TITLE III – BOARD OF DIRECTORS/TRUSTEES AND OFFICERS

MULTIPLE CHOICE
1. I. Stockholders or members periodically elect the board of directors or trustees, who are
charge with the management of the corporation.
II. Stockholders or members also elects officers to carry out management functions on a
day-to-day basis.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

2. I. Acts of management pertain to the stockholders or members.

II. Acts of ownership pertain to the board.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

3. I. Once the directors or trustees are elected, the stockholders or members relinquish
corporate powers to the board in accordance with law.
II. Contracts intra vires entered into by the board of directors are binding upon the
corporation.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

4. I. Every director must own at least 100 share of the capital stock of the corporation of
which he is a director, which share shall stand in his name on the books of the
corporation.
II. Trustees of non-stock corporations must be members thereof.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

5. I. The governing body of a corporation is its board of directors.

II. The board of directors of a corporation is a creation of law.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
6. I. It is well settled in this jurisdiction that where corporate directors are guilty of a breach
of trust, a stockholder may institute a suit in behalf of himself and other stockholders and
for the benefit of the corporation.
II. The board of directors (or trustees, in case of non-stock corporations) has the sole
authority to determine policies, enter into contracts, and conduct the ordinary business of
the corporation within the scope of its charter.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

7. A corporation’s board of directors is understood to be that body which, except:

a. Exercises all powers provided for under the Corporation Code.
b. Conducts all business of the corporation.
c. Controls and holds all property of the corporation.
d. None of the above.

8. I. The property of the corporation is not the property of its stockholders or members;
however, it may be sold by the stockholders or members.
II. The power and responsibility to decide whether a corporation can enter into a binding
contract is lodged with the board of directors.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

9. The following are the qualifications of a board of director/trustees, 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 of the 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.

10. I. The board of the following corporations vested with public interest shall have
independent directors constituting at least 10% of such board.
II. Independent directors must be elected by the other directors present or entitled to vote
in absentia during the election of directors.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

11. It is a person who, apart from shareholdings and fees received from the corporation is
independent of management and free from any business or other relationship which
 could, or could reasonably be perceived to materially interfere with the exercise of
independent judgment in carrying out the responsibilities as a director.
a. Dependent director
b. Independent director
c. Authorized director
d. Outstanding director

12. I. The acts of corporate officers within the scope of their authority are binding on the
corporation.
II. Any 2 or more positions may be held concurrently by the same person, except that no
one shall act as president and secretary or as president and vice-president at the same
time.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

13. I. The power to remove directors or trustees belongs to the office exclusively.
II. Removal of directors or trustees may be with or without cause.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

14. The requisites for removal of directors are the following, except:
a. The removal should take place at a regular or special meeting duly called for the
purpose.
b. The director or trustee can only be removed by a vote of the stockholders
representing at least majority of the outstanding capital stock or majority of the
members entitled to vote in case of non-stock corporations.
c. There must be a previous notice to stockholders or members of the corporation of
the intention to propose such removal at the meeting.
d. The special meeting of the stockholders or members of a corporation for the
purpose of removal must be called by the secretary on order of the president or on
the written demand of the stockholders representing or holding at least a majority
of the outstanding capital stock or a majority of the members entitled to vote.

15. I. The directors of a corporation shall not receive any compensation for being members of
the board of directors, except for reasonable per diems.
II. In no case shall the total yearly compensation of directors, as such directors, exceed
10% of the net income after income tax of the corporation during the preceding year.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
16. I. The general rule is that obligations incurred by the corporation, acting through its
directors, officers and employees, are its sole liabilities, and vice versa.
II. A contract of the corporation with one or more of its directors or trustees or officers is
void.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

17. A contract of the corporation with one or more of its directors or trustees or officers.
a. Doctrine of self-dealing board of directors
b. Doctrine of corporate opportunity
c. Doctrine of double compensation
d. Doctrine of trust fund

18. The requisites for a contract of the corporation with one or more of its directors or
trustees or officers to be valid are the following, except:
a. That the presence of such director or trustee in the board meeting in which the
contract was approved was not necessary for the approval of the contract.
b. That the vote of such director or trustee was not necessary for the approval of the
contract.
c. That the contract is fair and reasonable under the circumstances.
d. That in case of an officer, the contract has been previously authorized by the
stockholders.

