rc titles v- xv

When a corporation chooses to adopt its bylaws prior to incorporation, what is the specific voting and signature requirement?

• A. Approval and signature of all the incorporators.

• B. Affirmative vote of the majority of the outstanding capital stock.

• C. Approval by a majority of the board of directors and the corporate secretary.

• D. Two-thirds vote of the stockholders or members of the corporation.

a

Which of the following statements is legally accurate regarding a stockholder's waiver of notice for meetings?

• A. A stockholder can permanently waive their right to be notified by signing a continuing proxy.

• B. General waivers of notice written into the articles of incorporation or bylaws are legally prohibited.

• C. Attendance at a meeting automatically waives the right to notice, even if the person attends strictly to object to the meeting's legality.

• D. A corporation can force a blanket waiver if approved by a two-thirds vote of the outstanding capital stock.

b

A stockholders' meeting was improperly called because notices were sent out late. Under what exact conditions can the business transacted at this meeting still be considered legally valid?

• A. If the business transacted is within corporate powers and a simple majority of stockholders are present to ratify the error.

• B. If a two-thirds majority of the outstanding capital stock is present and votes to waive the procedural defect.

• C. If all stockholders are present or represented, the acts are within corporate powers, and no one expressly objects at the start.

• D. If the corporate secretary formally submits an affidavit of correction to the Securities and Exchange Commission within five days.

c

While most corporate decisions require only a majority vote of the directors present constituting a quorum, what voting threshold is strictly required for the election of corporate officers?

• A. A two-thirds vote of the directors present constituting a quorum.

• B. A majority vote of the outstanding capital stock present at the meeting.

• C. A unanimous vote of the directors present constituting a quorum.

• D. A majority vote of all the members of the board of directors.

d

How can stockholders delegate the power to amend, repeal, or adopt new bylaws entirely to the board of directors?

• A. By a vote of the owners of two-thirds (2/3) of the outstanding capital stock.

• B. By a majority vote of the outstanding capital stock during a regular meeting.

• C. By the unanimous written consent of all stockholders of record.

• D. By securing an endorsement certificate from the appropriate government regulatory agency.

a

If a director cannot physically attend a monthly board meeting, what is their legal recourse to participate and cast a vote?

• A. They can execute a written proxy assigning their voting right to another sitting director.

• B. They can attend and vote through remote communication, such as videoconferencing.

• C. They can appoint an external representative via a notarized voting trust agreement.

• D. They must submit their vote in absentia to the corporate secretary before the meeting.

b

What is the maximum statutory period that a single, continuing proxy document can remain valid and effective?

• A. One (1) year from the date of its execution.

• B. Three (3) years, unless expressly revoked earlier by the stockholder.

• C. Five (5) years at any one time, after which a new document must be signed.

• D. Ten (10) years, provided it is explicitly stated in the proxy agreement.

c

Why does a corporation "close the stock and transfer books" prior to a scheduled stockholders' meeting?

• A. To finalize the corporation's financial statements for the preceding year's audit report.

• B. To halt the trading of the corporation's shares on the public stock exchange temporarily.

• C. To allow the Securities and Exchange Commission to inspect the corporate records for compliance.

• D. To establish a strict cutoff date to determine the official stockholders entitled to notice and voting rights.

d

If a stock certificate registers shares explicitly to "Person A and/or Person B," how must voting rights be exercised for those specific shares?

• A. Any single listed owner can independently vote the shares or appoint a proxy without the other's consent.

• B. Both owners must unanimously agree on the vote, otherwise, the shares cannot be voted.

• C. The voting rights are split equally, allowing Person A and Person B to cast half a vote each.

• D. A court-appointed administrator must be assigned to vote on behalf of the joint owners.

a

What is the minimum required notice period that a corporation must provide to its stockholders or members before a regular meeting and a special meeting, respectively?

• A. 30 days for a regular meeting; 15 days for a special meeting.

• B. 21 days for a regular meeting; 1 week for a special meeting.

• C. 20 days for a regular meeting; 7 days for a special meeting.

• D. 2 weeks for a regular meeting; 2 days for a special meeting.

b

What mechanical process occurs to a stockholder's physical stock certificates when they enter into a valid voting trust agreement?

• A. The certificates are stamped with a "Voting Trust" seal and returned to the original stockholder.

