FATHER SATURNINO URIOS UNIVERSITY

ACCOUNTANCY PROGRAM

ACCOUNTING INTENSIVE REVIEW (AIR)

REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS

Topic: CORPORATION

228. What is the requirement before a stock transfer agent or 236. The following are the limitations on the right of
one engaged principally in the business of registering transfer inspection, except:
of stocks in behalf of a stock corporation to operate in the a. The right must be exercised during reasonable
Philippines? hours on business days.
a. There must be a license renewable annually b. The person demanding the right has not improperly
from SEC and payment of registration fees. used any information obtained through any previous
b. The agent must be a corporation. examination of the books and records of the
c. The agent must be a sole proprietor. corporation.
d. The agent must be a partnership. c. The demand is made in good faith or for legitimate
purpose.
229. What is the effect if an officer or agent without justifiable d. The demand must always be made by the
reason refuses to allow any director or stockholder to examine stockholders only.
and copy excepts from its corporate record or meetings? 237. It refers to a business combination whereby one or more
a. Such officer or agent is liable for civil damages. existing corporations are absorbed by another corporation
b. Such officer or agent is liable criminally for which survives and continues the combined business. Merger
violation of Corporation Code
c. Both A and B 238. It refers to a business combination whereby two or more
d. Neither A nor B existing corporations form a new corporation different from the
230. The following are the persons given the right to inspect combining corporation? Merger
corporate books, except
a. Any director, trustee, stockholder or member 239. Which of the following is not a requisite for merger or
b. Delinquent stockholder in all cases consolidation?
c. Voting trust certificate holder a. It must be approved by the board of each
d. Stockholder of a sequestered company corporation by majority vote.
e. Beneficial owner of shares b. There must be ratification by vote of stockholders
231. What is the period for the compliance by the corporation representing 2/3 of outstanding capital stock or
of the demand by a stockholder of its most recent financial members.
statement? c. There must be approval by the Securities and
a. Within 10 days from receipt of written demand Exchange Commission.
b. Within 20 days from receipt of written demand d. There must be consent or approval of the
c. Within 30 days from receipt of written demand creditors of the corporation.
d. Within 60 days from receipt of written demand 240. When one corporation buys all the shares of another
232. When shall the board of directors present to the corporation, what is the effect, as a general rule?
stockholders the financial report of the operation of the a. This will result automatically to merger.
corporation for the preceding year which shall include b. This will result automatically to consolidation.
financial statements duly signed and certified by an c. This will operate to dissolve the acquired
independent CPA? corporation.
a. In every special meeting called by the President d. The entities will maintain their separate entities
b. At the regular meeting of stockholders and one will not answer for the debts of the
c. At the end of the year other.
d. At the April 15 of the succeeding year 241. A corporation shall be liable to the liabilities of another
233. How much is paid-up capital of the corporation for the corporation in the following cases, except:
financial statements to be required to be audited by CPA a. If the purchase was in fraud in creditors.
under Corporation Code? b. If the purchase results to control or significant
a. At least P50,000 influence.
b. At least P100,000 c. If there is an express assumption of liabilities.
c. At least P1,000,000 d. If there is a consolidation or merger.
d. At least P500,000 e. If the purchaser is merely a continuation of the
234. If the paid-up capital of the corporation is less than P50, seller.
000, what minimum financial statements may be presented to 242. In which of the following types of acquisition shall be the
be stockholders? purchaser be liable to the debts of the acquiree?
a. At Least audited by CPA who is a sole practitioner a. Asset-level only which involves property only
b. At least audited by a notary public purchase
c. At least audited by a bid auditing film b. Business-enterprise level which involves
d. At least certified under oath by the corporate business-enterprise level.
treasurer or other responsible officer c. Equity level which involves share purchase.
235. The following are the rights of stockholders to corporate 243. The following are the legal effects of merger or
books and records except: consolidation, except:
a. Right of inspection a. There is automatic assumption of the liabilities of the
b. Right to demand a list of stockholders absorbed corporation or constituent corporations
c. Right to duplication of trade secrets which are dissolved.
d. Right to demand a detailed auditing of business b. The absorbed or constituent corporations are ipso
expenditures facto dissolved by operation of law without necessity
e. Right to examine books of the corporations of any further act or deed.
subsidiary c. It permits the transfer of the assets to the purchaser
f. Right to financial statements and the distribution of the consideration received in
a single operation.
AIR 2017 – Regulatory Framework for Business Transactions Page 1 of 7
