1.

XYZ Corporation is a non-stock corporation whose principal place of

business is located in Manila. If a REGULAR MEETING of its MEMBERS
shall be held, its venue shall be:

o Manila only.
o Any place in Manila or Quezon City, if the by-laws so
provide in the latter case.
o Quezon City only, if the by-laws so provide.
o Quezon City only, if the Articles of Incorporation so provide.

2. Mr. X is a stockholder of ABC Corporation is a close corporation. After some

time, Mr. X wanted to withdraw from ABC Corporation and wanted the
latter to buy back his shares. ABC Corporation agreed to buy back the shares
of Mr. X being satisfied that it has sufficient assets to pay for such purchase.
The acquisition of Mr. X’s share is:

o Valid.
o Valid if ABC Corp has unrestricted retained earning (URE)
to cover the shares to be purchased or required.
o Not valid since the acquisition was not for a legitimate purpose.
o Not valid since Mr. X did not follow the steps for the availment of
appraisal right.

3. South China Airlines (SCA) is a foreign airline company. South China

Airlines tickets are sold in the Philippines through Philippine Airlines as
their general agent. South China Airlines is not registered to do business as
such with the Philippine Securities and Exchange Commission. Which
statement is most accurate?

o Although unlicensed to do business in the Philippines, SCA can sue

before the Philippine Courts and can also be sued.
o SCA can sue but cannot be sued.
o SCA cannot sue and cannot be sued also.
o SCA cannot sue but can be sued.

4. Conditions subsequent in connection with the existence of a corporation

are:
o Those which cannot be done until there is a corporate existence.
 o Those the non-compliance of which will lead to the automatic
suspension of its corporate franchise.
o Those the non-compliance of which will lead to its automatic
dissolution.
o All of the above.

5. AAA Corporation is a wholly owned subsidiary of BBB Corporation. To

support the business of AAA Corporation, BBB Corporation agreed to give
its corporate guarantee to the loan of AAA Corporation. What is required so
that the corporate guarantee will be valid?

o It only requires the approval of the BOD of BBB Corp.

o The Articles of Incorporation must provide such power and be
approved by the BOD.
o Providing corporate guarantee to another corporation is a necessary
exercise of power of a corporation.
o It would require both the approval of the BOD and stockholders on
record.

6. T Corp. has a corporate term of 20 years under its Articles of Incorporation

or from June 1, 1980 to June 1, 2000. On June 1, 1991, it amended its
Articles of Incorporation to extend its life by 15 years from June 1, 1980 to
June 1, 2015. The SEC approved this amendment. On June 1, 2011, however,
T Corp. decided to shorten its term by 1 year or until June 1, 2014. Both the
1991 and 2011 amendments were approved by majority vote of its Board of
Directors and ratified in a special meeting by its stockholders representing
at least 2/3 of its outstanding capital stock. The SEC, however, disapproved
the 2011 amendment on the ground that it cannot be made earlier than 5
years prior to the expiration date of the corporate term, which is June 1,
2014. Is this SEC disapproval correct?

o No, since the 5-year rule on amendment of corporate term

applies only to extension, not to shortening of term.
o Yes, any amendment affecting corporate term cannot be made
earlier than 5 years prior to the corporate’s expiration date.
o No, since a corporation can in fact have a corporate life of 50 years.
o Yes, the amount

7. Gawsengsit Corp. (GC) is a corporation incorporated in Singapore. It

invested in Bumblebee Corp., a Philippine corporation, by acquiring 30% of
its shares. As a result, Gawsengsit Corp. nominated 30% of the directors of
 Bumblebee Corp., all of whom are Singaporeans and officers of Gawsengsit
Corp. Choose the correct statement relating to Gawsengsit Corp.

o GC is doing business in the Philippines and requires a license from

the SEC.
o GC is not doing business in the Philippines by its mere
investment in a Philippine corporation and does not need
a license from the SEC.
o GC has to appoint a resident agent in the Philippines.
o GC cannot elect directors in Bumblebee Corp.

