Practice question
A corporation has only one class of fully paid shares with identical rights. Its articles and certificates provide no special preference. Without any lawful amendment or other legal basis, officers pay twice the declared per-share dividend on shares held by their relatives solely because of family ties. All other relevant distribution conditions are assumed satisfied. Which conclusion best applies the equality rule?
- Family relationship itself creates a preferred class.
- A board may ignore identical share rights whenever it wishes.
- The preferential rate lacks the stated legal basis and conflicts with equal treatment of the identical shares.
- Only unrelated holders have shares under section 6.
- The preference automatically amends the articles without any procedure.
Legal references
- Revised Corporation Code, RA 11232, sections 3 and 6, https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/2/86463
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