 d. It involves exchanges of properties, a transfer of the 249. How many days from the approval or decision of the
assets of the constituent corporations in exchange appraisers of stocks shall the amount be paid to the
for securities in the new or surviving corporation but dissenting shareholders? 30 days
neither involves winding up of the affairs of the
constituent corporations in the sense that their 250. What is the valuation date for the determination of fair
assets are distributed to the stockholders. value of shares in the exercise of appraisal right?
e. Consent of the creditors is necessary and a. Day on which the vote was taken
required. b. Subsequent day of the date on which the vote was
244. What is the affectivity date of the merger or taken
consolidation? c. Prior day of the date on which the vote was
a. Date of submission of the articles of merger or taken
consolidation to the SEC. d. Date of declaration of dividends
b. Upon publication of the articles of merger or 251. The following are the effects of exercise of appraisal
consolidation. right, except:
c. 2 weeks after the publication of the articles of a. All rights accruing to such shares shall be
merger or consolidation. suspended from time of demand for payment of the
d. Date of issuance by SEC of certificate of merger fair value of the shares until either the abandonment
or consolidation. of the corporate action.
245. It refers to the rights to demand payment of the fair value b. The dissenting stockholder shall be entitled to
of his shares, after dissenting from a proposed corporate receive payment of the fair value of his shares.
action involving a fundamental change in the corporation in c. Upon payment of the fair value of shares, all the
the cases provided by law. Appraisal right rights of dissenting stockholders are terminated and
not merely suspended.
246. The following are the instances where appraisal right is d. If the dissenting shareholder is not paid the fair
available, except: value of the shares within 30 days from the award,
a. An amendment to the articles that has the effect of his voting and dividend rights shall be immediately
changing or restricting the rights of shareholder, or restored.
of authorizing preference over those of outstanding e. A dissenting shareholder who demands
shares or changing the term(shortening or payment of fair value of his shares is allowed to
extending) of corporate existence. withdraw from his decision even without the
b. Sale, encumbrance or other disposition of all or consent of the corporation.
substantially all of the corporate property or assets. 252. Who shall bear the cost and expenses of appraisal of the
c. Investment of corporate funds in another corporation fair value of the shares of a dissenting shareholder?
or in a purpose other than the primary purpose. a. Dissenting stockholder unless stipulated
d. Increasing or decreasing authorized capital b. Always corporation
stock or incurring/increasing bond c. Always dissenting stockholder
indebtedness. d. Corporation except when the price offered by
e. Merger or consolidations the corporation approximates the fair value
f. In a close corporation, a stockholder may for any determined by the appraiser.
reason, compel corporation to purchase his shares 253. It is a corporation where no part of its income is
when the corporation has sufficient assets in its distributable as dividends to its members.= Non stock
books to cover its debts and liabilities exclusive of corporation
capital stock.
247. Which of the following statements concerning the 254. Which of the following are the requisites of a non-stock
exercise of appraisal right is incorrect? corporation?
a. Payment may be made regardless of the a. It does not have a capital stock dividend into shares.
presence of unrestricted retained earnings of the b. No part of whose income is, during its existence,
corporation. distributable as dividends to its members, trustees,
b. The dissenting stockholder shall make a written or officers.
demand on the corporation within 30 days after the c. Bot A & B
date on which the vote was taken for the payment of d. Neither A nor B
the fair value of his shares. 255. Which of the following statement is true?
c. Price must be based on fair values as of day prior to a. A stock corporation may be converted to Non-
date on which vote was taken. stock Corporation by mere amendment of
d. Stockholder must transfer his shares to the articles of incorporation.
corporation upon payment by the corporation. b. A non-stock corporation may be converted to Stock
e. The withdrawing stockholder must submit his shares Corporation by mere amendment of articles of
to the corporation for notation of being dissenting incorporation.
stockholder within 10 days from his written demand. c. Both A & B
248. If within 60 days from the approval of corporation action d. Neither A nor B
by stockholders, the dissenting stockholder and the 256. How can a non-stock corporation be converted to Stock
corporation cannot agree on the fair value of the shares, who Corporation?
shall determine the price of shares? a. By mere amendment of articles of incorporation
a. Three disinterested persons, one named by the b. By dissolving the corporation and forming a new
stockholder, one name by the corporation and one
the third chosen by the two whose decision by c. By contractual agreement among the shareholders
majority is binding and final. d. By amendment of by-laws
b. The dissenting shareholder 257. The following statements pertaining Stock Corporation
c. The Securities and Exchange Commission are correct, except:
d. The Commercial Court a. Owners may deprive of the right to vote by proxy in
the articles or by-laws.