8. Father X, an American priest who came from New York, registered the
Diocese of Bacolod of the Roman Catholic Church which was incorporated
as a corporation sole. There were years when the head of the Diocese was a
Filipino, but there were more years when the heads were foreigners. Today,
the head is an American again. Y donated a piece of land located in Bacolod
City for use as a school. Which statement is most accurate?

o The Register of Deeds of Bacolod City can refuse to register and

transfer the title because the present head of the corporation sole is
not a Filipino.
o The nationality of a corporation sole depends upon the nationality
of the head at any given time.
o A corporation sole, regardless of the nationality of the
head can acquire real property either by sale or donation.
o A corporation sole is not legally allowed to own real property.

9. X is a minority stockholder of CCC Corporation. Y is a member of the Board

of Director of CCC Corporation and at the same time he is the President. X
believes that Y is mismanaging CCC Corporation hence, as a stockholder
and in behalf of the other stockholders, he wanted to sue Y. Which
statement is most accurate?

o X can institute a derivative suit in behalf of himself as a stockholder.

o A derivative suit must be instituted in behalf of the
corporation.
o Derivate suit is an exclusive remedy that X can institute.
o Derivative suit is not the remedy in this situation.

10. XXX Bank Corporation and ZZZ Corporation were merged into XX ZZ
Bank Corporation. So as not to create unnecessary conflict, all the former
 directors of both banks wanted to be appointed/elected as members of the
Board of Directors of the merged bank. Each bank used to have eleven (11)
members of the board. The maximum number of directors of the merged
bank is

o 11
o 15
o 22
o 21

11.X Corp., whose business purpose is to manufacture and sell vehicles,

invested its funds in Y Corp., an investment firm, through a resolution of its
Board of Directors. The investment grew tremendously on account of Y
Corp.’s excellent business judgment. But a minority stockholder in X Corp.
assails the investment as ultra vires. Is he right and, if so, what is the status
of the investment?

o Yes, it is an ultra vires act of the corporation itself but voidable only,
subject to stockholder’s ratification.
o Yes, it is an ultra vires act of its Board of Directors and thus void.
o Yes, it is an ultra vires act of its BOD but voidable only
subject to stockholder’s ratification.
o Yes, it is an ultra vires act of the corporation itself and consequently
void.

12. How can the by-laws of a non-stock corporation be amended?

o By majority vote of board of trustees and 2/3 vote of the members.
o By majority vote of the board of trustees and majority vote
of the members.
o By majority vote of board of trustees.
o By 2/3 vote of the members.

13. The capital stock of ABC Corporation is divided into common shares and
preferred shares. Preferred shares are preferred as to dividends and
common shares are those shares which have the regular and ordinary
attributes of a share of a corporation. Which statement is most accurate?

o This kind of classification may not be allowed or else it will violate

the Doctrine of Equity of Shares.
o Classification of shares may be allowed for as long as it is
clearly stated as such in the Articles of Incorporation.
 o Classification of shares is mainly for business purpose to attract
investors.
o Classification of shares may be allowed with the approval of the
stockholders and the BOD.

14. X is a director in T Corp. who was elected to a 1-year term on Feb. 1,

2010. On April 11, 2010, X resigned and was replaced by R, who assumed as
director on May 17, 2010. On Nov. 21, 2010, R died. S was then elected in his
place. Until which time should S serve as director?

o April 11, 2011

o February 1, 2011
o May 17, 2011
o November 21, 2011

15. X, the President of ZZZ Corporation, was authorized by the Board of

Directors of ZZZ Corporation to obtain a loan from YYY Bank and to sign
documents in behalf of the corporation. X personally negotiated for the loan
and got the loan at very low interest rate. Upon maturity of the loan, ZZZ
Corporation was unable to pay. Which statement is most accurate?

o Because X was personally acting in behalf of the Corporation, he can

be held personally liable.
o X, as President, cannot be personally held liable for the
obligation of the corporation even though he signed all the
loan documents because the loan was authorized by the
Board.
o YYY Bank can choose as to who it wants to hold liable for the loan.
o If ZZZ Corp. cannot pay, X can be held subsidiarily liable.

16. The corporate term of a stock corporation is that which is stated in its
Articles of Incorporation. It may be extended or shortened by an
amendment of the Articles when approved by majority of the its Board of
Directors and:

o approved and ratified by at least 2/3 of all stockholders.

o approved by at least 2/3 of the stockholders representing the
outstanding capital stock.
o ratified by at least 2/3 of all stockholders.
 o ratified by at least 2/3 of the stockholders representing the
outstanding capital stock.

