any director and stockholder
• d. The President

The following are included in the specific express powers of a corporation, except,

• a. Power to Acquire Own Shares
• b. Power to Incur, Create or Increase Bonded Indebtedness
• c. Power to Invest corporate funds in another corporation or business
• d. Power to deny redemptive rights

The partnership shall bear the loss of things which are contributed to the partnership to be sold.

• True
• False

Upon approval by ______________ of each of the board of directors or trustees of the constituent corporations of the plan of merger or consolidation, the same shall be submitted for approval by the stockholders or members of each of such corporations at separate corporate meetings duly called for the purpose.

• a. majority
• b. minority
• c. at least two thirds
• d. at least one

The profits and losses of the partnership shall be divided equally among the partners if they have no profit and loss sharing agreement.

• True
• False

Statement 1. Foreign corporations doing business in the Philippines with license may sue and be sued in the country Statement 2. Foreign corporations doing business in the Philippines without license cannot sue and cannot be sued in the Philippines.?

• a. Statement 1 is true: Statement 2 is true
• b. Statement 1 is true: Statement 2 is false
• c. Statement 1 is false: Statement 2 is false
• d. Statement 1 is false: Statement 2 is true

One of constituent remains as an existing juridical person, the suriving corporation, whereas the other corporation shall be absorbed by the former.

• a. Consolidation
• b. Merger
• c. Appraisal right
• d. Dissenting of shares

A contract where two or more persons bind themselves to contribute money, property or industry to a common fund with the intention of dividing the profits among themselves.

• partnership
• corporation
• voluntary association
• sole proprietorship

A stipulation exempting a capitalist partner from losses is valid.

• True
• False

Within ten (10) days from receipt of a written request of any stockholder or member, the corporation shall furnish to him its most recent financial statement, which shall include

• a. profit or loss statement and cash flow stament
• b. balance sheet and statement of changes in equity
• c. statement of financial position and profit or loss statement
• d. Income statement and declaration of dividends

___________ are entitled to operate without the strict formalities normally required in the operation of standard corporations.

• a. Private Corporations
• b. Public Corporations
• c. Open Corporations
• d. Close Corporations

A stock or non-stock corporation organized to provide facilities for teaching.

• a. Close corporations
• b. Educational corporation
• c. Regular corporation
• d. Religious corporations

Which of the following statements does not describe a watered stock?

• a. Watered stock is an asset with an artificially-inflated value
• b. These are shares issued without consideration
• c. Shares issue offered to the public at prices that are highly deflated when compared with the book value of the issuer's assets
• d. It is a stock that is issued with a value much greater than the value of the issuing company's assets.

Statement 1. A priest alone, can form a religious corporation

• a. Statement 1 is true: Statement 2 is false
• b. Statement 1 is true: Statement 2 is true
• c. Statement 1 is false: Statement 2 is false
• d. Statement 1 is false: Statement 2 is true

Which of the following is/are requisites of a close corporation?

• a. A close corporation's shares shall not be held by a group of more than 20 persons
• b. All of the answers correct
• c. All of the company's issued stocks are subject to one or more specified restrictions on transfer
• d. The corporation shall not list in any stock exchange or make any public offering of any of its stock.

Identify which formula best depicts a consolidation

• a. A Inc. +B Inc. + C Inc. = A Inc.
• b. A Inc. + B Inc. + C Inc. = D Inc.
• c. A Inc. + B Inc. + C Inc. = C Inc.
• d. A Inc. + B Inc. + C Inc. = B Inc

If there is a deadlock in the management, the Securities and Exchange Commission may arbitrate the dispute and shall have several authorities which are expressly stated. Which among these statements is not included in such authorities?

• a. Dissolving the corporation
• b. Canceling or altering any provision contained in Articles of Incorporation, by-laws, or any stockholder's agreement
• c. Appointing a permanent director
• d. Requiring the purchase at their fair value of shares of any stockholder, either by the corporation regardless of the availability of unrestricted retained earnings in its books, or by the other stockholders

A parrnership whose capital in money or property amounts to P3,000 or more does not acquire juridical personality if the contract is not recorded with the SEC.

• True
• False

Which if the following statement is incorrect with regards to the procedures involved in a merger?

• a. There must be an approval by majority vote of each of the board of directors or trustees of the constituent corporations of the plan of merger
• b. No correct answer
• c. There must be affirmative vote of stockholders representing at least two-thirds of the outstanding capital stock/members of the constituent corporations
• d. Articles of merger will be filed in SEC in quadruplicate copy for approval

In a corporate liquidation, if the three year extended life has expired without a trustee or receiver having been expressly designated by the corporation itself within that period, the board of directors or trustees

• a. may be permitted to so continue as officers by legal implication to compete the corporate liquidation
• b. may be permitted to so continue as directors by legal implication to stop the corporate liquidation.
• c. may be permitted to so continue as members by legal implication to compel the corporate liquidation
• d. may be permitted to so continue as trustees by legal implication to compete the corporate liquidation

Which of the following group of people may form the board of trustees in an educational institution?

• a. Hanna, John, Kim and Jerry
• b. Gardo, Cardo, Marlo, Darlo, Tarlo
• c. Janjan, Kenken, Benben, Lenlen, Ranran, Pampam, Samsam
• d. Tommy, Corry, Karry, Molly, John, Dan

Failure to pay any and all taxes, imposts, assessments or penalties cannot revoke or suspend the license.

• True
• False

The following are the liabilities of a stockholder, except

• a. Liability for dividend lawfully received
• b. Liability to the corporation for interest on unpaid subscriptions
• c. Liability to the corporation and its creditors for watered stock
• d. Liability to corporate creditors for unpaid stock subscriptions

A foreign corporation applying for a license to transact business in the Philippines shall submit to the Securities and Exchange Commission a copy of its __________________, certified in accordance with law, and their translation to an official language of the Philippines, if necessary

• a. by-laws
• b. articles of incorporation and by-laws
• c. articles of incorporation or by-laws
• d. articles of incorporation

Which of the following signifies a merger of three companies?

