TITLE III – BOARD OF DIRECTORS/TRUSTEES AND OFFICERS
1. I. Stockholders or members periodically elect the board of directors or trustees, who are
charged with the management of the corporation.
Il. Stockholders or members also elects officers to carry out management functions on a day
to-day basis.
a. Only I is true
b. Only Il is true
c. Both are true
d. Both are false
2. I. Acts of management pertain to the stockholders or members.
Il. Acts of ownership pertain to the board.
a. Only I is true
b. Only Il is true
c. Both are true
d. Both are false
3. I. Once the directors or trustees are elected, the stockholders or members relinquish corporate
powers to the board in accordance with law.
Il. Contracts intra vires entered into by the board of directors are binding upon the corporation.
a. Only I is true
b. Only Il is true
c. Both are true
d. Both are false
4. I. Every director must own at least 100 share of the capital stock of the corporation of which he
is a director, which share shall stand in his name on the books of the corporation.
Il. Trustees of non-stock corporations must be members thereof.
a. Only I is true
b. Only Il is true
c. Both are true
d. Both are false
5. I. The governing body of a corporation is its board of directors.
Il. The board of directors of a corporation is a creation of law.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
6. I. It is well settled in this jurisdiction that where corporate directors are guilty of a breach of trust,
a stockholder may institute a suit in behalf of himself and other stockholders and for the
benefit of the corporation.
Il. The board of directors (or trustees, in case of non-stock corporations) has the sole authority
to determine policies, enter into contracts, and conduct the ordinary business of the
corporation within the scope of its charter.
a. Only I is true
b. Only Il is true
c. Both are true
d. Both are false
7. A corporation's board of directors is understood to be that body which, except:
a. Exercises all powers provided for under the Corporation Code.
b. Conducts all business of the corporation.
c. Controls and holds all property of the corporation.
d. None of the above.
8. I. The property of the corporation is not the property of its stockholders or members; however,
it may be sold by the stockholders or members.
Il. The power and responsibility to decide whether a corporation can enter into a binding
contract is lodged with the board of directors.
a. Only I is true
b. Only Il is true
c. Both are true
d. Both are false
9. The following are the qualifications of a board of director/trustee, except:
a. For a stock corporation, ownership of at least 1 share of the capital stock of the
corporation in his own name. For a non-stock corporation, only members of the
corporation can be elected.
b. Majority of the board of directors or trustees must be citizens of the Philippines.
c. The director or trustee must be capacitated.
d. The director or trustee must be of legal age.
10. I. The board of the following corporations vested with public interest shall have independent
directors constituting at least 10% of such board.
ll. Independent directors must be elected by the other directors present or entitled to vote in
absentia during the election of directors.
a. Only I is true
b. Only Il is true
c. Both are true
d. Both are false
ll. It is a person who, apart from shareholdings and fees received from the corporation, is
independent of management and free from any business or other relationship which could, or
could reasonably be perceived to materially interfere with the exercise of independent
judgment in carrying out the responsibilities as a director.
a. Dependent director
b. Independent director.
c. Authorized director.
d. Outstanding director.
12. I. The acts of corporate officers within the scope of their authority are binding on the
corporation.
Il. Any 2 or more positions may be held concurrently by the same person, except that no one
shall act as president and secretary or as president and vice-president at the same time.
a. Only I is true
b. Only Il is true
c. Both are true
d. Both are false
13. I. The power to remove directors or trustees belongs to the officers exclusively.
Il. Removal of directors or trustees may be with or without cause.
a. Only I is true
b. Only Il is true
c. Both are true
d. Both are false
14. The requisites for removal of directors are the following, except:
a. The removal should take place at a regular or special meeting duly called for the
purpose.
b. The director or trustee can only be removed by a vote of the stockholders
representing at least majority of the outstanding capital stock or majority of the
members entitled to vote in case of non-stock corporations.
c. There must be a previous notice to stockholders or members of the corporation of the
intention to propose such removal at the meeting.
d. The special meeting of the stockholders or members of a corporation for the purpose of
removal must be called by the secretary on order of the president or on the written
demand of the stockholders representing or holding at least a majority of the
outstanding capital stock or a majority of the members entitled to vote.
15. I. The directors of a corporation shall not receive any compensation for being members of
the board of directors, except for reasonable per diems.
Il. In no case shall the total yearly compensation of directors, as such directors, exceed 10%
of the net income after income tax of the corporation during the preceding year.
a. Only I is true
b. Only Il is true
c. Both are true
d. Both are false
16. I. The general rule is that obligations incurred by the corporation, acting through its directors,
officers and employees, are its sole liabilities, and vice versa.