17. In the following instances, the right of appraisal may be availed of except:

o Corporation sold some of its property the proceeds of which will be

used in conducting its business.
o Corporation entered into a merger with another corporation.
o Amendment of the Articles of Incorporation for the purpose of
increasing by 10% the number of preferred shares.
o In case of corporation, the shares of stock of which are
held by a few shareholders and are subject to one or more
restriction on its transfer.

18. The Board of Directors of Corporation A and Corporation B agreed to

enter into a merger. Pursuant to the plan of merger, Corporation A shall be
the surviving corporation. Which of the following is correct?

o Corporation B is automatically dissolved.

o Corporation B is automatically dissolved if the plan of merger has
been approved by the stockholders representing 2/3 of the
outstanding capital stock of Corporation A and B.
o Corporation B is automatically dissolved if the articles of merger
have been submitted to the SEC.
o Corporation B is automatically dissolved upon the
issuance of a certificate of merger by the SEC.

19. The following are the remedies available to a stockholder of record when
a corporation refused to issue a certificate of stock except:

o To file a petition for mandamus to compel the issuance of the

certificate of stock where the facts and conditions of the case bring it
within the legal rules which governs its issuance.
o To rescind the contract of subscription if the corporation wrongfully
refuses to deliver a certificate.
o To file a suit for specific performance of an express or implied
contract.
o To file an alternative relief by way of damages where
specific performance cannot be granted.
20. Mr. A indorsed and delivered his 100 shares in ABC Corporation to Mr. B
in lieu of his debt to the latter. The corporate secretary pursuant to a by-law
provision granting the corporation stockholders a right to first refusal over
shares disposed by its stockholders, offered to buy the same to Mr. B which
the latter refused, requesting the corporate secretary to register the said
shares to his name, the request was refused contending that is contrary to
the by-law provisions. Is the corporate secretary correct?

o Yes, right of first refusal is a property right in favor of the

corporation and it is only when the latter fails to exercise it that the
offering stockholder has liberty to dispose the same to third parties.
o No, a by-law provision cannot take away the substantial right of
stockholders. Transfer cannot be restricted through by-laws.
o Yes, by-law provisions are its own private laws which
substantially have the same effect as the laws of the
corporation. They are in effect written into the charter
and in a sense become the fundamental law of the
corporation.
o No, the right of

21. Which of the following is FALSE about treasury shares?

o The acquisition of treasury shares does not reduce the number of

issued shares or the amount of stated capital.
o The sale of treasury shares do not increase the number of issued
shares or the amount of stated capital.
o The re-issuance of the treasury shares may not be exempted from
registration requirement.
o Treasury shares do not revert back to the issuance shares of the
corporation, they do not lose their status as “issued shares”.

22. Preferred shares cannot vote on the proposal to _____.

o To include other corporate officers in the corporation by-laws.

o To issue corporate bonds.
o To shorten the corporate term.
o None of the above.

23. It is an instance where a corporation, even without unrestricted retained

earning can acquire its own shares.
 o When the articles of incorporation provide that the corporation can
purchase its own shares upon expiration of a fixed period of two
years.
o When there is no highest bidder in the sale of delinquent shares.
o When the stockholder owning 250 and ½ or fractional shares to the
corporation.
o When the corporation decides to invest its funds in another
corporation and there are dissenting stockholders.

24. Dennis subscribed to 10,000 shares of XYZ Corporation with a par value
of P100 per share. However, he paid only 25% of the subscription or
P250,000.00. No call has been made on the unpaid subscription. How
many shares is Dennis entitled to vote at the annual meeting of the
stockholders of XYZ?

o 10,000 shares
o 2,500 shares
o 250 shares
o 0 shares

25. The BIR assessed ABC Corp. for deficiency income tax for taxable year
2010 in the amount of P26,731,208.00, inclusive of surcharge and penalties.
The BIR can
o Run after the directors and officers of ABC Corp. to collect the
deficiency tax and their liability will be solidary.
o Run after the stockholders of ABC Corp. and their liability will be
joint.
o Run after the stockholders of ABC Corp. and their liability will be
solidary.
o Run after the unpaid subscriptions still due to the ABC
Corp, if any.