AIR 2017 – Regulatory Framework for Business Transactions Page 2 of 7

 b. Owners cannot transfer their ownership unless the distributive rights of members, or any class or
allowed by the articles or by-laws classes of members, or provide distribution.
c. Voting by mail or other similar means in the election e. In any other case, assets may be distributed to such
of the board may be authorized by by-laws with persons, societies, organizations or corporations,
approval of SEC. whether or not organized for profit, as may be
d. Membership shall be terminated in the manner and specified in a plan of distribution adopted pursuant
for the causes provided in the articles of to the Corporation code.
incorporation or by the laws. 263. What is the required vote for the approval of the
e. Officers of the non-stock corporation may be elected resolution recommending a plan of distribution of Non-Stock
directly by the members unless otherwise provided Corporation assets?
in the by-laws. a. Approval by majority vote of the trustees and
f. Cumulative voting is available in the election of ratification by stockholders representing 2/3 of
the members of the board. the members having voting rights.
258. Unless otherwise provided in the articles of incorporation b. Approval by majority vote of the trustees and
or by-laws, what is the number of the board of trustees? ratification by stockholders 2/3 of the members
a. It should be not less than 5 but not more than 15. having voting rights.
b. It should be not less than 5 but may exceed 15 c. Approval by majority vote of the trustees and
as provided in the articles of incorporation or ratification by stockholders 2/3 of the members
by-laws. having voting rights
c. It should be not less than 5 but not more than 10. d. Approval by majority vote of the trustees and
d. It should be not less than 5 but not more than 20. ratification by stockholders 2/3 of the members
259. What is the term of office members of the Board of having voting rights
Trustees of Non-stock Corporation? 3 years 264. The following are the requisites of a close corporation,
except:
260. What is the location of the regular or special meetings of a. The number of stockholder may exceed 20.
members of a Non-Stock Corporation? b. Issues stocks are subject to transfer restrictions with
a. The place shall be in the principal office of the a right of pre-emption in favour of the stockholders
corporation. or the corporation
b. At any place even outside the principal office of c. The corporation shall not be listed in the stock
the corporation as long as provided in the by- exchange or its stocks should not be public offered.
laws and within the Philippines. d. At least 2/3 of the voting stocks or voting rights are
c. The place shall be in the residence of the founding not owned or controlled by another corporation
members. which is not a close corporation.
d. The place shall be in the residence of the President. 265. The are the characteristics of a close corporation,
261. The following rules are applicable only to Non-Stock except.
corporation, except: a. Stockholders may act as directors without need of
a. Prohibition against distribution of dividends. election and therefore liable as directors.
b. Non-profit character of corporation. b. Stockholders involved in the management of the
c. The right to vote cannot be limited or even corporation are liable as directors.
denied in the articles of incorporation or by- c. Quorum may be greater than mere majority.
laws. d. The corporate officers or employers may be
d. A corporation is not qualified to occupy the position elected or employed directly by the stockholders
of trustee. instead by the board of directors.
262. The order of priority for the distribution of Non-Stock e. Transfers of stocks to others, which would
corporation’s assets in case of dissolution is provided below. increase the number of stockholders to more than
(No answer, just indication of priority) the maximum are invalid.
a. All liabilities and obligations of the corporation shall f. Corporate actuations may be binding even without
be paid, satisfied and discharged, or adequate a formal board meeting.
provision shall be made therefore. g. Preemptive right extends to all stock issues.
b. Assets held by the corporation upon a condition h. Deadlocks are settled by the SEC.
requiring return, transfer or conveyance, and which i. Stockholder is not allowed to withdraw and
condition occurs by reason of the dissolution, shall exercise his appraisal right.
be returned, transferred or conveyed in accordance 266. The following cannot be incorporated as a close
with such requirements. corporation, except
c. Assets received and held by the corporation subject a. Mining companies
to limitations permitting their use only for charitable, b. Retail business
religious, benevolent, educational or similar c. Oil companies
purposes, but not held upon a condition requiring d. Stock exchange
return, transfer or conveyance by reason of the e. Banks
dissolution, shall be transferred or conveyed to one f. Insurance companies
or more corporations, societies or organizations g. Public utilities
engaged in activities in the Philippine substantially h. Educational institution
similar to those of the dissolving corporation i. Corporations vested with public interest
according to a plan of distribution adopted pursuant 267. The following are the requisites for validity of restrictions
to the Corporation Code. on transfers of shares of close corporation and
d. Assets other than those mentioned in the preceding in order to bind purchaser thereof in good faith,
paragraphs, if any, shall be distributed in except.
accordance with provisions of the articles of a. It shall not be more onerous than granting the
incorporation or the by-laws, to the extent that the existing shareholders or the corporation the option
articles of incorporation or the by-laws, determine to purchase the shares of the transferring
stockholders within the option period.