• B. The certificates are physically deposited in an escrow account managed by the Securities and Exchange Commission.

• C. The certificates are cancelled, new ones are issued to the trustee, and the trustors receive voting trust certificates.

• D. The certificates remain untouched, but a legally binding annotation is appended to the corporate stock ledger.

c

What is required for a court-appointed executor to attend a stockholders' meeting and cast a vote on behalf of a deceased stockholder's estate?

• A. The executor must secure a notarized proxy form signed by all the legal heirs of the deceased.

• B. The executor must file a formal petition with the corporate secretary at least one week before the meeting.

• C. The executor must pledge the shares as a security interest to a creditor before exercising the voting right.

• D. The executor may attend and vote on behalf of the stockholder without the need for any written proxy.

d

Bylaws become legally effective immediately upon receiving an affirmative majority vote from the stockholders and the board of directors.

f

Treasury shares retain their voting rights and can be voted by the board of directors during corporate meetings.

f

A director who has a potential conflict of interest in a related-party transaction must recuse themselves from voting on its approval at the board meeting.

t

A voting trust agreement can never exceed a period of five years under any circumstance.

f

Meetings of the board of directors must strictly be held within the city or municipality where the principal office of the corporation is located.

f

If stockholders delegate the power to amend bylaws to the board of directors by a two-thirds vote, they need a two-thirds vote to revoke that power later.

f

If an authorized corporate officer unjustly refuses to call a meeting, a stockholder has the legal right to petition the SEC to issue an order directing the stockholder to call the meeting themselves.

t

A stockholder who votes in absentia is not counted toward the quorum because they are not physically present nor represented by a proxy.

f

When is a pre-incorporation subscription absolutely irrevocable, regardless of whether the other subscribers consent to a revocation?

• A. Once the articles of incorporation are submitted to the SEC.

• B. Upon the expiration of a continuous six-month period.

• C. When the corporation officially issues stock certificates.

• D. After the board of directors holds its first regular meeting.

a

Which of the following is strictly prohibited by law as a valid form of consideration for the issuance of shares of stock?

• A. Previously incurred indebtedness of the corporation.

• B. Promissory notes or promises of future service.

• C. Unrestricted retained earnings transferred to stated capital.

• D. Intangible property such as patents or copyrights.

b

How can a director who has knowledge about the issuance of shares for less than their par value successfully avoid solidary liability for the "watered" difference?

• A. By resigning from the board immediately after the issuance.

• B. By returning their own shares to the corporate treasury.

• C. By filing a written objection with the corporate secretary.

• D. By abstaining from the vote during the board meeting.

c

During a public auction for delinquent shares, how is the winning bidder legally determined by the corporation?

• A. The person who offers the highest cash amount for all the delinquent shares.

• B. The person who agrees to pay the principal debt without charging interest.

• C. The person who bids for the largest fraction of shares at the lowest price.

• D. The person who offers to pay the full outstanding amount for the smallest number of shares.

d

Under the Code, who among the following is explicitly denied the right to inspect or demand the reproduction of corporate records?

• A. A stockholder who represents the interests of a competitor.

• B. A newly registered member of a nonstock corporation.

• C. A minority stockholder with less than one percent ownership.

• D. An independent director serving on the corporate board.

a

A stockholder wishes to file a court action to recover their shares sold in a delinquency sale due to a defective notice. What strict legal prerequisite must be met before this action can be maintained?

• A. They must secure a court injunction within thirty days of the sale.

• B. They must pay the buyer the full purchase sum plus legal interest.

• C. They must prove the corporation acted with fraud or gross negligence.

• D. They must publish a notice of their complaint in a local newspaper.

b

In standard procedure, a corporation must wait one year after publishing a notice of a lost stock certificate before issuing a replacement. How can a stockholder legally bypass this waiting period?

• A. By submitting an affidavit signed by the corporate president.

• B. By paying a premium fee equivalent to the lost shares' par value.

• C. By filing a satisfactory bond or security effective for one year.

• D. By securing an immediate court order from a regional trial court.

c

What is the exact voting threshold required to legally approve a plan of merger or consolidation?

• A. A two-thirds vote of the board of directors of each constituent corporation.

• B. A majority vote of the outstanding capital stock of the surviving corporation only.

