BUSINESS LAWS AND REGULATIONS
1. There are two tests to determine the existence of a
partnership:
I. First Test: Determine whether or not there is an agreement to
contribute money, property, or industry to a common fund.
II. Second Test: Determine whether or not there is an intent of
the contracting parties to divide the profits among themselves.
a) Only I is true;
b) Both are false.
c) Only II is true;
d) Both are true;
2. It is not a requirement before one can qualify as a De facto
corporation.
a) The existence of a valid law under which it may be
incorporated;
b) An attempt in good faith to incorporate
c) Assumption of corporate powers
d) Extrajudicial court agreement
3. What shall happen if a corporation fails to formally organize
and commence its business within 5 years from the date of its
incorporation.
a) Certificate of incorporation shall be deemed revoke;
b) The corporation shall continue to exist as de Facto;
c) The incorporators shall be pursuit for crime of
negligence;
d) The articles of incorporation shall be reestablished
Feedback: Section 12, Revised Corporation Law
4. When two or more persons bind themselves to contribute
money, property, industry to a common fund, with the intention
of dividing the profits among themselves.
a) F.
b) Sole proprietorship;
c) Corporation;
d) Partnership;
5. These pertains to members of the board of directors in a
certain corporation who are also directors in another
corporation.
a) Interlocking directors;
b) Cross directors;
c) Interdependent directors;
d) Cross-company directors.
Feedback: Section 32, Revised Corporation Law
6. It pertains to an action brought by a stockholder on behalf of
the corporation to enforce corporate rights against the
corporation’s directors, officers or other insiders.
a) Derivative suit;
b) Criminal suit;
c) Governmental suit;
d) Corporate suit.
7. The following are the rights of partners, except:
a) Appraisal right
b) Rights in specific partnership property;
c) Interest in the partnership;
d) Right to participate in the management.
Feedback: Section 38, Revised Corporation Law
8. No member shall own more than what percent of the
subscribed share capital of a cooperative?
a) 15%
b) 20%
c) 10%
d) 5%
9. What type of cooperative member has no right to vote or be
voted upon and shall only be entitled to any such rights and
privileges as the bylaws may provide?
a) Disloyal member
b) Associate member
c) Loyal member
d) Regular member
10. It is an artificial being created by operation of law, having
the right of succession and the powers, attributes and
properties expressly authorized by law or incident to its
existence.
a) Cooperative
b) Partnership
c) Corporation
d) Joint Venture
11. In which of the following cases is the court not justified in
piercing the veil of corporate fiction?
a) When corporate fiction is used to commit fraud;
b) When the corporation is a mere instrumentality or alter
ego of the stockholders or owners;
c) When the corporate fiction is used to commit tax
evasion or to justify a wrong or to defend a crime;
d) When the subsidiary corporation is fully owned or fully
controlled by the parent corporation
12. It refers to the governing body of a corporation.
a) CEO, COO and CFO
b) Stockholders
c) Board of directors
d) Managers
Feedback: Section 22, Revised Corporation Law
13. For the purposes of quorum, a stockholder or member who
participates through remote communication or in absentia shall
be deemed:
a) Present
b) Absent
c) Emancipated
d) Incapacitated
Feedback: Section 23, Revised Corporation Law
14. It refers to a position that must be expressly mentioned in
the by-laws in order to be considered as it is.
a) Corporate officer
b) Manager
c) Incorporator
d) Stockholder
Feedback: Section 24, Revised Corporation Law
15. The preferred share of capital of a cooperative shall not
exceed what percent of its total authorized share capital?
a) 10%
b) 25%
c) 20%
d) 5%
16. It mandates that all corporations duly organized pursuant
thereto are required to submit to the SEC the names,
nationalities, shareholdings, and residences of the directors,
trustees and officers elected.
a) SEC
b) Penal code
c) Government agencies
d) Corporation code
Feedback: Section 25, Revised Corporation Law
17. The following pertains to the characteristics of a
corporation, except:
a) Created by operation of law;
b) Has a right of succession;
c) It is an artificial being;
d) It has the powers, attributes and properties not
expressly authorized by law or incidental to its
existence.
Feedback: Section 2, Revised Corporation Law
18. Which language shall corporations use in filing articles of
incorporation with the Commission?
a) Any language;
b) Any official language;
c) English only;
d) Tagalog and English.
19. Removal of directors or trustees may be:
a) With cause only
b) With or without cause
c) By a stated manager
d) By an official member
Feedback: Section 27, Revised Corporation Law
20. Its purpose is to enable the shareholder to retain his
proportionate control in the corporation.
a) Bond indebtedness;
b) Appraisal right;
c) Pre-emptive right;
d) Corporate right.
21. A partnership is not dissolved on the death of a:
a) General – Limited partner;
b) Limited partner;
c) Industrial partner;
d) General;
22. A sale of all or substantially all of the corporation’s
properties and assets must be authorized by:
a) Managers’ vote;
b) Officiating Officials’ vote;
c) Stockholder or members’ vote;
d) Creditor and CEO’s vote.
