QUIZ – CORPORATION LAW

May 11, 2020

1. Give the four (4) kinds of watered stocks.

2. True or False

a. The liability of a director for acts as prescribed under Sec. 64 of the RCC to the corporation is
solidary with the stockholder.

b. The rationale for the prohibition on watered stocks under the RCC is to secure equality among
subscribers to prevent discrimination against those who have paid in full the par or issue value
of their shares.

c. The prohibition on watered shares refers to subsequent transfer of shares, not original
shares.

3. Give the two (2) rules on interest rate for unpaid subscriptions.

4. Give the legal consequences of the following:

a. failure of the stockholder to pay the unpaid balance on the date fixed in the call of the BOD

b. failure of the stockholder to pay within thirty (30) days from date specified by BOD

5. Give the three (3) remedies of a corporation to enforce payment of stock subscription.

6. Define call.

7. Define highest bidder.

8. A subscribed 10 shares of stock with a par value of P100 each. He paid P500 as initial payment. The
balance of P500 was called in by the directors. A failed to pay, Hence, his shares of stock was declared
delinquent. The interest, expenses and cost sale amounted to P100, The total amount due was therefore
P600. A, B and C were the bidders. A offered to pay P600 for 3 shares, while B offered P600 for 4 shares
and C offered P600 for 5 shares. Who is the highest bidder? Please explain.

9. Give the four (4) rights which the holder of a delinquent stock shall be deprived of.

10. True or False

a. Delinquent stocks are included in determining the existence of a quorum.

b. A holder of unpaid stocks which have not yet been declared delinquent by the BOD shall have
all the rights of a stockholder.

c. A delinquent stock shall have the right to dividends.

 d. A new stock certificate may be issued for a lost certificate even before expiry of the one-
year period if he files a bond or security with the corporation.

e. A controlling stockholder of a competitor of a corporation has no right to demand inspection

of its corporate books.

f. A financial statement of a corporation that has a total assets or liabilities of less than
P500,000 may be certified by the treasurer and president.

g. A corporation may exercise the stock and transfer functions itself in its principal place of
business or engage the services of a stock and transfer agent .