• C. A unanimous vote of the board of directors and a majority of stockholders.

• D. A majority board vote and a two-thirds stockholder vote from each participating corporation.

d

What is the specific status of the voting rights of a stockholder who holds unpaid shares that have not yet been officially declared delinquent?

• A. They retain all the rights of a stockholder, including the right to vote.

• B. They can only vote on matters concerning the election of directors.

• C. Their voting rights are suspended until the subscription is fully paid.

• D. They lose all rights except the right to receive corporate dividends.

a

At what precise legal moment does a corporate merger or consolidation officially take effect?

• A. When the stockholders of the constituent corporations ratify the plan.

• B. When the SEC issues a certificate approving the articles of merger or consolidation.

• C. When the articles of merger are signed by the respective corporate presidents.

• D. When the surviving corporation officially assumes the liabilities of the absorbed entity.

b

If a stockholder attempts to sell and transfer their shares but still owes the corporation an unpaid claim related to those specific shares, what action will the corporation take?

• A. It will confiscate the shares and immediately auction them to the public.

• B. It will record the transfer but garnish all future dividends from the buyer.

• C. It will refuse to officially record the transfer in the corporate books.

• D. It will sue the new buyer for the unpaid balance of the subscription.

c

Under what strict condition is a corporation legally permitted to issue a formal stock certificate to a subscriber?

• A. Immediately upon the signing of the subscription contract.

• B. Once the subscriber pays at least fifty percent of the par value.

• C. After the subscriber provides a promissory note for the balance.

• D. Only after the full subscription amount, including interest, is paid.

d

A pre-incorporation subscription can be freely revoked at any time within a six-month window as long as the subscriber provides written notice to the corporation.

f

A corporation is legally permitted to issue stocks for less than their par value if the board of directors unanimously approves the issuance to raise emergency capital.

f

If no outside bidders appear at a public auction to purchase delinquent shares, the corporation is legally allowed to bid for the shares itself.

t

A delinquent stockholder immediately loses every single right associated with their shares until the outstanding balance is fully settled.

f

Following a merger, the newly surviving corporation automatically inherits all real and personal property of the constituent corporations without the need for executing separate transfer deeds.

t

A corporate officer can successfully defend their refusal to allow a stockholder to inspect the company's records if they can prove the stockholder represents the interests of a competing business.

t

Under Section 80, in which of the following scenarios is a stockholder specifically granted the right of appraisal?

• A. When corporate funds are invested in a venture outside of the corporation's primary purpose.

• B. When the board of directors decides to increase the authorized capital stock to fund operations.

• C. When the corporation declares cash dividends that are less than the expected market rate.

• D. When a majority of the board of directors is replaced during an annual stockholders' meeting.

a

How must a dissenting stockholder exercise their appraisal right, and what is the baseline for the fair value calculation?

• A. Submit a verbal demand within 30 days of the vote; value is based on the day the corporate action is finalized.

• B. Make a written demand within 30 days of the vote; value is based on the day before the vote, excluding anticipated changes.

• C. File a petition with the SEC within 60 days of the vote; value is determined by the average market price of the last month.

• D. Make a written demand within 60 days of the vote; value is based on the exact day the vote was taken, including anticipated gains.

b

A corporation must immediately pay the awarded fair value to a dissenting stockholder within 30 days of the appraisers' decision, even if the corporation does not have unrestricted retained earnings.

f

What happens to a dissenting stockholder's voting and dividend rights after they formally demand payment for their shares?

• A. The rights are fully retained until the corporation actually completes the purchase of the shares.

• B. The rights are permanently revoked and transferred to the corporate secretary pending the buyout.

• C. The rights are suspended but will be immediately restored if the corporation fails to pay the awarded value within 30 days.

• D. The rights are converted into a special class of voting shares until the appraisers determine the fair value.

c

What is the consequence if a dissenting stockholder fails to submit their stock certificates for notation within ten days after demanding payment?

• A. The stockholder must pay a penalty fee to the corporate secretary before the appraisal can proceed.

• B. The fair value of the shares is automatically reduced by ten percent to account for the delay.

• C. The corporate action being dissented against is temporarily halted until the certificates are surrendered.