• a. ABC Inc. + DEF Inc. = DEF Inc.
• b. STU Inc. + VWX Inc. + YZ Inc. = YZ Inc.
• c. GHI Inc. + JKL Inc. + MNO Inc. = PQR Inc.
• d. GHI Inc. + JKL Inc. + MNO Inc. = GHIJKLMNO Inc.

Which of the following is a requirement for the withdrawal of a foreign corporation?

• a. Settlement of all claims accrued in the?Philippines?
• b. Payment of taxes in countries other than the Philippines
• c. Letter intent to withdraw
• d. All of the answers correct

In a corporation, a corporate officer had committed acts that fall outside the scope of their legal authority. This is a form of

• a. Illegal act
• b. Ultra vires act
• c. Intra vires act
• d. Illegal act and ultra vires act

A partnership intended to be formed as a limited partnership but without the word "Limited" or "Ltd." appended to its name shall be considered as a general partnership.

• True
• False

Which of the following statements is correct regarding trustees and officers?

• a. All of the answers correct
• b. Term of officer is three years except the first directors
• c. Numbers of trustees may be more than 15 as fixed by Articles of Incorporation but their incorporating trustees may not be more than 15
• d. A non-stock corporation may designate their governing board by any name other than board of trustees.

The right of the members of any class or classes to vote may be limited, broadened or denied to the extent specified in the _______________.

• a. no correct answer
• b. articles of incorporation or the by-laws
• c. by-laws
• d. articles of incorporation

Shares of stock shall not be issued in exchange for ____________ ..

• a. Cash
• b. Previously rendered services
• c. Property
• d. Promissory note

Under the Foreign Investment act of 1991, doing business covers

• a. Soliciting orders
• b. Appointing a representative or distributor domiciled in the Philippines which transacts business in its own name and for its own account
• c. All of the answers correct
• d. Making investment as a shareholder by a foreign entity in domestic corporations duly registered to do business and/or exercise of right of such investor

Which of the following situations describes a merger?

• a. ABC Inc. had combined with XYZ Inc., the resulting corporation was named as STU Inc.
• b. ABC Inc. formed STU Inc. and XYZ Inc.
• c. No correct answer
• d. ABC Inc. had combined with XYZ Inc., the XYZ Inc. was absorbed by ABC Inc.

He contributes his services to the partnership.

• capitalist partner
• substituted limited partner
• industrial partner
• general partner

Turkey Food Company is a foreign corporation who acquired license to operate in the Philippines. Which of the following statements is true

• a. Turkey Food Company cannot be sued
• b. Turkey Food Company cannot sue
• c. Turkey Food Company cannot be sued and cannot sue
• d. No correct answer

In a dissolution by shortening of term, a copy of the amended articles of incorporation shall be submitted to the

• a. Bureau of Internal Revenue
• b. Department of Trade and Industry
• c. Board of Directors
• d. Securities and Exchange Commission

A limited partner shall be liable as general partner in three of the following cases. Which one is the exception?

• when he is a general-limited partner as stated in the certificate.
• when his surname which appears in the partnership name is also the surname of a general partner.
• when he participates in the management of the business.
• when he takes part in the control of the business.

Which of the following instances may a stockholder of a corporation shall have the right to dissent and demand payment of the fair value of his shares?

• a. In case any amendment to the articles of incorporation has the effect of extending or shortening the term of corporate existence
• b. In case any amendment to the articles of incorporation has the effect of authorizing preferences in any respect superior to those of outstanding shares of any class
• c. All of the answers correct
• d. In case any amendment to the articles of incorporation has the effect of changing or restricting the rights of any stockholder class of shares

The by-laws may provide that the members of a non-stock corporation may hold their regular or special meetings at any place even outside the place where the principal office of the corporation is located.

• a. Any place within the Philippines for special meeting and any place outside the Philippines for regular meetings
• b. Any place within the Philippines
• c. Any place within the Philippines for regular meeting and any place outside the Philippines for special meetings
• d. Any place within or outside the Philippines

Statement 1. A non-stock corporation can be converted into a stock corporation

• a. Statement 1 is true: Statement 2 is false
• b. Statement 1 is true: Statement 2 is true
• c. Statement 1 is false: Statement 2 is false
• d. Statement 1 is false: Statement 2 is true

Which of the following stipulations is valid?

• a stipulation excluding an industrial partner from profits.
• a stipulation exempting a capitalist partner from losses.
• a stipulation excluding a capitalist partner from profits.
• a stipulation exempting an industrial partner from losses.

The following positions in a corporation are presented to you

• a. I.President and III. Corporate Secretary
• b. III. Corporate Secretary and IV. Corporate Secretary
• c. I. President and IV. Chairman of the Board
• d. I. President and II. Treasurer

When a partner has been appointed manager in the articles of partnership, he may be removed without just cause by the vote of the partner owning the controlling interest.

• True
• False

The power to make to decide and do things in order to protect debts due to the corporation is one of the

• a. General express powers of a corporation
• b. Specific express powers of a corporation
• c. Inherent powers of a corporation
• d. Implied powers of a corporation

Doing business in the Philippines covers

• a. Soliciting orders
• b. Having a nominee or officer to represent its interest in such corporation
• c. Make investment as a shareholder by a foreign entity in domestic corporations duly registered to do business and/or exercise of right of such investor
• d. Appointing a representative or distributor domiciled in the Philippines which transacts business in its own name and for its own account

Which of the following statements is incorrect?

