Practice question
A company has never issued 1,000 authorized shares. It agrees that an investor will acquire 600 of them, while another shareholder separately sells 100 already outstanding shares to that investor. Which is correct?
- Both transactions must be identical in legal character
- Neither can involve stock
- The acquisition of the 600 unissued shares is a subscription; the separate 100-share secondary transfer is not made one by section 59
- The investor may choose a label that erases the difference
- Every authorized but unissued share is already owned by existing shareholders individually
Legal references
- https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/2/86463 — RA 11232, sections 9, 35(f), and 59
Answer this question in flashcards to review your response and continue practicing.