AIR 2017 – Regulatory Framework for Business Transactions Page 3 of 7

 b. It must appear in the articles of incorporation. 273. It happens when the directors of the stock holders of a
c. It must be provided in the be-laws. close corporation are so divided respecting the management
d. it shall be provided in the certificate of stock. of the business and affairs of the corporation that the votes
e. it shall prohibit the stockholder from selling required for any corporate action cannot be obtained and as a
the shares. result, business and affairs can no longer be conducted to the
268. The following are the effects where stockholders are advantages of the stockholder.
managers in a stock corporation, except. a. deadlock
a. There is no need to elect directors. b. equal
b. Stockholders concerned shall be deemed the c. tie
directors. d. same
c. The stockholder shall have the same liabilities as 274. Who has the authority to break the deadlock in a close
directors. corporation?
d. The stockholder is not personally liable for a. president upon petition by any stockholder
corporate torts. b. chairman of the board upon petition by any
269. Unless otherwise provided in the by-laws, the following stockholder
actions by the directors of a close corporation even c. founder upon petition by any stockholder
without Board of Director’s meeting shall be valid. d. SEC upon petition by any stockholder
a. Before or after such action is taken, written 275. The following are the orders or actions that may be done
consent thereto is signed be all the directors. by the SEC in case of deadlock in a close corporation,
b. All the stockholders have actual or implied except?
knowledge of the action and make no prompt a. cancelling or altering any provision contained in
objection thereto in writing. the articles of incorporation, by laws, or any
c. The directors are accustomed to take informal stockholders
action with the express or implied acquiescence of b. cancelling, altering or enjoying any resolution or
all the stockholders. act of the corporation or its board of directors,
d. All the directors have express or implied stockholders or officers
knowledge of the action in question and none of c. directing or prohibiting any act of the corporation
them makes prompt objection thereto in writing. or its board of directors, stockholders, officers, or other
e. The action of the director is in bad faith persons party to the action.
against the close corporation and without the d. requiring the purchase at their fair value of shares
knowledge of other directors. of any stockholder. Either by the corporation
270. If a board of director’s meeting of a close corporation is regardless of the availability of unrestricted retained
held without proper call or notice, when is a earnings in its books, or by other stockholders
corporate action decided in that meeting deemed e appointing a provisional director
ratified by a director who failed to attend? f. dissolving the corporation
a. if he promptly gives his written objection with the g. granting such other relief as the circumstances
corporate secretary after having a knowledge may warrant
thereof. h. render judgement convicting the corporate
b. if the action is committed to defraud the officer for criminal violation of corporation code
corporation. 276. He is an impartial person appointed by SEC in case of
c. if the action is outside the corporate powers of the deadlock in a close corporation who is neither a stockholder
corporation. nor a creditor of a close corporation or any subsidiary of
d. if the action is within the corporate powers affiliate of such corporation. He is not a receiver or custodian
and the absent directors failed to give his written of a corporation but shall have all the rights and powers of
objection with the corporate secretary after duly elected director of a close corporation.
having knowledge thereof. a. Independent director
271. What is the nature of the preemptive right in a close b. Provisional director
corporation? c. External director
a. its existence depends upon the provision of d. Executive director
articles of incorporation. 277. When may a stockholder of a close corporation exercise
b. it is based on the provision in the by laws is right of appraisal to compel the close corporation to acquire
c. it is absolute unless limited or curtailed by the his shares held at fair value which should not be less than
articles of incorporation. their par or issued value?
d. it depends upon the contractual agreement. a. Only for those reasons enumerated under
Corporation wherein appraisal right is available.
272. What is the required vote for the ratification of the b. For any reason regardless of the capital structure
amendment of the article of incorporation of a close of the close corporation.
corporation? c. For any reason provided that the corporation’s
a. always affirmative vote of at least 2/3 of the total assets exceed total liabilities.
outstanding capital stock whether with or without d. For any reason provided there are
voting rights. unrestricted retained earnings.
b. always affirmative vote of at least 2/3 of the 278. When may a stockholder file a written petition to the SEC
outstanding capital stock whether with voting rights. to compel the dissolution of a close corporation?
c. always affirmative vote of at least majority of the a. Only if that stockholder’s written petition is ratified
outstanding capital stock whether with or without by at least majority of the outstanding capital stock.
voting rights. b. Only if that stockholder’s written petition is ratified
d. affirmative vote of at least 2/3 of the by at least 2/3 of the outstanding capital stock.
outstanding capital stock whether with or without c. Whenever any of the acts of the directors,
voting rights or of such greater proportion of shares as officers or those in control of the close
may be specifically provided in the articles of corporation is illegal, fraudulent, dishonest, or
incorporation oppressive or unfairly prejudicial to the