26. A Religious Corporation may be any of the following except:

o A non-stock corporation organized for religious purpose.
o A corporation sole whose Articles of Incorporation must be
approved by SEC.
o A religious society which has acquired juridical personality.
o A corporation sole whose Articles of Incorporation are filed with the
SEC.
27. X subscribed 10,000 shares in the capital stocks of AAA Corporation. He
paid 50% of the 10,000 shares. X asked the Corporate Secretary to issue him
the corresponding stock certificate representing the 50% of what he already
paid. The Corporate Secretary of the corporation refused. Was the Corporate
Secretary correct?
o The Corporate Secretary is correct because the Revised
Corporation Code provides that no certificate of stock
shall be issued to a subscriber until the shares as
subscribed have been fully paid.
o The Corporate Secretary cannot refuse because the Stock Certificate
can be issued corresponding to the percentage of shares which are
paid.
o The Corporate Secretary cannot refuse because a Certificate of Stock
can be issued provided it is indicated in the Certificate the actual
percentage of what has been paid.
o The Corporate Secretary cannot refuse because it is his legal duty to
issue a stock certificate corresponding to the number of shares
actually subscribed regardless of the actual payment.

28. 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?

o The existing shareholders can subscribe to the new shares

equivalent to their existing shareholding because the
Corporation Code provides that each of the existing
stockholders will have preemptive rights to the extent of
their existing shareholdings.
o The existing shareholders’ preemptive rights is equivalent to the
percentage that they want.
o Each of the existing shareholder can exercise their right of first
refusal against each other.
o Preemptive rights and rights of first refusal are one and the same.

29. X owns 99% of the capital stock of SSS Corporation. X also owns 99% of
TTT Corporation. SSS Corporation obtained a loan from VW Bank. On due
date, SSS Corporation defaulted. TTT Corporation is financially healthy.
Which statement is most accurate?
 o X being a controlling owner of SSS Corp. can automatically be held
personally liable for the loan of SSS Corp.
o TTT Corp. owned 99% by X, can automatically be held liable.
o SSS Corp. and TTT Corp. although both are owned by X,
are two (2) distinct corporations with separate juridical
personality hence, the TTT Corp. cannot automatically be
held liable for the loan of SSS Corp.
o The principle of piercing the veil of corporate fiction can be applied
in this case.

30. The Corporation Code sanctions a contract between two or more

corporations which have interlocking directors, provided there is no fraud
that attends it and it is fair and reasonable under the circumstances. The
interest of an interlocking director in one corporation may be either
substantial or nominal. It is nominal if his interest:

o does not exceed 25% of the outstanding capital stock.

o exceeds 25% of the outstanding capital stock.
o exceeds 20% of the outstanding capital stock.
o does not exceed 20% of the outstanding capital stock.

31. Stock dividends are:

o Shares of stock of another corporation distributed by a corporation

to its stockholders.
o Dividends payable in stock.
o Shares of stock issued in payment of indebtedness.
o Dividends payable in unissued shares of a corporation instead of in
cash or in property out of unrestricted retained earnings.

32. In case of disagreement between the corporation and a withdrawing

stockholder who exercises his appraisal right regarding the fair value of his
shares, a three-member group shall by majority vote resolve the issue with
finality. May the wife of the withdrawing stockholder be named to the three-
member group?

o No, the wife of the withdrawing shareholder is not a

disinterested person.
o Yes, since she could best protect her husband’s shareholdings.
o Yes, since the rules do not discriminate against wives.
 o No, since the stockholder himself should sit in the three-member
group

33. The Articles of Incorporation of AAA Corporation was approved by the

Securities and Exchange Commission (SEC). After the receipt of the
Certificate of Approval from the SEC, AAA Corporation decided to
immediately start the operation of its business despite the fact that it has no
approved By-Laws. What is the legal status of the AAA Corporation?

o De jure corporation
o De facto corporation
o Corporation by estoppel
o Unregistered corporation

34. The following are the modes by which a corporation may validly issue
shares of stock and the persons subscribing to it considered shareholders
except:

o By transferring unrestricted retained earnings to stated capital.

o By sale of shares lawfully issued and fully paid which was
reacquired by the corporation after incorporation for money,
property or service.
o By subscription to new issues of stock when all the original stock
has been issued, before approval of the amended articles of
incorporation.
o By subscribing to the original and unissued stock prior to the
incorporation of a corporation.