• a partner's separate creditors are preferred as to the partner's separate assets.
• partnership creditors are preferred as to partnership assets.
• partnership creditors are preferred as to each partner's separate assets.
• a partner's separate creditors may attach a partner's share in the partnership assets.

The board of directors or trustees of each corporation, party to the merger or consolidation, shall approve a plan of merger or consolidation, which of the following must be set forth?

• a. All of the answers correct
• b. The terms of the merger or consolidation and the mode of carrying the same into effect
• c. The names of the corporations proposing to merge or consolidate, hereinafter referred to as the constituent corporations
• d. A statement of the changes, if any, in the articles of incorporation of the surviving corporation in case of merger; and, with respect to the consolidated corporation in case of consolidation, all the statements required to be set forth in the articles of incorporation for corporations organized under the Corporation Code

Statement 1. When a director or trustee takes advantage of the business opportunity and obtained profits that should belong to the corporation he is serving, he must account to of the all profits and return them to the corporation

• a. Statement 1 is false: Statement 2 is true
• b. Statement 1 is true: Statement 2 is false
• c. Statement 1 is false: Statement 2 is false
• d. Statement 1 is true: Statement 2 is true

This is a financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time.

• a. Balance Sheet
• b. Statement of Changes in Equity
• c. Statement of Financial Performance
• d. Corporate Journal

If the partnership has the required minimum capital in money or property but the contract is not in a public instrument or the same is not recorded with the SEC, the partnership

• is void
• still acquires juridical personality
• is voidable
• does not acquire juridical personality

If the paid-up capital of the corporation is greater than P50,000.00,

• a. the financial statements must be signed by an Independent Certified Public Accountant
• b. the financial statements must be signed by the director
• c. the financial statements must be signed by the majority stockholder
• d. the financial statements may be certified under oath by the treasurer or any responsible officer of the corporation

Upon the winding up of the corporate affairs, any asset distributable to any creditor or stockholder or member who is unknown or cannot be found shall be

• a. Kept by the corporation
• b. Given to charity institutions
• c. Sold at an auction
• d. Escheated to the city or municipality where such assets are located

Statement 1. SEC will issue a license after complying with the documentary requirements Statement 2. Within 60 days from the issuance of the license, foreign corporation shall deposit bonds at least one hundred thousand dollars

• a. Statement 1 is false: Statement 2 is false
• b. Statement 1 is true;: Statement 2 is true
• c. Statement 1 is true: Statement 2 is false
• d. Statement 1 is false: Statement 2 is true

What may be the composition of the executive committee of a corporation?

• a. All of the answers correct
• b. Officers who are neither offices nor directors
• c. Directors
• d. Stockholders who are neither offices nor directors

A partner's interest in the partnership is his share of the profits and surplus which he may assign to a third person. Which of the following statements concerning such right is correct?

• the assignee has the right to receive the profits which the assigning partner would otherwise be entitled to.
• the conveyance of a partner's interest will cause the dissolution of the partnership.
• the assignee becomes a partner.
• the assignee has a right to interfere in the management of the partnership business.

Which of the following is a liability of a stockholder?

• a. Liability to the corporation and its debtors for watered stock
• b. Liability to corporate debtors for unpaid stock subscriptions
• c. Liability to the corporation for interest on paid subscriptions
• d. Liability for dividend unlawfully received

Holders of subscribed shares not fully paid which are not delinquent shall have ___________________________________.

• a. no right to vote
• b. the right to declare dividends
• c. all the rights of a stockholder
• d. limited rights

Which of the following situations describes a consolidation?

• a. ABC Inc. had combined with XYZ Inc., the resulting corporation was named as STU Inc.
• b. ABC Inc. formed STU Inc. and XYZ Inc.
• c. No correct answer
• d. ABC Inc. had combined with XYZ Inc., the XYZ Inc. was absorbed by ABC Inc.

Statement 1. If a foreign corporation duly licensed to do business desires to withdraw, it must file a petition for withdrawal

• a. Statement 1 is true: Statement 2 is false
• b. Statement 1 is false: Statement 2 is false
• c. Statement 1 is true: Statement 2 is true
• d. Statement 1 is false: Statement 2 is true

Which of the following statements describes a voluntary dissolution?

• a. Dissolution by failure to formally organize and commence the transactions of its business or construction of its works within two years from its incorporation
• b. Dissolution by the expiration of the term
• c. No correct answer
• d. Dissolution by order of the securities and exchange commission

Which of the following is/are requirements in acquiring license to do business in the Philippines?

• a. Certificate that the laws of their incorporation allows Filipino citizens and corporation to business in their country and that the corporation is in good standing
• b. All of the answers correct
• c. Application, under oath, filed in SEC including Articles of Incorporation and by-laws:
• d. Certification that the corporation is solvent and in sound financial condition: and

The power to declare dividends is one of the

• a. Implied powers of a corporation
• b. Inherent powers of a corporation
• c. Specific express powers of a corporation
• d. General express powers of a corporation

Which statement describes a close corporation?

• a. Only to board of directors exercise corporate powers
• b. Powers to appoint corporate officers are exercised by the Board of directors
• c. Preemptive right extends to treasury shares
• d. Pre-emptive rights does not extend to treasury shares

Any foreign corporation lawfully doing business in the Philippines shall be bound by all laws, rules and regulations applicable to __________________ of the same class, except such only as provide for the creation, formation, organization or dissolution of corporations or those which fix the relations, liabilities, responsibilities, or duties of stockholders, members, or officers of corporations to each other or to the corporation.

• a. foreign corporations
• b. stock corporations
• c. domestic corporations
• d. non-stock corporations

Which of the following are things that are required to be kept in a corporation?