AIR 2017 – Regulatory Framework for Business Transactions Page 4 of 7

 corporation or any stockholder or whenever the b. Legislative dissolution
corporate assets are being misapplied or c. Failure to organize and commence business
wasted. within 2 years from the date of issuance of the
d. Only if that stockholder’s written petition is ratified certificate of incorporation
by at least ¼ of the outstanding capital stock. d. Quo warranto suit against a defacto corporation
279. It is a stock or non-stock corporation organized to provide e. Minority stockholders’ suit for dissolution on
facilities for teaching or instruction and which requires justifiable grounds
favourable recommendation by DEPED or CHED before its f. SEC dissolution upon filing of verified complaint
articles of incorporation may be approved by SEC. and after due notice and hearing
a. Educational corporation g. Shortening of the corporate term by
b. Charitable corporation amending the articles of incorporation
c. Religious corporation 288. When a corporation is voluntary dissolved by amending its articles
d. Civil corporation of incorporation to shorten its corporate term, when will the
corporation be deemed dissolved?
280. What is the composition of board of trustees of non-stock a. Upon approval of the amended articles of
educational corporations? incorporation or the expiration of the
a. It shall not be less than 5 but not more shortened term, as the case may be, the
than 15 regardless of the number. corporation shall be deemed dissolved
b. It shall not be less than 5 but may without any further proceedings, subject to
exceed 15. the provisions of this Code on liquidation.
c. It shall not be less than 5 but not more b. There must be court order.
than 15 but shall be in multiples of 5. c. There must be decision by the SEC.
d. It shall not be less than 5 but not more d. There must be approval by the corporate creditors.
than 10. 289. What is the required vote for the voluntary dissolution of a
281. Unless otherwise provide in the articles of incorporation or by- corporation?
laws, what is the normal term of office of Board of Trustees a. Majority of the board of directors/trustees and
of a non-stock educational institution? ratification of stockholders owning 2/3 of the
a. 5 years capital stock or majority of members.
b. 3 years b. 2/3 of the board of directors/trustees and
c. 1 year ratification of stockholders owning majority of the
d. 2 years capital stock or majority of members.
282. It is a special form of corporation usually associated with the c. Majority of the board of directors/trustees and
clergy, consisting of one person only and his successors ratifications of stockholders owning majority of
who is incorporated by law to give some legal capacities the capital stock or majority of members.
and advantages. d. 2/3 of the board of directors/trustees and ratification
a. Corporation sole of stockholders owning 2/3 of the capital stock or
b. Religious societies/corporate aggregate majority of members.
c. Ordinary non-stock religious corporation 290. It refers to the process by which all the assets of the corporation
d. Charitable corporation are converted into liquid assets in order to facilitate the
283. A non-stock corporation governed by a board but with payment of obligations to creditors, and the remaining
religious purposes. balances, if any, is to be distributed to the stockholders or
a. Corporate sole members.
b. Religious societies/corporate a. Incorporation
aggregate b. Dissolution
c. Ordinary non-stock religious corporation c. Liquidation
d. Charitable corporation d. Elimination
284. What is the required vote for the incorporation of 291. After the dissolution of a corporation, what is the remaining period
religious society as a corporate aggregate? of the corporate body?
a. At least 2/3 of its membership. a. 2 years from the time it is dissolved for the purpose
b. At least majority of its membership. of liquidation of its corporate affairs
c. At least 1/3 of its membership. b. 3 years from the time it is dissolved for the
d. At least ¼ of its membership. purpose of liquidation of its corporate affairs
c. 1 years from the time it is dissolved for the purpose
285 . How can a corporation sole be converted into a of liquidation of its corporate affairs
corporate aggregate? d. 4 years from the time it is dissolved for the purpose
a. By mere amendment of articles of of liquidation of its corporate affairs
incorporation 292. Upon winding up of the corporate affairs, any asset distributable
b. By dissolving the corporation and forming to any creditor or stockholder or member who is known and
a new one cannot be found shall be escheated and forfeited in favour of
c. By contractual agreement among the the
shareholders a. Barangay where such property is located
d. By amendment of by-laws b. Province where such property is located
286. It refers to the extinguishment of the corporate franchise c. City or municipality where such property is
and the termination of corporate existence. located
a. Winding up d. National government
b. Dissolution 293. It refers to the reopening or reorganization. It contemplates a
c. Liquidation continuance of corporate life in an effort to restore the
d. Elimination corporation to its former successful operation.
287. The following are involuntary methods of dissolution. a. Incorporation
Which one is voluntary? b. Dissolution
a. Expiration of the corporate term c. Liquidation