• D. The corporation is granted the option to entirely terminate the stockholder's appraisal rights.

d

True or False: The bylaws of a nonstock corporation can authorize regular or special meetings to be held anywhere in the world, as long as proper notice is sent to all members.

f

Which of the following statements accurately describes the rules for trustees in a nonstock corporation?

• A. The number of trustees can legally exceed fifteen, and they hold office for a maximum term of three years.

• B. The number of trustees is strictly capped at fifteen, and they hold office for a maximum term of one year.

• C. The number of trustees is fixed at exactly five, and they serve indefinite terms until they resign.

• D. The number of trustees is determined by the SEC annually, and they hold office for a maximum term of five years.

a

During the dissolution of a nonstock corporation, what is the mandatory first step in the distribution of its assets?

• A. Transferring assets held for charitable purposes to organizations with substantially similar activities.

• B. Ensuring all liabilities and obligations of the corporation are fully paid, satisfied, and discharged.

• C. Distributing the remaining regular assets pro-rata to all existing members based on the bylaws.

• D. Returning all assets that were donated with a condition requiring their return upon corporate dissolution.

b

According to Section 95, which of the following entities is legally permitted to incorporate as a close corporation?

• A. A domestic insurance company seeking to limit its shareholder base.

• B. A newly established educational institution with only five founders.

• C. A family-owned restaurant chain that strictly restricts stock transfers.

• D. A publicly trading mining corporation transitioning to private ownership.

c

True or False: If the articles of incorporation of a close corporation allow stockholders to directly manage the business without a board of directors, those managing stockholders legally assume all statutory duties and liabilities of directors.

t

The corporation generally has the absolute right to refuse a stock transfer that violates stated restrictions. Under what condition MUST the close corporation allow the invalid transfer anyway?

• A. If the transferee acquired the shares in good faith and paid above market value for them.

• B. If the transferring stockholder has held the shares for a continuous period of more than five years.

• C. If the SEC issues a standard waiver declaring the specific transfer restriction to be overly burdensome.

• D. If every single existing stockholder consents to the breach, or the articles of incorporation are amended.

d

In a close corporation where stockholders actively engage in managing the business, how does the law treat their liability for corporate civil wrongs (torts)?

• A. They are personally liable for corporate torts unless the corporation carries reasonably adequate liability insurance.

• B. They are completely shielded from personal liability because the corporate veil cannot be pierced under any circumstances.

• C. They are only liable up to the exact amount of capital they initially invested in the corporation.

• D. They share joint but not solidary liability exclusively with the appointed corporate officers.

a

True or False: In a close corporation, the preemptive right of stockholders applies only when shares are being issued in exchange for cash, and does not apply when shares are issued to settle corporate debts.

f

When the SEC arbitrates a severe deadlock within a close corporation, it has the unique authority to compel the buyout of a stockholder's shares. How does this specific power differ from the standard appraisal right buyout?

• A. The SEC can only order a buyout if the shares are purchased at exactly their par value.

• B. The SEC can order the buyout even if the corporation lacks unrestricted retained earnings on its books.

• C. The SEC requires the stockholder to surrender all past dividends before the buyout can be executed.

• D. The SEC mandates that the purchasing funds must come exclusively from a newly approved bank loan.

b

Which of the following statements correctly distinguishes a provisional director appointed by the SEC from a standard corporate receiver?

• A. A provisional director assumes full ownership of the corporate assets, while a receiver only manages the staff.

• B. A provisional director can be a major creditor of the company, whereas a receiver must be completely unaffiliated.

• C. A provisional director acts as a neutral tie-breaker with regular board voting rights, whereas a receiver legally takes custody of assets.

• D. A provisional director is permanently appointed until dissolution, while a receiver serves a maximum term of three years.

c

A stockholder in a close corporation has the right to compel the corporation to purchase their shares at fair value for any reason. What is the strictly required financial condition for the corporation to execute this purchase?

• A. The corporation must have operated profitably for the three consecutive years immediately preceding the demand.

• B. The corporation must possess sufficient unrestricted retained earnings equal to twice the value of the shares.

• C. The corporation must liquidate at least one major physical asset to ensure the transaction does not drain cash reserves.

• D. The corporation must have enough assets to cover all its debts and liabilities, excluding its capital stock.

d

What is a distinct rule regarding the venue for regular or special meetings of members in a nonstock corporation?