23. X and Y orally agreed to form a partnership. Each
contributed cash worth P15,000 to the common fund. But they
did not register the partnership with the Securities and
Exchange Commission.
a) The partnership is void;
b) The partnership is voidable;
c) The partnership is valid;
d) The partnership is unenforceable.
24. Those who cannot be held liable to third persons for
partnership obligations.
a) Capitalist partner;
b) Limited partner;
c) Industrial partner;
d) General partner.
25. A government corporation is normally created by:
a) General law;
b) Specific law;
c) Charter
d) Signifying law
Feedback: Section4, Revised Corporation Law
26. These refer to shares which are less than one share.
a) Single shares;
b) Corporate shares;
c) Fractional shares;
d) Medium shares.
27. An act outside or beyond corporate powers.
a) Ultra vires act;
b) Ultra virus act;
c) Intra vires act;
d) Ultra instinct.
28. It pertains to an action brought by a stockholder on behalf
of the corporation to enforce corporate rights against the
corporation’s directors, officers or other insiders:
a) Derivative suit;
b) Criminal suit;
c) Ban suit;
d) Corporate suit.
29. This refers to a person who brings about or cause to bring
about the information and organization of a corporation.
a) Incorporators
b) Underwriter
c) Corporate officers
d) Promoter
Feedback: Section 5, Revised Corporation Law
30. Which of the following statements is false concerning
treasury shares?
a) They are entitled to dividends;
b) They have no voting right;
c) They may be disposed of for a price lower than the par
value provided such price is reasonable;
d) They are not outstanding shares.
31. A, B and C are partners in ABC Company. D represented
himself as a partner in ABC Company to X, who, on the belief of
such representation, extended a P150,000 credit to ABC
Company. Assuming only B and C consented to such
representation, who will be held liable to X?
a) X extended the credit to ABC Company so a
partnership liability exists. Thus, all the partners A, B and
C, and D are liable;
b) B, C and D are partners by estoppel and, thus are
liable pro rata to X;
c) Partners A, B and C who benefited from the credit
extended by X are liable;
d) D who made the representation is liable to X.
32. The requirements for the sale or other disposition of assets
are the following, except:
a) Approval by the majority vote of its board of directors
or trustees;
b) Ratification by the vote of the stockholders
representing at least 2/3 of the outstanding capital
stock, or in case of non-stock corporation, by the vote
of at least 2/3 of the members;
c) Any dissenting stockholder may exercise his appraisal
right;
d) SEC approval is required.
33. This must be in the articles of incorporation
a) Classification of shares, their corresponding rights,
privileges, or restrictions, and their stated market value,
if any;
b) Classification of shares, their corresponding demands,
privileges, or restrictions, and their stated market value,
if any;
c) Classification of shares, their corresponding rights,
privileges, or restrictions, and their stated par value, if
any;
d) Classification of shares, their corresponding rights,
demands, privileges, or restrictions
34. In a universal partnership of all profits, the usufruct of the
properties and the naked title of the properties is with the:
a) Usufruct – Partner; Naked Title – Partner;
b) Usufruct – Partnership; Naked Title – Partnership;
c) Usufruct – Partner; Naked Title – Partnership;
d) Usufruct – Partnership; Naked Title – Partner.
35. A partnership is not dissolved on the death of a:
a) General partner;
b) Industrial partner;
c) General – Limited partner;
d) Limited partner.
36. A limited partner shall not become liable as a general
partner unless:
a) He takes part in the control of the business;
b) He contributes his services to the capital of the firm;
c) His surname appears in the partnership name;
d) The word “limited” is not added to the name of the
partnership;
e) All of the above.
37. The following persons are disqualified to form a universal
partnership. Who are the exceptions:
a) Brothers and Sisters;
b) Husband and wife;
c) Those guilty of adultery and concubinage;
d) Common law relationships.
38. I. The power to remove directors or trustees belongs to
the officers exclusively.
II. Removal of directors or trustees may be with or without
cause.
a)
b)
c)
d)
Only I is true;
Only II is true;
Both are true;
Both are false
39. 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.
40. The exclusive right to vote and be voted for in the election
of directors, if granted, it must be for a limited period which is:
a) Period not to exceed 5 years from the date of
corporation;
b) Period not to exceed 5 years from the date of
incorporation;
c) Period not to exceed 3 years from the date of
corporation;
d) Period not to exceed 3 years from the date of
incorporation.
Feedback: Section 7, Revised Corporation Law
41. I. Any director or trustee of a corporation shall be removed
from office only with cause;
II. Any director or trustee of a corporation may be
removed from office without cause.
a) Only I is correct;
b) Only II is correct;
c) Both are true;
d) Both are false.