AIR 2017 – Regulatory Framework for Business Transactions Page 5 of 7

 d. Rehabilitation c. Within 120 calendar days after the end of the
294. It is a corporation formed, organized or existing under any law fiscal years, as indicated in the Financial
other than those of the Philippines and whose laws allows Statements
Filipino citizens and corporation to do business in its own d. Within 120 calendar days after the end of the
country or state. fiscal years, as indicated in the Financial
a. Domestic corporation Statements
b. Resident corporation 301. Which of the following effects of lack of license on
c. Foreign corporation the part of foreign corporation doing business in the
d. Illegal corporation Philippines are correct?
295. In determining the nationality of a corporation in the Philippines, a. It may not sue or intervene in any action in any
whether domestic or foreign, what is the test applied by the court of administrative agency of the
Corporation Code? Philippines.
a. Incorporation test b. It may be sued on any valid cause of action
b. Residency test recognized in the Philippines.
c. Control test c. Both A and B
d. Grandfather rule test d. Neither A nor B
302. Which of the following effects of lack of license on
296 296. How can a foreign corporation be allowed to transact or do the part of foreign corporation not doing business in
business in the Philippines? the Philippines are correct?
a. By securing a license for that purpose from the SEC and a a. It may sue and be sued in any court or
certificate of authority from appropriate government administrative agency of the Philippines.
agency. b. It may be sue and be sue only for isolated
b. By submitting by-laws to the SEC transactions, as well as for those which are
c. By registering with Department of Trade and Industry casual or incidental thereto.
d. By asking for permission from the Bureau of Internal Revenue c. Both A and B
297. Which of the following can be considered a resident d. Neither A nor B
agent of a foreign corporation? 303. Under RA No. 7042 also known as Foreign
a. An individual who must be of good moral Investment Act of 1991, the phrase “doing business”
character and of sound financial standing, shall include the following, except
residing in the Philippines a. Soliciting orders, service contracts, opening
b. A domestic corporation lawfully transacting offices, whether called “liaison” offices or
business in the Philippines designated in a branches.
written power of attorney to do a business in b. Appointing representatives or distributors
the Philippines domiciled in the Philippines or who in any
c. Both A and B calendar year stay in the country for a period or
d. Neither A nor B periods totaling one hundred eighty [180] days
298. The following are the grounds for revocation of license of or more.
a foreign corporation, except c. Participating in the management, supervision or
a. Failure to file annual reports required by the control of any domestic business, firm, entity or
Corporation Code corporation of the Philippines.
b. Failure to appoint and maintain a resident d. Any other acts or acts that imply continuity of
agent commercial dealing or arrangements and
c. Failure to inform the SEC of the change of contemplate to that extent the performance of
residence of the resident agent acts of works, or the exercise of some of the
d. Failure to establish a branch in the Philippine functions normally incident to, and in
e. Failure to submit a copy of amended articles of progressive prosecution of commercial gain or
incorporation or by-laws or articles of merger or of the purpose and object of the business
consolidation organization.
f. Failure to pay taxes, imposts and assessments e. Mere investments as a shareholder by a
g. Engaging in business unauthorized by SE foreign entity in domestic corporation duly
h. Acting as dummy of a foreign corporation registered to do business, and/or the
299. What is the period for the submission of the General exercise of rights as such investor; nor
Information Sheet of the Corporation to the SEC? having a nominee director or officer to
a. Within the 30 calendar days from the actual represent its interest in such corporation;
annual stockholders’ or members meeting nor appointing representative or distributor
b. Within the 60 calendar days from the actual domiciled in the Philippines which transacts
annual stockholders’ or members meeting business on its own name and for its own
c. Within the 90 calendar days from the actual account.
annual stockholders’ or members meeting 304. Under RA No. 7042 also known as Foreign
d. Within the 120 calendar days from the actual Investment Act of 1991, the following are considered
annual stockholders’ or members meeting Philippine National, except.
300. What is the period for the submission of the Audited a. Citizen of the Philippines
Financial Statements stamped “Received by the b. A domestic partnership or association wholly
BIR” of the Corporation to the SEC? owned by citizen of the Philippines
a. Within 30 calendar days after the end of the c. A corporation organized under Corporation
fiscal years, as indicated in the Financial Code of the Philippines of which at least sixty
Statements percent (60%) of the capital stock outstanding
b. Within 60 calendar days after the end of the and entitled to vote is owned and held by
fiscal years, as indicated in the Financial citizen of the Philippines.
Statements d. A corporation organized abroad and registered
as doing business in the Philippines under the