• a. Slack and Transfer book
• b. All are needed to be kept
• c. Record of all business transactions
• d. Minutes of all meetings of company labor union

In case of death, resignation, transfer or removal of the person in office his successor replaces him and continue the corporation sole.

• True
• False

External appraisal of the value of shares happen when the stockholder and the corporation cannot agree in the fair value of the shares.

• True
• False

Statement 1. The surviving or consolidated corporation shall be responsible and liable for all the liabilities and obligations of each of the constituent corporations as if the remaining corporations themselves had incurred the obligation.

• a. Statement 1 is false: Statement 2 is false
• b. Statement 1 is true; Statement 2 is true
• c. Statement 1 is true: Statement 2 is false
• d. Statement 1 is false: Statement 2 is true

Which of the following statements is correct? [2]

• a. In a stock corporation, each stockholder is entitled to one vote only
• b. In a non-stock corporation, voting by mail may be allowed
• c. In a non-stock corporation, each stockholder is entitled to multiple votes
• d. In a stock corporation, voting by mail may be allowed

A limited partner may contribute money and/or property to a partnership but not services.

• True
• False

An educational institution to offer programs from Grade 1-6 must have an endorsement from

• a. Technical Skills Development Authority
• b. Commission on Higher Education
• c. Department of Education
• d. Securities and Exchange Commission

A ________________ may be either an individual residing in the Philippines or a domestic corporation lawfully transacting business in the Philippines.

• a. resident agent
• b. resident alien
• c. resident stockholder
• d. resident

The rights of creditors or liens upon the property of any of such constituent corporations shall not be impaired.

• True
• False

Statement 1. In a close corporation, corporate powers may be exercised by stockholders

• a. Statement 1 is true: Statement 2 is true
• b. Statement 1 is false: Statement 2 is false
• c. Statement 1 is true: Statement 2 is false
• d. Statement 1 is false: Statement 2 is true

An artificial person like a corporation may be a partner in a partnership.

• True
• False

Organization that does not have a capital stock.

• a. Close corporations
• b. Stock corporations
• c. Non-stock corporation
• d. Regular corporations

In consolidation, one of constituent remains as an existing juridical person, the suriving corporation, whereas the other corporation shall be absorbed by the former.

• True
• False

Arrange the following sentence in order to properly describe the processes in the election of directors or trustees

• a. IV, I, III, II, V
• b. IV, I, II, V, III
• c. IV, II, I, III, V
• d. IV, II, I, V, III

Notice to any partner relating to partnership affairs is notice to the partnership.

• True
• False

ABC Inc. had a merger with XYZ Inc. It was agree that XYZ will be the surviving company. Which of the following statements is true?

• a. The juridical personality of ABC Inc. shall cease
• b. All of the answers correct
• c. XYZ Inc. shall possess all the rights, privileges, immunities and franchises of each of the constituent corporations but not with the properties belonging to the constituent corporation which are deemed transferred without further act or deed.
• d. ABC Inc. shall possess all the rights, privileges, immunities and powers and shall be subject to all the duties and liabilities of a corporation

A partner may be a limited and general partner at the same time.

• True
• False

In a limited partnership where there are 4 partners:

• the number of limited partners must be greater than the number of general partners, that is, 3:1.
• the number of limited partners must be equal to the number of general partner, that is, 2:2.
• all the partners must be limited partners.
• it is enough that there is one limited partner; the rest may all be general partners.

A man and a woman living together as husband and wife without the benefit of marriage may enter into a universal partnership.

• True
• False

Which of the following distinguishes a non-stock corporation from a stock corporation

• a. Usually operates for the main purpose of earning profit
• b. Members cannot exercise appraisal rights
• c. Members are entitled to have multiple votes
• d. Part of the income may be distributed to the members

Which of the following organizations may be best considered as a special corporation

• a. Enteng Religious Supplies
• b. San Antonio Ministry
• c. No correct answer
• d. San Marino Services

Any stockholder of a close corporation may, for any reason, compel the said corporation to purchase his share at their fair value, which shall not be less than their par or issued value, when the corporation has sufficient asset to cover its debts and liabilities excluding capital stock. Based on this, which of the following statements is correct?

• a. This right is available to stockholders of regular corporations and close corporations
• b. This right is available to stockholders of regular corporations but not available to stockholders of close corporations
• c. This right is available to stockholders of close corporations
• d. This right is available to stockholders of regular corporations

The demand for payment may not be withdrawn unless with consent of the corporation.

• True
• False

The partnership will bear the risk of the loss of three of the following things. Which is the exception?

• things contributed to be sold.
• things contributed so that only their use and fruits will be for the common benefit.
• fungible things or those that cannot be kept without deteriorating.
• things brought and appraised in the inventory

After dissolution, a partnership is still bound by the act of a partner authorized to act for the partnership with respect to the completion of transactions begun before dissolution.

• True
• False

The form for proxies of stockholders and members and the manner of voting them

• a. May be included in the articles of incorporation
• b. May be included in the certificate of incorporation
• c. May be included in the by-laws of a corporation
• d. May be included in the company mission and vision

ABCD College is a non-stock corporation. Which of the following is correct

• a. The board can be composed of eleven trustees
• b. The board can be composed of seven trustees
• c. The board can be composed of five trustees
• d. The board can be composed of six trustees

An educational institution to offer senior high school programs must have an endorsement from

• a. Technical Skills Development Authority
• b. Securities and Exchange Commission
• c. Commission on Higher Education
• d. Department of Education

Any amendment to the plan of merger or consolidation may be made, provided such amendment is approved by majority vote of the respective boards of directors of all the constituent corporations and ratified by the affirmative vote of stockholders representing _________________ of the outstanding capital stock of each of the constituent corporations.