35. The number of the Board of Trustees of a non-stock, non-profit education

institution should be ---

o five (5) only

o any number for as long as it is not less than five (5) and no more
than eleven (11)
o any number in multiples of five (5), for as long as it is not
less than five (5) and not more than fifteen (15)
o not less than five (5) nor more than ten (10) in multiples of five (5)

36. The rule is that no stock dividend shall be issued without the approval of
stockholders representing at least 2/3 of the outstanding capital stock at a
 regular or special meeting called for the purpose. As to other forms of
dividends:

o a mere majority of the entire Board of Directors applies.

o a mere majority of the quorum of the Board of Directors applies.
o a mere majority of the votes of stockholders representing the
outstanding capital stock applies.
o the same rule of 2/3 votes applies.

37. A corporation generally can issue both par value stock and no par value
stock. These are all fixed in the Articles of Incorporation of the corporation.
Which of the following corporations may not be allowed to issue no par
value shares?

o insurance companies
o banks
o trust companies
o all of the above

38. X is a stockholder of ABC Corporation. Pursuant to a Voting Trust

Agreement, Y became the trustee of X. Meanwhile ABC Corporation held its
annual election for its Board of Directors. Y sought to be elected as a Board
of Director of the said Corporation. Which of the following statements are
true?

o Y is disqualified to be a member of the Board since he is not the

owner of at least one share of ABC Corp.
o Y is disqualified to be a member of the Board since Y is legal title-
holder of the shares under the Voting Trust Agreement.
o Y is disqualified to be a member of the Board since X still retains the
equitable or beneficial ownership of the stock.
o Y is disqualified to be a member of the Board if X also owns at least
one share of ABC Corp.

39. In a special meeting called for the purpose, 2/3 of the stockholders
representing the outstanding capital stock in X Co. authorized the
company’s Board of Directors to amend its By-Laws. By majority vote, the
Board then approved the amendment. Is this amendment valid?

o No, since the stockholders cannot delegate their right to

amend the By-Laws to the Board.
 o Yes, since the majority votes in the Board was sufficient to amend
the By-Laws.
o No, because the voting in the Board should have been by majority of
a quorum.
o Yes, since the votes of 2/3 of the stockholders and majority of the
Board were secured.

40. Unknown to the other four proponents, Enrico (who had been given the
task of attending to the Articles of Incorporation of the proposed
corporation, Auto Mo, Ayos Ko) misappropriated the filing fees and never
filed the Articles of Incorporation with the Securities and Exchange
Commission (SEC). Instead, he prepared and presented to the proposed
incorporators a falsified SEC certificate approving the Articles. Relying on
the falsified SEC certificate, the incorporators began assuming and
discharging corporate powers.

o De jure corporation
o De facto corporation
o Corporation by estoppel
o General partnership

41. The Board of Directors of XYZ Corp. unanimously passed a Resolution

approving the taking of steps that in reality amounted to willful tax evasion.
On discovering this, the government filed tax evasion charges against all the
company’s members of the board of directors. The directors invoked the
defense that they have no personal liability, being mere directors of a
fictional being. Are they correct?

o No, since as a rule only natural persons like the members of the
BOD can commit corporate crimes.
o Yes, since it is the corporation that did not pay the tax and it has a
personality distinct from its directors.
o Yes, since the directors officially and collectively performed acts
that are imputable only to the corporation.
o No, since the law makes directors of the corporation solidarily liable
for gross negligence and bad faith in the discharge of their duties.

42. Claude, the registered stock holder of 1,000 shares in ABC Corp. pledged
the shares to Conrad by endorsement in blank of the covering stock
certificates and, execution of a Deed of Assignment of Shares of Stock,
intended as collateral for a loan of P 1.0 Million that was also supported by a
 separate promissory note. After Claude defaulted on the loan, Conrad
sought to have the shares registered in his name in the books of the
corporation. If you are the Corporate Secretary of ABC Corporation, would
you register the shares in the name of Conrad without any written
instruction from Claude?

o Yes, since the endorsement and delivery of the certificates of stock

executed by Claude constitute the legal authority to cancel the
shares in his name and to place them in Conrad’s name.
o Yes, since the execution of the Deed of Assignment by Claude would
constitute the legal authority to cancel the shares in his name and
place them in Conrad’s name.
o No, because corporate officers can only take direct instructions
from the registered owners of the proper disposition of shares
registered in their names.
o No, because pledge must be foreclosed. Conrad cannot just
appropriate the shares of stock.