• A: Meetings must strictly be held within the city or municipality where the principal office is located.

• B: Meetings may be held anywhere within Philippine territory, provided proper notice is given.

• C: Meetings can be held in any location globally if authorized by a majority vote of the trustees.

• D: Meetings are restricted to the regional location of the principal office unless the SEC grants an exemption.

b

During the dissolution of a nonstock corporation, what is the proper sequential order for applying and distributing its assets?

• A: Return conditional assets, pay all liabilities, transfer charitable assets, distribute to members based on bylaws.

• B: Transfer charitable assets, pay all liabilities, return conditional assets, distribute to members based on bylaws.

• C: Pay all liabilities, return conditional assets, transfer charitable assets, distribute remaining assets per bylaws.

• D: Pay all liabilities, distribute assets to members based on bylaws, return conditional assets, transfer charitable assets.

c

For restrictions on the transfer of shares in a close corporation to be binding on a good-faith purchaser, where must these restrictions be explicitly indicated?

• A: In the articles of incorporation and the corporate bylaws only.

• B: In the corporate bylaws and a notarized stockholders' agreement only.

• C: In the articles of incorporation, the bylaws, as well as the certificate of stock.

• D: In the certificate of stock and an official SEC registration filing.

c

How do the preemptive rights of stockholders in a close corporation differ from the standard preemptive rights in a regular stock corporation?

• A: They are strictly limited to new shares issued exclusively for cash, excluding property exchanges.

• B: They extend to all stock to be issued, including the reissuance of treasury shares and shares issued for personal services.

• C: They only apply to common stock issuances and explicitly exclude any issuance of preferred shares.

• D: They require a two-thirds vote of approval from the board of directors before they can be legally exercised.

b

A nonstock educational institution is organizing its board of trustees. Which of the following configurations is legally permissible?

• A. 12 trustees, with one-fourth of their terms expiring every year.

• B. 10 trustees, with one-fifth of their terms expiring every year.

• C. 15 trustees, with one-third of their terms expiring every year.

• D. 5 trustees, with all terms expiring simultaneously after 5 years.

b

If a trustee in a nonstock educational corporation resigns after serving 2 years of a 5-year term, how long will the newly elected replacement serve?

• A. Only for the remaining 3 years of the unexpired term.

• B. For a fresh 5-year term starting from the date of the election.

• C. Until the next annual classification of the entire board.

• D. For 1 year, subject to renewal by the remaining board members.

a

How does a corporation sole legally hold ownership of the temporalities, estates, and properties of the religious denomination?

• A. As the absolute owner, with full rights of personal disposal.

• B. As a joint owner alongside the highest governing religious body.

• C. As a corporate shareholder, receiving dividends from the assets.

• D. As a trustee, managing them for the exclusive benefit of the church.

d

A corporation sole wishes to sell a parcel of land it holds. Under what specific circumstance is the intervention of the Regional Trial Court NOT necessary?

• A. If the sale is approved by a two-thirds vote of the church members.

• B. If the property's value is below a threshold established by the SEC.

• C. If the internal rules of the religious denomination already regulate such sales.

• D. If the chief archbishop executes a verified affidavit of necessity.

c

A diocese wishes to incorporate as a religious society to manage its properties and affairs. What voting threshold from its membership is required to legally proceed?

• A. An affirmative vote of at least two-thirds of its membership.

• B. A unanimous vote of the currently serving board of trustees.

• C. A simple majority vote of the members attending the meeting.

• D. An affirmative vote of at least three-fourths of its membership.

a

Which of the following entities is legally permitted to incorporate as a One Person Corporation (OPC)?

• A. A licensed CPA organizing to provide public accounting services.

• B. A publicly-listed company establishing a domestic subsidiary.

• C. A trust established for the financial benefit of a minor.

• D. A newly formed preneed and life insurance company.

c

In a One Person Corporation, the single stockholder is expressly prohibited by law from holding which corporate officer position?

• A. President

• B. Corporate Secretary

• C. Treasurer

• D. Sole Director

b

Under what specific condition does the alternate nominee take over the management of a One Person Corporation?

• A. Whenever the single stockholder leaves the country for more than thirty days.

• B. Immediately upon the temporary incapacity of the single stockholder.

• C. Automatically upon the permanent death of the single stockholder.