19. A director, by virtue of his office, acquires for himself a business opportunity which
should belong to the corporation, thereby obtaining profits to the prejudice of such
corporation, he must account to the latter for all such profits by refunding the same.
a. Doctrine of self-dealing board of directors
b. Doctrine of corporate opportunity
c. Doctrine of double compensation
d. Doctrine of trust fund

20. It is a body created by the by-laws and composed of not less than three members of the
board which, subject to the statutory limitations, has all the authority of the board of
directors to the extent provided in the by-laws.
a. Board committee
b. Trust committee
c. Officers’ committee
d. Executive committee

21. The following are the limitations of an executive committee, except:

a. Approval of any action for which shareholders’ approval is also required.
b. Filling of vacancies in the board.
c. Amendment or repeal of by-laws or the adoption of new by-laws.
d. Amendment or repeal of any resolution
22. I. executive committee may act, by 2/3 vote of all its members.
II. the act of a director violating the doctrine of corporate opportunity can be ratified by a
vote of the stockholders owning or representing at least majority of the outstanding
capital stock.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

23. I. A stockholder or member who participates through remote communication or in

absentia, shall be deemed present for purposes of quorum.
II. The directors or trustees elected shall perform their duties as prescribed by law, rules
of good corporate governance, and bylaws of the corporation.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

24. Immediately after their election, the directors of a corporation must formally organize
and elect:
a. A president, who must be a director.
b. A treasurer, who must be a resident.
c. A secretary, who must be a citizen and resident of the Philippines.
d. All of the above.

25. I. If the corporation is vested with public interest, the board shall also elect a compliance
officer.
II. The officers shall manage the corporation and perform such duties as may be provided
in the bylaws and/or as resolved by the board of directors.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

26. A person shall be disqualified from being a director, trustee or officer of any corporation
if, within 5 years prior to the election or appointment as such, the person was:
a. Convicted by final judgment of an offense punishable by imprisonment for a
period exceeding 6 years.
b. Found administratively liable for any offense involving fraudulent acts.
c. Found by a foreign court or equivalent foreign regulatory authority for acts,
violations or misconduct.
d. All of the above
27. A person shall be disqualified from being a director, trustee or officer of any corporation
if, within 5 years prior to the election or appointment as such, the person was convicted
by final judgment.
a. Of an offense punishable by imprisonment for a period exceeding 6 years;
b. For violating the Revised Corporation Code.
c. For violating the Securities Regulation Code.
d. All of the above.

28. I. The SEC shall, motu proprio or upon verified complaint, and after due notice and
hearing, order the removal of a director or trustee elected despite the disqualification, or
whose disqualification arose or is discovered subsequent to an election.
II. The removal of disqualified director shall be without prejudice to other sanctions that
the SEC may impose on the board of directors or trustees who, with knowledge of th
disqualification, failed to remove such director or trustee.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

29. I. Any vacancy occurring in the board of directors or trustees other than by removal or by
expiration of term may be filled by the vote of at least a majority of the remaining
directors or trustees, if still constituting a quorum.
II. Any directorship or trusteeship to be filled only by an election at a regular or at a
special meeting of stockholders or members duly called for the purpose, or in the same
meeting authorizing the increase of directors or trustees if so stated in the notice of the
meeting.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

30. When the vacancy prevents the remaining directors from constituting a quorum and
emergency action is required to prevent grave, substantial, and irreparable loss or damage
to the corporation, the vacancy may be temporarily filled from among the officers of the
corporation by unanimous vote of the remaining directors or trustees.
a. Emergency board of director
b. Temporary board of director
c. Provisional board of director
d. Interim board of director
 TITLE IV
POWERS OF CORPORATIONS
A corporation exercises its powers through its board of directors and/or its duly authorized
officers and agents, except in instances where the Corporation Code requires stockholders’
approval for certain specific acts.

Corporate powers
A corporation has no power except those expressly conferred on it by the Corporation
Code and those that are implied or incidental to its existence. In turn, a corporation exercises
said powers through its board of directors and/or its duly authorized officers and agents. Thus, it
has been lodged with the board of directors that exercises its corporate powers. In turn, physical
acts of the corporation, like the signing of documents, can be performed only by natural persons
duly authorized for the purpose by corporate by-laws or by a specific act of the board of
directors.

SEC. 35. Corporate Powers and Capacity. – Every corporation incorporated under this
Code has the power and capacity:

a) To sue and be sued in its corporate name;

b) To have perpetual existence unless the certificate of incorporation provides
otherwise;
c) To adopt and use a corporate seal;
d) To amend its articles of incorporation in accordance with the provisions of this
Code;
e) To adopt bylaws, not contrary to law, morals or public policy, and to amend or
repeal the same in accordance with this Code;
f) In case of stock corporations, to issue or sell stocks to subscribers and to sell
treasury stocks in accordance with the provisions of this Code; and to admit
members to the corporation of it be a nonstick corporation;
g) To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage, and
otherwise deal with such real and personal property, including securities and bonds
of other corporations, as the transaction of the lawful business of the corporation
may reasonably and necessarily require, subject to the limitations prescribed by law
and the Constitution;