Practice question
A corporation owes its sole shareholder a valid loan. They remain separate persons, and no transfer, payment, veil-disregard basis or other extinction exists. The company invokes ownership of all shares as confusion. Which is correct?
- Share ownership alone does not merge the two legal characters in one person.
- Every shareholder loan is automatically extinguished.
- The company name must be ignored because there is one shareholder.
- Only the amount of stationery determines merger.
- The shareholder necessarily owes the company the same debt.
Legal references
- Civil Code Articles748,1236-1237,1270-1299 and1302: https://lawphil.net/statutes/repacts/ra1949/ra_386_1949.html
- RA11232 Section2, separate corporate entity: https://lawphil.net/statutes/repacts/ra2019/ra_11232_2019.html
Answer this question in flashcards to review your response and continue practicing.