• a. All of the answers correct
• b. At least two thirds
• c. At least one half
• d. At least majority

A person insists to have a copy of reports and financial statements of a company. In what situations where you can refuse to let the person have the things that he is requesting?

• a. The person is not acting for a legitimate purpose in making his demand
• b. The person requesting is a new director
• c. The person is a former director of the company
• d. No correct answer

The right of appraisal shall cease if

• a. The SEC determines that such stockholder is not entitled to the appraisal right
• b. The proposed corporate action is not abandoned by the corporation:
• c. The proposed corporate action is disapproved by the SEC
• d. The demand for payment is withdrawn without the consent of the corporation:

A partnership formed for the exercise of a profession whic is duly registered is an example of

• partnership by estoppel
• particular partnership
• universal partnership of profits
• universal partnership of all present property

You are about to comply the requirements of an educational institution that offers non-degree programs in the field of housekeeping, where will you obtain your endorsement letter?

• a. Commission on Higher education
• b. No correct answer
• c. Technical Skills Development Authority
• d. Department of Education

Arrange the following steps in merger or consolidation

• a. B, F, D, A, E, C
• b. B, F, A, D, C, E
• c. B, F, A, D, E, C
• d. B, F, D, A, C, E

The private creditor of a partner shall have preference over such partner's separate property.

• True
• False

A stock corporation can be directly converted into a non-stock corporation

• True
• False

The board of directors shall perform three major functions, which is not included?

• a. To control and hold corporate property
• b. To conduct all corporate business
• c. To exercise corporate powers
• d. To be involved in ultra vires acts

Business organization which all shares are held by a few selected persons who are either related by blood or marriage, or those who know each other well and are aware of each other's business skills.

• a. Stock corporation
• b. Non-stock corporation
• c. Regular corporation
• d. Close corporation

Based on our lesson, which of the following statements best defines a foreign corporation

• a. It is a company formed, organized or existing in the Philippines where all of its incorporators are foreign nationals who are authorized to do business in the country
• b. It is a company formed, organized or existing under any law other than those of the Philippines, and whose laws allow Filipino citizens and corporations to do business in its own country or state
• c. It is an organization incorporated in the Philippines where most of its incorporators are foreign nationals
• d. It is a company formed, organized or existing under any law other than those of the Philippines

Attached to the ______________ shall be a duly executed certificate under oath by the authorized official or officials of the jurisdiction of its incorporation, attesting to the fact that the laws of the country or state of the applicant allow Filipino citizens and corporations to do business therein, and that the applicant is an existing corporation in good standing.

• a. application for license
• b. Certificate of registration
• c. Certificate of incorporation
• d. application for registration

Statement 1. A close corporation is a business organization which all shares are held by a few selected persons

• a. Statement 1 is false: Statement 2 is true
• b. Statement 1 is true: Statement 2 is false
• c. Statement 1 is true: Statement 2 is true
• d. Statement 1 is false: Statement 2 is false

Which of the following can cause the revocation of license of a foreign corporation

• a. Failure to appoint and maintain a resident agent in the Philippines
• b. Failure to submit to the SEC an authenticated copy of any amendment to its articles of incorporation or by-laws or of any articles of merger or consolidation
• c. All of the answers correct
• d. Failure to pay any and all taxes, imposts, assessments or penalties

A foreign corporation is a company formed, organized or existing under any law other than those of the Philippines, and whose law allow Filipino citizens and corporation to do business in its own country or state.

• True
• False

Which of the following is not a form of involuntary dissolution

• a. Dissolution by failure to formally organize and commence the transactions of its business or construction of its works within two years from its incorporation
• b. Dissolution by the expiration of the shortened term amended before
• c. Legislative dissolution
• d. Dissolution by order of the securities and exchange commission

The primary office of ABC Inc. is located at Mandaluyong City, it also have a branches in Makati City and Quezon City. The minutes of meetings of the board of directors are kept at ______________.

• a. Makati City
• b. Quezon City
• c. Any of the offices
• d. Mandaluyong City

Supposing that you are in charge of processing the documentary requirements of the incorporation of a private College with the specialization in the field of information and communications technology, where will you obtain the recommendation for such institution to be formed?

• a. Commission on Higher Education
• b. Department of Communication
• c. Technical Skills Development Authority
• d. Department of Education

Watered stocks are

• a. those issued as stock dividend when there are no sufficient retained earnings or surplus to justify it
• b. those issued for consideration other than actual cash such as property or services when the fair value of such thing or service is greater than the par or issued value of the stock
• c. those issued with consideration or bonus shares
• d. those issued as fully paid when the corporation has received a greater amount of money than the par or issued value of the stock

Which of the following sentences is incorrect regarding merger and consolidation?

• a. The surviving corporation in a merger or the new corporation in a consolidation shall possess all the rights, privileges, immunities and powers shall be subject to all the duties and liabilities of a corporation.
• b. The surviving corporation in a merger or the new corporation in a consolidation shall be subject to all the duties and liabilities of a corporation.
• c. The separate existence of the constituent corporations in a merger shall cease.
• d. Any claim against the constituent corporation may be prosecuted by and against the surviving or consolidated corporation.

Which of the following foreign companies is considered as a foreign corporation doing business in the Philippines

• a. Australia Inc. had a nominee or officer to represent its interest in such corporation
• b. India Inc. appointed representatives or distributors domiciled in the Philippines and stayed in the country for a period or periods totaling 200 days
• c. USA Inc. has appointed a representative or distributor domiciled in the Philippines which transacts business in its own name and for its own account
• d. No correct answer

Statement 1. A non-stock corporation is an organization that does not have a capital stock, any profit it may obtain shall be distributed equally to the members

• a. Statement 1 is true: Statement 2 is false
• b. Statement 1 is false: Statement 2 is true
• c. Statement 1 is false: Statement 2 is false
• d. Statement 1 is true: Statement 2 is true

ABC Inc. and XYZ Inc. consolidated into WVU Inc. Which of the following statements is true?