Il. A contract of the corporation with one or more of its directors or trustees or officers is void.
a. Only I is true
b. Only Il is true
c. Both are true
d. Both are false
17. A contract of the corporation with one or more of its directors or trustees or officers.
a. Doctrine of self-dealing board of directors
b. Doctrine of corporate opportunity
c. Doctrine of double compensation
d. Doctrine of trust fund
18. The requisites for a contract of the corporation with one or more of its directors or trustees or
officers to be valid are the following, except:
a. That the presence of such director or trustee in the board meeting in which the
contract was approved was not necessary to constitute a quorum for such meeting.
b. That the vote of such director or trustee was not necessary for the approval of the
contract.
c. That the contract is fair and reasonable under the circumstances.
d. That in case of an officer, the contract has been previously authorized by the
stockholders.
19. A director, by virtue of his office, acquires for himself a business opportunity which should
belong to the corporation, thereby obtaining profits to the prejudice of such corporation, he
must account to the latter for all such profits by refunding the same.
a. Doctrine of self-dealing board of directors
b. Doctrine of corporate opportunity
c. Doctrine of double compensation
d. Doctrine of trust fund
20. It is a body created by the by-laws and composed of not less than three members of the
board which, subject to the statutory limitations, has all the authority of the board of directors
to the extent provided in the by-laws.
a. Board committee
b. Trust committee
c. Officers' committee
d. Executive committee
21. The following are the limitations of an executive committee, except:
a. Approval of any action for which shareholders' approval is also required.
b. Filling of vacancies in the board.
c. Amendment or repeal of by-laws or the adoption of new by-laws.
d. Amendment or repeal of any resolution of the board.
22. l. The executive committee may act, by 2/3 vote of all its members.
ll. The act of a director violating the doctrine of corporate opportunity can be ratified by a vote
of the stockholders owning or representing at least majority of the outstanding capital
stock.
a. Only I is true
b. Only Il is true
c. Both are true
d. Both are false
23. I. A stockholder or member who participates through remote communication or in absentia,
shall be deemed present for purposes of quorum.
Il. The directors or trustees elected shall perform their duties as prescribed by law, rules of
good corporate governance, and bylaws of the corporation.
a. Only I is true
b. Only Il is true
c. Both are true
d. Both are false
24. Immediately after their election, the directors of a corporation must formally organize and
elect:
a. A president, who must be a director.
b. A treasurer, who must be a resident.
c. A secretary, who must be a citizen and resident of the Philippines
d. All of the above.
25. I. If the corporation is vested with public interest, the board shall also elect a compliance
officer.
Il. The officers shall manage the corporation and perform such duties as may be provided in
the bylaws and/or as resolved by the board of directors.
a. Only I is true
b. Only Il is true
c. Both are true
d. Both are false
26. A person shall be disqualified from being a director, trustee or officer of any corporation if,
within 5 years prior to the election or appointment as such, the person was:
a. Convicted by final judgment of an offense punishable by imprisonment for a period
exceeding 6 years.
b. Found administratively liable for any offense involving fraudulent acts
c. Found by a foreign court or equivalent foreign regulatory authority for acts, violations
or misconduct.
d. All of the above.
27. A person shall be disqualified from being a director, trustee or officer of any corporation if,
within 5 years prior to the election or appointment as such, the person was convicted by final
judgment.
a. Of an offense punishable by imprisonment for a period exceeding 6 years;
b. For violating the Revised Corporation Code.
c. For violating The Securities Regulation Code.
d. All of the above.
28. The SEC shall, motu proprio or upon verified complaint, and after due notice and hearing,
order the removal of a director or trustee elected despite the disqualification, or whose
disqualification arose or is discovered subsequent to an election.
The removal of a disqualified director shall be without prejudice to other sanctions that the
SEC may impose on the board of directors or trustees who, with knowledge of the
disqualification, failed to remove such director or trustee.
a. Only I is true
b. Only Il is true
c. Both are true
d. Both are false
29. I. Any vacancy occurring in the board of directors or trustees other than by removal or by
expiration of term may be filled by the vote of at least a majority of the remaining directors
or trustees, if still constituting a quorum.
Il. Any directorship or trusteeship to be filled by reason of an increase in the number of
directors or trustees shall be filled only by an election at a regular or at a special meeting
of stockholders or members duly called for the purpose, or in the same meeting
authorizing the increase of directors or trustees if so stated in the notice of the meeting.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
30. When the vacancy prevents the remaining directors from constituting a quorum and
emergency action is required to prevent grave, substantial, and irreparable loss or damage
to the corporation, the vacancy may be temporarily filled from among the officers of the
corporation by unanimous vote of the remaining directors or trustees.
a. Emergency board of director
b. Temporary board of director
c. Provisional board of director
d. Interim board of director