42. Vacancies in the board of directors due to disqualification
may be filled by:
a) Stockholders if there is a quorum;
b) Remaining directors if there is no quorum,
c) Remaining directors if there is a quorum;
d) Both the remaining directors and stockholders should
vote regardless whether constituting a quorum..
43. It is one where persons, by words spoken or written or by
conduct represent themselves, or consents to another
representing them to anyone, as partners in an existing
partnership or with one or more persons not actual partners.
a) Partnership by estoppel;
b) Partnership by prescription;
c) Closed partnership;
d) Partnership sole.
44. A is the capitalist partner and B the industrial partner. A
engaged personally in the same kind of business the
partnership is engaged in:
a) If there are losses, the partnership will bear the losses;
b) If there are profits, the profits will be shared by A and
the partnership;
c) If there are profits, A will give the profits to the
partnership;
d) A will be excluded from the partnership and pay
damages.
45. A and B are partners with A as the managing partner. X
owes A P100,000 and the partnership P300,000 which are now
both due. A issued a receipt for the payment of X in the
amount of P100,000 in his own name. The payment shall be
applied to:
a) The partnership credit totally;
b) The credit of A only since the receipt is in his name;
c) The payments shall be applied proportionately to both
credits;
d) The payment shall be applied equally in both credits.
46. A person with a single stockholder is considered
a) One person corporation
b) Single person corporation
c) Lonely person corporation
d) Elected person corporation
Feedback: Section 10, Revised Corporation Law
47. Within stock corporations, minimum authorized capital
stock is:
a) Required
b) Not required
c) Fixed
d) Definite
Feedback: Section 12, Revised Corporation Law
48. A and B are capitalist partners while Gelter is an industrial
partner. There is no agreement as to the profits and losses. The
partnership realized profit in the amount of P150,000. The share
of Gelter in the profits shall be:
a) A and B will determine Gelter’s share in the profits
b) Just and equitable under the circumstances;
c) Gelter’s share shall be P150,000;
d) Pro rata to his contributed capital.
49. The essential requisites in the formation of a limited
partnership are the following: I. The certificate of limited
partnership; and II. The certificate of limited partnership must be
filed in the Office of the Securities and Exchange Commission
a) Only I is true;
b) Both are true;
c) Only II is true;
d) Both are false.
50. The surname of a limited partner shall not appear in the
partnership name, unless: I. It is also the surname of a limited
partner; and II. Prior to the time when the limited partner
became such, the business has been carried on under a name
in which his surname appeared.
a) Only I is true;
b) Only II is true;
c) Both are true;
d) Both are false.
51. The change in the relation of the parties caused by any
partner ceasing to be associated in the carrying on, as might
be distinguished from the winding up of the business.
a) Liquidation;
b) Termination;
c) Winding – up
d) Dissolution.
52. I. Well settled is the principle that the corporate mask may
be removed or the corporate veil pierced when
the corporation is just an alter ego of person or of
another corporation.
II. It is a basic principle in Corporation Law that a
corporation has a personality which is the same as
the officers or members who compose it.
a)
b)
c)
d)
Only I is true;
Only II is true;
Both are true;
Both are false.
53. The following are the characteristics of a corporation,
except:
It is an artificial being;
a) Created by meeting of the minds;
b) It has the right of succession;
c) It has the powers, attributes and properties expressly
authorized by law or incident to its existence.
54. They may be purchased or taken up by the corporation
upon the expiration of a fixed period, regardless of the
existence of unrestricted retained earnings in the books of the
corporation, and upon such other terms and conditions as may
be stated in the articles of incorporation, which terms and
conditions as must also be stated in the certificate of stock
representing said shares.
a) Par value stock;
b) No par value stock
c) Redeemable stock;
d) Class A stock.
55. Natural persons who are not licensed to practice a
profession, and partnerships or associations organized for the
purpose of not practicing a profession, shall not be allowed to
organize as a corporation.
a) True
b) False
56. Preferred shares may be issued only with a stated par value.
a) True
b) False
57. Banks are allowed to issue no par value shares.
a) True
b) False
Feedback: Section 6, RCC. Not permitted to issue
58. Non-voting shares are absolutely not entitled to vote.
a) True
b) False
Feedback: Section 6, RCC.
59. Holders of redeemable shares may not be deprived of
the right to vote.
a) True
b) False
Feedback: Section 6, RCC.
60. As a rule, each share shall have equal rights in all
respects to every other share,
a) True
b) False
61. A corporation can only exercise powers that are
expressly authorized by law.
a) True
b) False
Feedback: Section 2 of the Revised Corporation
Law includes powers that are incidental to
the express powers as authorized by law
62. A partnership transacting business with third persons is
disputably presumed to be a limited partnership.
a) True
b) False
c) Tralse
63. The contributions of a limited partner may be cash or
property, but not services.
a) True
b) False
c) Tralse
64. No-par value shares must be issued for a consideration of at
least P5.00 per share
a) True
b) False