• a. XYZ Inc. shall possess all the rights, privileges, immunities and franchises of each of the constituent corporations with the properties belonging to the constituent corporation which are deemed transferred without further act or deed.
• b. ABC Inc. shall not possess any of the rights, privileges, immunities and powers because it has already ceased its existence
• c. XYZ Inc. shall possess all the rights, privileges, immunities and franchises of each of the constituent corporations but not with the properties belonging to the constituent corporation which are deemed transferred without further act or deed.
• d. ABC Inc. shall possess all the rights, privileges, immunities and powers and shall be subject to all the duties and liabilities of a corporation

In case of a change of address of the resident agent, it shall be his or its duty to immediately notify in writing the _________________ of the new address.

• a. Securities and Exchange Commission
• b. Department of Trade and Industry
• c. No correct answer
• d. National Statistics Authority

Which statement describes a non-stock corporation?

• a. Each Member is entitled to multiple votes depending on their stocks owned
• b. Right and interest can be transferred as a matter of right
• c. Board of Trustees may be more than 15
• d. No correct answer

A limited partner may assign his interest to another person.

• True
• False

It is a company formed, organized or existing under any law 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. Transnational Corporation
• d. International Corporation

The issuance of watered stock is a form of

• a. Intra vires act
• b. Illegal act and ultra vires act
• c. Ultra vires act
• d. Illegal act

One of the distinctions between a partnership and a corporation is that a partnership

• is created by operation of law
• acts through a board of directors
• may be formed by one person
• may exist for an indefinite period

The change in the relation of the partners caused by any ceasing to be associated in the carrying on of the business is

• liquidation of the partnership business
• termination of the partnership
• dissolution of the partnership
• winding up of partnership affairs

Every corporation whose charter expires by its own limitation or is annulled by forfeiture or otherwise, or whose corporate existence for other purposes is terminated in any other manner, shall nevertheless be continued as a body corporate for _______________ after the time when it would have been so dissolved, for the purpose of prosecuting and defending suits by or against it and enabling it to settle and close its affairs, to dispose of and convey its property and to distribute its assets, but not for the purpose of continuing the business for which it was established.

• a. 4 years
• b. 2 years
• c. 3 years
• d. 1 year

The application for a license to transact business in the Philippines shall likewise be accompanied by a statement under oath of the president or any other person authorized by the corporation, showing to the satisfaction of the Securities and Exchange Commission and other governmental agency in the proper cases that the applicant is solvent and in sound financial condition, and setting forth the assets and liabilities of the corporation as of the date not exceeding __________ immediately prior to the filing of the application.

• a. 2 years
• b. 4 years
• c. 3 years
• d. 1 year

In merger, the constituent corporations shall be dissolvd and a new consolidated corporation will emerge into new corporate entity which shall obtain all the assets of the disappearing corporations, as well as all their liabilities.

• True
• False

One of the following is not a characteristic of partnership.

• principal
• real
• onerous
• preparatory

Which of the following statements correctly describes the liability of the board

• a. Board of directors of a stock corporation are jointly and severally liable if they acquire any personal interest in conflict with their duty
• b. Board of directors of a stock corporation are jointly and severally liable if they did not willfully vote for patently unlawful acts of the corporation
• c. Board of trustees of a stock corporation are jointly and severally liable if they are found guilty of gross negligence or bad faith in directing the affairs of the corporation
• d. Board of trustees of a stock corporation are jointly and severally liable for the issuance of watered stock

It can be converted to non-stock corporations by amending its Articles of Incorporation.

• a. Close corporations
• b. Regular corporations
• c. All of the choices
• d. Stock corporations

The power to o establish pension, retirement, and other plans for the benefit of its directors, trustees, officers and employees is one of the

• a. Inherent powers of a corporation
• b. Specific express powers of a corporation
• c. Implied powers of a corporation
• d. General express powers of a corporation

Non-stock corporations may be formed or organized for __________________.

• a. Educational purposes
• b. Civic service purposes
• c. All of the answers correct
• d. Fraternal purposes

Statement 1. In a corporate dissolution, the organization shall continue as a body corporate for three years after the time when it would have been so dissolved for the purpose of continuing the business operations

• a. Statement 1 is false: Statement 2 is false
• b. Statement 1 is false: Statement 2 is true
• c. Statement 1 is true: Statement 2 is true
• d. Statement 1 is true: Statement 2 is false

An educational corporation is a stock or non-stock corporation organized to provide facilities for teaching.

• True
• False

Which of the following persons may form a corporation?

• a. rabbi
• b. priest
• c. any of them
• d. chief archbishop

In a proxy,

• a. The proxy votes as an agent
• b. The ownership is transferred to the proxy
• c. The proxy has rights in all meetings within 5 years
• d. The agreement is irrevocable

A general partnership is automatically dissolved by reason of the insanity of a partner.

• True
• False

A limited partner may contribute

• services only
• property and/or services
• money and/or services
• money and/or property

Which of the following statements describes a close corporation?

• a. Powers to appoint corporate officers are exercised by the Board of directors
• b. Stockholder are not subject to liabilities
• c. There are no classifications of board of directors
• d. Preemptive right extends to treasury shares

Company by-laws must be

• a. consistent with the non-existing law
• b. not impair the obligations of contracts
• c. directed against a particular individual
• d. inconsistent with the morals and public policies

A corporation sole is an incorporated office, composed of a single individual who may be a bishop, priest, minister or presiding officer of a religious sect, denomination or church.

• True
• False

Which of the following statements concerning the name of a partnership is false?