• D. When the primary nominee is unable, incapacitated, or refuses to discharge the functions.

d

If the single stockholder of an OPC dies, what is the required timeframe for the corporate secretary to formally notify the Commission?

• A. Within 15 days from the appointment of the new director.

• B. Within 5 days from the occurrence of the death.

• C. Within 60 days from the transfer of the shares to the heirs.

• D. Within 7 days from the receipt of an affidavit of heirship.

b

If an OPC faces insolvency, what must the single stockholder affirmatively prove to claim the benefit of limited liability?

• A. That the audited financial statements were submitted to the Commission on time.

• B. That the corporate secretary properly maintained the minutes book.

• C. That the nominee had formally consented to manage the corporation's affairs.

• D. That the corporation was adequately financed and its property is separate from personal assets.

d

After the death of a single stockholder and the transfer of shares to the legal heirs, how much time do the heirs have to notify the Commission of their decision to either wind up the OPC or convert it to an ordinary stock corporation?

• A. Within 60 days from the transfer of the shares.

• B. Within 5 days from the notification of death.

• C. Within 15 days from the receipt of the affidavit of heirship.

• D. Within 30 days from the issuance of the amended articles.

a

Why is a corporation sole NOT required to draft and submit separate corporate bylaws?

• A. Because the SEC automatically drafts standard bylaws for all religious organizations.

• B. Because the temporalities are managed directly by the Regional Trial Court.

• C. Because the internal rules, regulations, and discipline of the religious denomination serve this function.

• D. Because religious entities are entirely exempt from the general provisions of the Corporation Code.

c

The board of trustees for an incorporated nonstock educational institution can consist of exactly 12 members.

f

A One Person Corporation is legally required to have a minimum authorized capital stock of P600,000.

f

If the single stockholder decides to change the designated nominee and alternate nominee, they must formally amend the Articles of Incorporation.

f

If the single stockholder appoints themselves as the corporate treasurer, they are required to post a bond with the Commission.

t

During a vacancy in the office of a corporation sole, the properties and temporalities are managed by the SEC until a new leader is officially appointed.

f

A One Person Corporation is not required to hold formal board meetings to validly execute corporate actions.

t

Under Section 134, how many days prior to the meeting must notice be given to shareholders for a voluntary dissolution where no creditors are affected, and what is the legal rationale for this specific timeframe?

• A) 21 days, to align with the standard notice period for regular annual meetings.

• B) 20 days, to synchronize with the Record Date provision for finalizing eligible voters.

• C) 15 days, to expedite the dissolution process when no third-party claims exist.

• D) 30 days, to ensure all stockholders have ample time to review the verified request.

b

When the dissolution of a corporation prejudices the rights of creditors, which of the following voting thresholds is strictly required to resolve upon the dissolution?

• A) Majority vote of the board of directors and a majority vote of the outstanding capital stock.

• B) Two-thirds (2/3) vote of the board of directors and a majority vote of the outstanding capital stock.

• C) Majority vote of the board of directors and at least two-thirds (2/3) vote of the outstanding capital stock.

• D) Two-thirds (2/3) vote of the board of directors and at least two-thirds (2/3) vote of the outstanding capital stock.

c

If a corporation voluntarily dissolves by amending its articles of incorporation to shorten its corporate term, when does the dissolution legally take effect?

• A) On the day immediately following the last day of the corporate term stated in the amended articles.

• B) Upon the formal issuance of a certificate of dissolution by the Securities and Exchange Commission.

• C) Fifteen days after the amended articles of incorporation are submitted to the Commission.

• D) Automatically on the exact date the stockholders vote to approve the amendment.

a

In a voluntary dissolution where creditors are affected, what is the strict deadline for filing a verified motion to withdraw the petition for dissolution?

• A) Within fifteen (15) days from the receipt of the petition by the Commission.

• B) At any time before the Commission renders a final judgment dissolving the corporation.

• C) Before the expiration of the objection deadline set by the Commission.

• D) Prior to the publication of the order setting the deadline for filing objections.

d

A foreign corporation licensed in the Philippines (excluding banks and insurance companies) must deposit securities with the SEC. Under what specific circumstance does the SEC mandate a "top-up" of these deposited securities?

• A) When the actual market value of the deposited securities decreases by at least ten percent (10%) from their value at the time of deposit.

