Commercial Law, 2011 Bar — Question 4

MULTIPLE CHOICE

ABC Corp. increased its capital stocks from Php10 Million to Php15 Million and, in the process, issued 1,000 new shares divided into Common Shares “B” and Common Shares “C.” T, a stockholder owning 500 shares, insists on buying the newly issued shares through a right of preemption. The company claims, however, that its By-laws deny T any right of pre-emption. Is the corporation correct? A) No, since the By-Laws cannot deny a shareholder his right of pre-emption. B) Yes, but the denial of his pre-emptive right extends only to 500 shares. C) Yes, since the denial of the right under the By-laws is binding on T. D) No, since pre-emptive rights are governed by the articles of incorporation.

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