43. In case of preferred shares are issued and sold at a premium, can the
corporation declare cash dividends in favor of its shareholders from the
excess portion?

o No, the excess portion can only be declared as stock dividends.

o Yes, the surplus of excess is no longer covered by the trust fund
doctrine.
o No, the excess portion is treated as legal capital hence, covered by
the trust fund doctrine.
o Yes, it is available for distribution as cash dividends.

44. EFG Foundation, Inc., a non-profit organization, scheduled an election

for its six-member Board of Trustees. X, Y and Z, who are minority
members of the foundation, wish to exercise cumulative voting in order to
protect their interest, although the Foundation’s Articles and By-Laws are
silent on the matter. As to each of the three, what is the maximum number
of votes that he/she can cast?
o 3
o 6
o 9
o 12
45. A foreign delegation of businessmen and investment bankers called on
your law firm to discuss the possibilities of investing in various projects in
the Philippines, and wanted your thoughts on certain issues regarding
foreign investment in the Philippines. Which of the following corporation or
businesses in the Philippines may it invest and up to what extent?

o a lifestyle magazine publication corporation, up to 40% equity.

o an advertising company, up to 100% equity.
o a jeepney manufacturing corporation, up to 100% equity.
o a real estate development corporation, up to 60% equity.

46. Lionel Messy was appointed by the Board of Directors of Barcelona Corp.
as an Assistant Gen. Manager for Operation which is not a corporate
position under the by-laws of the said corporation. He was dismissed by the
corporation due to mismanagement and his benefits were not given to him.
If Mr. Messy will institute a claim against Barcelona Corp. for illegal
dismissal which court or tribunal has jurisdiction of the case?

o SEC
o NLRC
o RTC
o Labor Arbiter

47. XXX Corporation and YYY Corporation have agreed to merge into one
corporation. To facilitate the merger, both corporations agreed that the
merger be made effective on May 31, 2012. The Securities and Exchange
Commission (SEC) approved the Articles of Merger on June 30, 2012.
Which statement is most accurate?

o The effective date of the merger is May 31, 2012, the date stipulated
by the parties.
o The effective date of the merger is always the date of the
approval of the Articles of Merger by SEC.
o The effective date of the merger would be the date approved by the
BOD and stockholders.
o The stockholders and BOD can set their effective date.

48. ABC Corp. issued redeemable shares. Under the terms of the issuance,
the shares shall be redeemed at the end of 10 years from date of issuance, at
par value plus a premium of 10%. Choose the correct statement relating to
these redeemable shares.
 o ABC Corp. would need unrestricted retained earnings to be able to
redeem the shares.
o Corporations are not allowed to issue redeemable shares, thus, the
issuance by ABC Corp. is ultra vires.
o Holders of redeemable shares enjoy a preference over creditors.
o ABC Corp. may redeem the shares at the end of 10 years
without need for unrestricted earnings provided that,
after the redemption, there are sufficient assets to cover
its debts.

49. The Articles of Incorporation of ABC Transport Co., a public utility,

provides for ten (10) members in its Board of Directors. What is the
prescribed minimum number of Filipino citizens in its Board?

o 5
o 6
o 7
o 10

50. A law was passed disqualifying former members of Congress from sitting
in the Board of Directors of government-owned or controlled corporations.
Because of this, the Board of Directors of ABC Corp., a government-owned
and controlled corporation, disqualified C, a former Congressman, from
continuing to sit as one of its members. C objected, however, insisting that
under the Corporation Code members of the board of directors of
corporations may only be removed by vote of stockholders holding 2/3 of its
outstanding capital stock in a regular or special meeting called for that
purpose. Is C correct?

o Yes, since the new law cannot be applied to members of the BOD
already elected prior to its passage.
o No, since the disqualification takes effect by operation of
law. It is sufficient that he was declared no longer a
member of the Board.
o Yes, since the provisions of the RCC applies as well to government-
owned and controlled corporations.
o No, since the Board has the power to oust him even without the new
law.