• B) When the corporation's gross income in the Philippines exceeds Five hundred thousand pesos (P500,000.00) in a single fiscal year.

• C) Whenever the corporation amends its articles of incorporation to pursue additional business purposes in the Philippines.

• D) If the corporation fails to notify the Commission of a change in its resident agent's registered address within 30 days.

a

If a licensed foreign corporation ceases to transact business in the Philippines or lacks a resident agent, legal summons may be served upon the SEC. What must the SEC do to legally complete this service of process?

• A) Publish the summons in a newspaper of general circulation for three consecutive weeks.

• B) Transmit a copy of the summons by mail to the corporation's home or principal office within ten (10) days.

• C) Withhold the corporation's security deposits until a representative appears to claim the summons.

• D) Forward the summons to the appropriate government agency that initially endorsed the corporation's license.

b

A foreign corporation has been transacting business in the Philippines without the required SEC license. A domestic supplier breaches a contract with them, and the foreign corporation wishes to sue. Meanwhile, a local customer wants to sue the foreign corporation for defective products. Which of the following is legally accurate?

• A) The foreign corporation can sue the supplier, but the local customer cannot sue the foreign corporation because it lacks legal personality.

• B) Neither party can file a lawsuit because the lack of a license completely invalidates all contracts made in the Philippines.

• C) The foreign corporation cannot sue the supplier, but the local customer is permitted to sue the foreign corporation in Philippine courts.

• D) Both the foreign corporation and the local customer are legally permitted to initiate their respective lawsuits in Philippine courts.

c

Two foreign corporations, both licensed in the Philippines, undergo a merger in their home country. Corporation X absorbs Corporation Y. Under the Revised Corporation Code, what specific action must Corporation Y (the absorbed entity) take in the Philippines?

• A) It must submit a solvency statement to the SEC proving that it has no outstanding liabilities to Philippine creditors.

• B) It must maintain its resident agent in the Philippines for a period of three years to handle pending lawsuits.

• C) It must deposit additional securities equivalent to 2% of the combined gross income of the merged entities.

• D) It must simultaneously file a petition for the withdrawal of its Philippine license along with the articles of merger.

d

If a corporation is ordered involuntarily dissolved by final judgment because it repeatedly and knowingly tolerated money laundering by its officers, what happens to its remaining assets after paying off its liabilities?

• A) They are escheated in favor of the national government upon petition by the SEC.

• B) They are held in trust by the SEC for a period of three years for any unknown creditors.

• C) They are distributed proportionally among the board of directors and executive officers.

• D) They are automatically returned to the corporation's original incorporators.

a

When a foreign corporation applies for a license, it must submit a certificate from its home jurisdiction proving reciprocity. If this certificate is in a foreign language, what is the strict procedural requirement for its translation?

• A) It must be translated into Filipino under oath by a representative of the Philippine consulate.

• B) It must be translated into English under oath by the translator and attached to the application.

• C) It must be translated into both English and Filipino by an SEC-accredited translation agency.

• D) It must be summarized in English by the corporation's designated resident agent.

b

During the winding up of corporate affairs, what happens to assets that are distributable to a creditor or stockholder who is unknown or cannot be found?

• A) The assets are divided equally among the remaining known stockholders of the corporation.

• B) The assets are retained by the appointed trustees indefinitely until the person is located.

• C) The assets are escheated in favor of the national government.

• D) The assets are donated to a charitable institution designated by the board of directors.

c

Before the SEC issues a certificate of withdrawal to a foreign corporation ceasing operations in the Philippines, the corporation must publish its petition for withdrawal. What is the required frequency and duration of this publication?

• A) Once a month for three consecutive months in any local newspaper.

• B) Twice a week for two consecutive weeks in a newspaper published in the principal office location.

• C) Daily for one full week in a newspaper of general circulation in the Philippines.

• D) Once a week for three consecutive weeks in a newspaper of general circulation in the Philippines.

d

True or False: During the three-year liquidation period following dissolution, a corporation is completely stripped of its corporate body status and may only act through a court-appointed receiver to settle its affairs.

f

True or False: A foreign corporation lawfully doing business in the Philippines is completely bound by all provisions of the Philippine Revised Corporation Code, including rules regarding the internal duties of its stockholders to each other.

f