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NATIONAL COLLEGE OF BUSINESS AND ARTS Cubao-Fairview-Taytay FIRST SEMESTER SY 2019-2020 MIDTERM DEPARTMENTAL EXAMINATIONS BUSINESS LAW 2

2 HRS LAWS ON BUSINESS ORGANIZATION

INSTRUCTIONS:Select the correct answer for each of the following questions. Mark only one answer for each item by shading the corresponding letter of your choice on the answer sheet provided. STRICTLY NO ERASURES ALLOWED. Use Pencil No. 2 only. PART I For Numbers 1 – 15, determine if: A. TRUE B. FALSE 1. 2. 3. 4.

5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

A universal partnership of all present property comprises only all that the partners may acquire by their work or industry during the existence of the partnership. Common shareholders shall not be deprived of their right to vote The partner appointed manager can execute all acts of administration despite the opposition of his other partners unless he will act unreasonably. The common property of a universal partnership shall be all the properties which shall belong to each of the partners at the time of the constitution of the partnership as well as the properties which each may acquire thereafter. All partners except industrial ones are liable pro rate for the contractual liabilities of the partnership Persons who are prohibited by law to donate to each other cannot enter into partnership contracts. When an unlawful partnership is dissolved, the profits acquired therefrom will be confiscated in favor of the state. No person convicted of violating the Corporation Code shall qualify as a director All incorporators are corporators The owner of founder shares may be given the exclusive right to vote and be voted for in the election of director for a limited period not exceeding 3 years Treasury shares sold for less than par or issued value are considered watered stocks and as such are prohibited by law Preferred shares of stocks may be issued with or without a stated par value. Members are entitled to receive cash dividends Redeemable shares may be redeemed even without available unrestricted retained earnings All persons who assume to act as a corporation knowing it to be without authority to do so shall be liable as limited partners for all debts, liabilities and damages incurred or arising as results thereof.

PART I – MULTIPLE CHOICE 16.

How many numbers of votes of the Board of Directors are required to change the name of a corporation? A. 2/3 vote of all members of the Board; B. 2/3 vote of all present; C. Majority of all present D. Majority vote of the Board.

17.

The authorized capital stock of a proposed corporation is P70,000 divided into 700 shares with a par value of P100 each. Under the corporation code, the minimum amount of subscription that must be paid is: A. P 4,375 C. P 5,100 B. P 17,500 D. P 5,000

18.

The nationality of the corporation is determined by the laws of its domicile or place of principal business. This test is known as: A. The control theory C. The incorporation theory B. The full absorption theory D. The management theory

19.

This group of persons may not form a corporation or be incorporators in a corporation in the Philippines under the corporation code. A. Fifteen Spanish citizens who are residents of Manila.

F F F F F F T F T F F F F T F

B.

Ten resident aliens and four aliens in Singapore.

BUSINESS LAW 2 LAWS ON BUSINESS ORGANIZATION C. Eleven Filipinos who are residents of San Francisco, California. D. Seven Americans residing in the Philippines and two Filipinos residents of Hawaii. 20.

For purposes of interlocking directors, the stockholdings shall be considered substantial if: A. Exceeding 10% of the authorized capital stock B. Exceeding 10% of the outstanding capital stock C. Exceeding 20% of the authorized capital stock D. Exceeding 20% of the outstanding capital stock

21.

1st statement -For a de facto corporation to exist, it is necessary that it is issued by the SEC a certificate of incorporation just like a de jure corporation. 2nd statement - In a corporation by estoppel, those who represent themselves as forming by a corporation are liable as stockholders to third persons. A. First statement is true, second is false B. First is false, second is true C. Both are false D. Both are true

22.

1st statement - Redeemable shares may be taken up or purchased by the corporation even in the absence of surplus profits. 2nd statement - Treasury shares may be reissued for a reasonable price even below par value. A. Both statements are false C. Only the first is true B. Both are true D. Only the first is false

23.

