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WorksheetsR corp 3
Total questions: 43
Worksheet time: 22mins
What is the role of an Independent Director?
To increase profits
To manage daily operations
To protect minority shareholders
To represent majority shareholders
What percentage of the board must be composed of independent directors in certain corporations?
20%
30%
10%
50%
Which of the following is NOT a qualification for Independent Directors?
Hold only one share of the company
Not be a substantial shareholder
Not be a relative of any director
Have prior experience as an officer
How long is the general term of office for Independent Directors?
3 years
2 years
5 years
1 year
What is required if a vacancy occurs in the board?
The position remains vacant indefinitely
Immediate election of a new director
Board may elect a replacement with SEC approval
No action is needed
Who elects directors in a stock corporation?
The corporate secretary
The SEC
The board of directors
The shareholders
What is the quorum requirement for a valid election?
All shareholders must be present
At least 75% of shareholders
At least majority of outstanding capital stock
At least one-third of shareholders
What happens if no valid election is held?
New directors are appointed by the SEC
A new election is automatically scheduled
Current directors continue in a holdover capacity
The corporation is dissolved
Who can remove a director in a stock corporation?
The SEC
Stockholders owning at least 2/3 of the outstanding capital stock
The chairman of the board
Any shareholder
What is a ground for removal of a director?
Discrimination
Failure to attend meetings
None of the above
Being a relative of another director
What is required for the removal process?
All of the above
A quorum must be present
A written notice must be sent
A special meeting must be called
What is the effect of cumulative voting?
It allows shareholders to concentrate votes on one candidate
It requires all votes to be split evenly
It eliminates the need for a quorum
It allows directors to vote on their own removal
What is the maximum allowable term for Independent Directors?
7 years
5 years
9 years
10 years
What must be included in the report of election to the SEC?
List of elected directors
Financial statements
Shareholder complaints
All of the above
What is the consequence of failing to hold regular elections?
The corporation is dissolved
The SEC may impose sanctions
Shareholders lose their rights
Directors are automatically removed
What is the definition of a vacancy?
A position that is filled
A seat that becomes unfilled
A temporary absence of a director
A resignation without notice
Who can fill a vacancy in the board of directors?
Any interested party
The shareholders
The remaining directors by majority vote
The SEC
What is the maximum compensation for directors?
15% of total revenue
10% of net income before tax
No limit on compensation
5% of net income
What constitutes disloyalty in a director?
Voting on corporate matters
Using position for personal gain
Attending board meetings
Acting in the best interest of the corporation
What is the Business Judgment Rule?
Directors are liable for poor decisions
Directors must always consult shareholders
Directors cannot make risky investments
Courts will not second-guess honest decisions made in good faith
What is the liability of directors for gross negligence?
They are not liable
They can be removed without cause
They are personally liable
They are only liable if shareholders approve
What is required for a valid certificate of stock?
It does not need to be recorded
It must be signed by the president
It can be issued without a corporate seal
It must be issued without payment
What are watered stocks?
Stocks that are not transferable
Stocks that are fully paid
Stocks issued for less than their par value
Stocks issued for their full value
What happens if a shareholder fails to pay for their subscribed shares?
They lose their shares immediately
They can pay later without penalty
Their shares may be declared delinquent and sold
They retain all rights to the shares
What is the process for selling delinquent shares?
They can be sold without notice
A public auction must be conducted
They can be transferred to other shareholders
They are automatically forfeited
What is alienation of shares?
The act of transferring ownership of shares
The process of issuing new shares
The act of dissolving a corporation
The process of removing a director
What records must corporations keep?
No records are required
Only financial statements
Articles, by-laws, and minutes of meetings
Only stockholder names
What is the effect of unjust refusal to inspect corporate records?
No consequences
The corporation may be liable for damages
The records are sealed permanently
The corporation is dissolved
What are the modes of dissolution for a corporation?
Voluntary and involuntary
Only involuntary
Only voluntary
By shareholder vote only
What is the purpose of liquidation?
To increase shareholder profits
To dissolve the board of directors
To continue business operations
To collect assets and pay debts
What is a non-stock corporation?
A corporation that is dissolved
A corporation formed for non-profit purposes
A corporation formed for profit
A corporation that issues shares
What is an educational corporation?
A corporation that operates for profit
A corporation formed for educational purposes
A corporation that issues shares
A corporation that is dissolved
What is a One Person Corporation (OPC)?
A corporation with multiple shareholders
A corporation with a single stockholder
A corporation that cannot operate legally
A corporation that is dissolved
What must foreign corporations obtain to operate in the Philippines?
No requirements
A partnership with a local firm
Approval from local government
A license from the SEC
What is the consequence of operating without a license?
No consequences
The corporation can be fined
The corporation can sue in court
The corporation is automatically dissolved
What is the effect of a foreign corporation's license?
It gives them juridical personality in the Philippines
It allows them to operate without restrictions
It allows them to avoid taxes
It exempts them from local laws
What is the purpose of the nominee in an OPC?
To approve contracts
To represent shareholders in meetings
To take over in case of death or incapacity
To manage the corporation indefinitely
What is the liability of an OPC owner?
No liability at all
Limited to company assets unless fraud is proven
Liability is shared with all shareholders
Unlimited liability for all debts
What is required for a corporation to convert to an OPC?
Approval from all shareholders
Following SEC procedures
A new business plan
No requirements
What is the effect of interlocking directors?
Allows for easier decision-making
No effect on contracts
Increases corporate profits
Requires special scrutiny to avoid conflicts
What is the purpose of executive committees?
To replace the board of directors
To manage specific tasks
To approve by-laws
To handle all corporate decisions
What is the quorum requirement for board meetings?
At least one-third of directors
At least majority of directors
All directors must be present
No quorum is needed
What is the rule on abstention during voting?
Abstentions are not allowed
Abstentions count as votes
Abstentions do not count as votes
Abstentions reduce the quorum
