Commercial Law, 2012 Bar — Question 60

MULTIPLE CHOICE

So that ABC Corporation could venture into more projects, it needed to raise funds by issuing new shares to increase its capitalization. X, Y, Z, J and G are the five existing shareholders of the company. They hold 20% each. How will the additional shares be divided among the existing shareholders? A) The existing shareholders can subscribe to the new shares equivalent to their existing shareholdings because the Corporation Code provides that each of the existing stockholders will have preemptive rights to the extent of their existing shareholdings. B) The existing shareholders’ preemptive rights is equivalent to the percentage that they want. C) Each of the existing shareholder can exercise their right of first refusal against each other. D) Preemptive rights and right of first refusal are one and the same.

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