In case of withdrawal of license by a foreign corporation, petition must be publish once a week for ____ consecutive weeks.

• a. 4 weeks
• b. 3 weeks
• c. 5 weeks
• d. 2 weeks

Upon issuance of the__________, a foreign corporation may commence to transact business in the Philippines and continue to do so for as long as it retains its authority to act as a corporation under the laws of the country or state of its incorporation, unless such license is sooner surrendered, revoked, suspended or annulled.

• a. Certificate of registration
• b. Certificate of incorporation
• c. Certificate of Accreditation
• d. License

The minimum capital in money or property except when immovable property or real rights thereto are contributed, that will require the contract of partnership to be in a public instrument and be registered with the SEC.

• P3,000
• P5,000
• P30,000
• P10,000

Doing business in the Philippines covers the appointing representatives or distributors domiciled in the Philippines or who in any calendar year stay in the Philippines for a period or periods totaling ________ or more.

• a. 180 days
• b. 264 days
• c. 90 days
• d. 120 days

Statement 1. The separate existence of the constituent corporations in a merger shall cease.

• a. Statement 1 is false: Statement 2 is false
• b. Statement 1 is false: Statement 2 is true
• c. Statement 1 is true: Statement 2 is true
• d. Statement 1 is true: Statement 2 is false

The board of directors may, by resolution, order the sale of delinquent stock and shall specifically state the amount due on each subscription plus all accrued interest, and the date, time and place of the sale which shall not be less than ____________ nor more than __________ from the date the stocks become delinquent.

• a. 30 days, 60 days
• b. 10 days, 20 days
• c. 20 days, 40 days
• d. 15 days, 30 days

An educational institution to offer undergraduate degrees must have an endorsement from

• a. Department of Education
• b. Securities and Exchange Commission
• c. Technical Skills Development Authority
• d. Commission on Higher Education

Every ______________ is authorized to do business in the Philippines under a license therefore issued to it, shall continue to have such authority under the terms and condition of its license, subject to the provisions of the Corporation Code and other special laws.

• a. non-stock
• b. foreign corporation
• c. stock corporation
• d. domestic corporation

Statement 1. If a corporation fails to formally organize and commence the transactions of its business or construction of its works within two years from its incorporation, it may be dissolved

• a. Statement 1 is false: Statement 2 is false
• b. Statement 1 is true: Statement 2 is true
• c. Statement 1 is true: Statement 2 is false
• d. Statement 1 is false: Statement 2 is true

For a stock educational institution, which of the following is the possible number of directors?

• a. 4
• b. 5
• c. 2
• d. 3

Without prejudice to other grounds provided by special laws, if a foreign corporation failed to file its annual report or pay any fees,

• a. the license of a foreign corporation to transact business in the Philippines may be revoked or suspended by the SEC
• b. the legal existence of the foreign corporation will automatically dissolved
• c. the existence of the foreign corporation will be void
• d. the foreign corporation shall pay the accumulated interest and other charges to SEC

In non-stock corporations, board of directors erm s one year

• True
• False

A corporate director acts within that granted authority. This is a form of

• a. Intra vires act
• b. Illegal act
• c. Illegal act and ultra vires act
• d. Ultra vires act

A non-stock corporation can be directly converted into a stock corporation. This statement is

• True
• False

A person admitted to all the rights of a limited partner who has died or has assigned his interest in the partnership is known as

• an ostensible partner
• a substituted limited partner
• a liquidating partner
• a general-limited partner

Two or more corporations may merge into a new single corporation which shall be the ______________ corporation.

• a. Consolidated
• b. Correspondent
• c. Consumed
• d. Constituent

These are powers that are necessary to carry into effect the powers expressly granted upon a corporation

• a. All of the answers correct
• b. Implied powers
• c. Express powers
• d. Inherent powers

Which of the following is not part of documentary requirements?

• a. Certification that the corporation is solvent and in sound financial condition
• b. Application under oath, filed in SEC including Articles of Incorporation and by-laws.
• c. Attach certificate that the laws of their incorporation allows Filipino citizens and corporation to business in their country and that the corporation is in good standing.
• d. Having a nominee or officer to represent its interest in such corporation

Which of the following will not cause the automatic dissolution of a general partnership?

• when the partnership business becomes unlawful
• insolvency of a partner
• insanity of a partner
• death of a partner

Statement 1. At least seventy percent of the authorized capital stock of educational corporations must be owned by Filipino citizens

• a. Statement 1 is true: Statement 2 is false
• b. Statement 1 is true: Statement 2 is true
• c. Statement 1 is false: Statement 2 is false
• d. Statement 1 is false: Statement 2 is true

A partnership has a personality separate and distinct from each of the partners.

• True
• False

Identify which formula best depicts a merger

• a. A Inc. + B Inc. = E Inc.
• b. A Inc. +B Inc. = A Inc.
• c. A Inc. + B Inc. = D Inc.
• d. A Inc. + B Inc. = C Inc.

An educational institution to offer vocational courses must have an endorsement from

• a. Securities and Exchange Commission
• b. Department of Education
• c. Technical Skills Development Authority
• d. Commission on Higher Education

One of the following is not a requisite of a contract of partnership. Which is it?

• there must be a vaild contract.
• it is established for the common benefit of the partners which is to obtain profits and divide the same among themselves.
• there must be a mutual contribution of money, property or industry to a common fund.
• the articles are kept secret among the members.

A subscription for shares of stock of a corporation still to be formed shall be irrevocable for a period of at least ___________ from the date of subscription.

• a. 9 months
• b. 1 month
• c. 6 months
• d. 3 months

In regular corporations only to board of directors exercise corporate powers.

• True
• False

At least _______ of the authorized capital stock of educational corporations must be owned by Filipino citizens.