The person cannot be admitted into the partnership without the consent of A. All the partners C. 2/3 of the partners B. Majority of the partners D. Partners representing the controlling interest

24.

After ten years, five out of the nine incorporators who organized the corporation and signed the articles of incorporation died. The corporation is A. Dissolved as there will only be four left which is below the minimum of five incorporators B. Dissolved as the Corporation Code requires that the incorporators be alive during the operation of the business C. Not dissolved as it still has forty years left in its term D. Not dissolved as it enjoys the right of succession

25.

They are issued to those who helped in incorporating the company or for services rendered in launching the welfare of the company: A. preferred stocks C. founders stock B. stock in escrow D. promotion Stocks

26.

Any director of a corporation may be removed from office by a vote of the stockholders holding or representing: A. majority of the stockholders present during the meeting B. ¾ of the outstanding capital stock entitled to vote C. 2/3 of the outstanding capital stock entitled to vote D. majority of the outstanding capital stock entitled to vote

27.

One of the following is not required and does not form part of the three-fold duty of directors of a corporation. Which one? A. Duty of Diligence C. Duty of Loyalty B. Duty of Obedience D. Duty of Dependability

28.

Private corporations which have accepted from the State the grant of a franchise or contract involving the performance of public duties is called: A. Quasi-public corporation C. Quasi-corporation B. Ecclesiastical corporation D. Eleemosynary corporation

29.

Three of the following corporations are not authorized to issue no-par-value shares of stock. Which one is the exception? A. Educational institutions C. Insurance companies B. Trust Companies D. Public utilities

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BUSINESS LAW 2

LAWS ON BUSINESS ORGANIZATION

30.

The corporation has a twelve-member board. Two of the members of the Board have sold their shares while three others are abroad. To have a quorum, this number is required: A. Seven B. Five C. Six D. Four

31.

The stockholders or members mentioned in the Articles of Incorporation originally forming and composing the corporation and who are signatories thereof are called: A. incorporators C. subscribers B. stockholders D. corporators

32.

Under the corporation code, the following are the qualifications of incorporators. Choose the exceptions A. Majority of whom must be Filipinos. B. Majority of whom are residents of the Philippines C. All are of legal age. D. Natural persons, not less than five but not more than 15.

33.

This is a written acknowledgement by the corporation of an interest of a stockholder in the corporate property and franchise: A. Proxy C. Share of stock B. Certificate of stock D. Capital stock

34.

Under the corporation code, the corporation shall be deemed dissolved and its corporate powers cease, if from the date of its incorporation, it does not formally organize and commence the transaction of its business within: A. 4 years B. 3 years C. 2 years D. 5 years

35.

Which of the following will qualify as an incorporator of a corporation under the corporation code? A. A minor C. Partnership B. A corporation D. Foreigner

36.

Under the corporation code, majority of the following must residents of the Philippines, except: A. Members of the board of directors C. Incorporators B. Members of the board of trustees D. Officers

37.

In case a managing partner collects a demandable debt from his debtor who also owes the partnership a demandable debt, which of the following is not correct if payment is not enough to cover the two debts? A. The sum collected shall be applied to the partnership credit B. It shall be applied to the two credits in proportion to their amounts C. The debtor has the right to have the payment applied to his debt to the partner if it should be onerous to him D. The partner cannot apply the payment to his own credit

38.

Statement 1- A director is removed from office by a vote of the stockholder or representing at least 2/3 of outstanding capital stock. The vacancy occasioned by such removal can be filled by the vote of at least a majority of the remaining directors if still constituting a quorum Statement 2-Treasury shares sold for less than par or issued value are considered “watered stock” and as such are prohibited by law. A. True, true B. True, false C. False, true D. False, false

39.

Delectus personae is an element of a partnership which means A. Right to choose his partners C. Obligation to remain loyal to his partners B. Confidence and trust in his partners D. Distribution of profits among the partners

40.

When a real property is contributed to the partnership A. A real contract is perfected B. A written instrument is required C. A public instrument complete with inventory is required D. A partner can make important alteration if beneficial to the partnership

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