AIR 2017 – Regulatory Framework for Business Transactions Page 6 of 7

 Corporation Code of which one hundred
percent (100%) of the capital stock outstanding
and entitled to vote is wholly owned by a
Filipinos or a trustee of funds for pension or
other employee retirement or separation
benefits, where the trustee is a Philippine
national and at least sixty per cent (60%) of the
fund will accrue to the benefit of Philippine
nationals.
e. Another corporation owned by another SEC-
registered corporation and non- Filipino
nationals provided at least sixty pecent (60%)
of the capital stock outstanding and entitled to
vote of each of both corporations must be
owned and held by citizen of the Philippines
and at least (60%) of the members of the board
of the directors of each of both corporations
must be citizen of the Philippines.
f. A corporation organized abroad and 60%of
the outstanding capital stock is owned by
Filipino nationals.
305. What is the requirement before a non-Philippine
national as defined by RA No. 7042 be allowed to do
business in the Philippines?
a. It must registered first before DTI for sole
proprietorship o SEC for copulation an
necessary license to to appropriate
government agency.
b. It must obtain permit first before the
Department of Finance.
c. It must obtain permit first before the office of
the Precedent.
d. It must obtain permit first before the office of
the Department of Foreign Affairs.
306. For purposes of computing the minimum percentage
to be owned by Philippine Nationals in investment
areas/ activities reserved to Philippine Nationals,
what class of stocks shall be considered?
a. Preferred stocks only.
b. Common stocks only.
c. Common stocks and preferred stocks if the
latter have voting rights in the election of
Boards of Directors.
d. Common stocks and preferred stocks even if
the latter have no voting rights in the election f
the Board of Directors.
307. What is the penalty for criminal violation of the
Corporation Code?
a. Fine not less than P1, 000 but not more than
P10,000 or by imprisonment for not less
than 30 days but not more than 5 years or
both.
b. Fine not less than P10, 000 but not more than
P100, 000 or by imprisonment for not less than
60 days but not more than 3 years or both.
c. Fine not less than P 100,000 but not more than
1,000,000 or by imprisonment for not less than
20 years but not more than 2 years or both.
d. Fine not less than P1, 000,000 but not more
than P10, 000,000 or by imprisonment for not
less than 9- days but not more than 10 years or
both.

AIR 2017 – Regulatory Framework for Business Transactions Page 7 of 7