• a. 50%
• b. 70%
• c. 30%
• d. 60%

All the partners are general partners.

• none of the choices
• particular partnership
• partnership at will
• partnership by estoppel

All partners including industrial ones shall be liable pro rata with all their separate property after the partnership assets have been exhausted.

• True
• False

Which of the following will not cause the automatic dissolution of a limited partnership?

• death of a general partner
• death of a limited partner
• insanity of a general partner
• insolvency of a general partner

In a universal partnership of all present property, the partners may stipulate that future property shall belong to the partnership but the stipulation cannot include property acquired by inheritance, legacy or donation.

• True
• False

Articles of universal partnership entered into without specification of its nature only constitute a universal partnership of all present property.

• True
• False

Which of the following is the final step in a merger

• a. SEC Issuance of a certificate of merger
• b. Articles of merger will be filed in SEC in quadruplicate copy for approval
• c. Articles of merger will be executed by the constituent corporations, signed by the Presidents and Secretaries
• d. Approval by majority vote of each of the board of directors or trustees of the constituent corporations of the plan of merger or consolidation

Braganza, Ortiz and Nevado want to form a partnership with Braganza contributing P500,000; Ortiz, office equipment; and Nevado, his services. If the three were to form a limited partnership, who among them will be the limited partner/s?

• either Braganza or Nevado or both of them.
• either Braganza or Ortiz or both of them.
• all the three must be limited partners.
• either Ortiz or Nevado or both of them.

Which of the following situations is not allowed in a corporation

• a. The board secretary is a shareholder of the company
• b. The board secretary is also the president
• c. The board secretary is also the treasurer
• d. The board secretary is a director of the company

Non-stock corporations are business organizations which may be organized for

• a. the purpose of trade and distribution of profit among the stockholders
• b. illegal purposes
• c. the main purpose of earning profit
• d. civic service

A dissenting stockholder must make and submit a written demand on the corporation within __________ after the date on which the vote was taken for payment of the fair values of his shares.

• a. sixty days
• b. thirty days
• c. ten days
• d. fifteen days

Notice of meetings called for the purpose of a merger shall be given to all stockholders or members of the respective corporations, at least two _______________ prior to the date of the meeting, either personally or by registered mail. Said notice shall state the purpose of the meeting and shall include a copy or a summary of the plan of merger.

• a. Thirty days
• b. Ten days
• c. Three months
• d. Two weeks

The partnership shall be solidarily liable with all the partners if one partner acting within the scope of his apparent authority receives money or property of a third person and misapplies it.

• True
• False

Which of the following is/are a ground/s to disallow inspection of company records?

• a. Both statements are grounds to disallow inspection of company records
• b. If such person was not acting in good faith or for a legitimate purpose in making his demands.
• c. No correct answer
• d. If the person making the demands has properly used any information secured through any prior examination of the records of such corporation or of any other corporation.

XYZ is a close corporation. Can the stockholders manage the business of the corporation?

• a. Cannot be determined
• b. Yes
• c. No
• d. Maybe

A partner may associate another person with him in his share but the associate shall not be admitted to the partnership without the consent of all the partners.

• True
• False

Which of the following signifies a consolidation of three companies?

• a. GHI Inc. + JKL Inc. + MNO Inc. = PQR Inc.
• b. STU Inc. + VWX Inc. + YZ Inc. = YZ Inc.
• c. ZYX Inc. + WVU Inc. + TSR Inc. = WVU Inc.
• d. ABC Inc. + DEF Inc. = DEF Inc.

A newly admitted partner is liable for partnership debts contracted before his admission to the extent of his contribution unless there is a contrary stipulation.

• True
• False

Which of the following is not part of the non-stock corporation.

• a. Board of directors should not be less than 5 but not more than 15
• b. Board of trustees term is three years.
• c. Memers entitled to one vote
• d. Income is not distributable to members

How many incorporators are there in a corporation sole?

• a. 2
• b. 4
• c. 3
• d. 1

For a non-stock educational institution, which of the following is the possible number of trustees?

• a. 6
• b. 10
• c. 8
• d. 4

One or more foreign corporations authorized to transact business in the Philippines may merge or consolidate with any domestic corporation.

• True
• False

Subscribers for stock shall pay to the corporation interest on all unpaid subscriptions from ________________________.

• a. the date of issuance of certificate of stock
• b. the date of subscription
• c. the date of incorporation
• d. the date of acquiring shares

Which of the following statements is correct?

• a. Ina regular corporation, stockholder may compel the corporation to purchase his shares
• b. In a close corporation, preemptive right extends to treasury shares
• c. In a regular corporation, stockholders are subject to liabilities of directors
• d. In a close corporation, there are no classifications of board of directors

Which of the following companies cannot become a close corporation?

• a. Serge College Inc.
• b. Erlinda Supplies Inc.
• c. San Antonio Printing Company
• d. Jeff Manufacturing Company

Statement 1. Liquidation is the winding up of the affairs of a corporation

• a. Statement 1 is false: Statement 2 is false
• b. Statement 1 is true: Statement 2 is true
• c. Statement 1 is true: Statement 2 is false
• d. Statement 1 is false: Statement 2 is true

Upon written petition to SEC, stockholders may compel the dissolution of the corporation whenever

• a. any of the acts of the officers in control of the corporation are illegal
• b. the corporate assets are being misapplied or wasted
• c. any of the acts of the directors are fraudulent
• d. all of the answers correct

An industrial partner can engage in business for himself if it is of a kind different from the partnership business even without the consent of the other partners.

• True
• False

When a partner is not authorized to act for the partnership and the act of the partner is not for apparently carrying on of the business, the partnership shall be bound by the act of such partner if the third person was not aware of the partner's lack of authority.

• True
• False