Q.What is retained earnings? Write any two merits of it as a source of finance of company.
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🔒 Start your 14-day free trial to unlock the full solution →Concept understanding — Company Law Document
What is a Company Law Document?
Think of a company as a legal person — it is born, it lives, it acts, and it can die. But unlike a human, a company has no physical body, no memory, and no voice. Everything it does must be recorded in writing. That writing is a company law document.
At its simplest: a company law document is any written record that the law requires a company to create, maintain, or file — or that the company itself chooses to create to govern its own affairs. These documents are the company's skeleton, its memory, and its proof of existence.
The Intuition: Why Documents Matter
Imagine you and three friends start a business together. You agree orally: "I'll put in ₹50,000, you'll run the shop, we split profits equally." A month later, one friend claims he owns 60% because he "did more work." Another says you never agreed to share profits at all. Without anything in writing, whose word counts?
Now imagine the same situation, but you all signed a document that says: "Each of us contributed ₹50,000. Profits are split equally. Decisions require a majority vote." That document is a company law document — it turns a vague handshake into a binding, enforceable reality.
For a company, the stakes are far higher. A company can have thousands of shareholders, borrow crores of rupees, employ hundreds of people. Oral agreements would be chaos. Documents create order, certainty, and accountability.
Company law documents serve three core purposes: evidence (proving what was agreed), governance (telling everyone how the company must behave), and compliance (satisfying legal requirements so the company stays valid).
The Precise Statement
A company law document is any written instrument — whether physical or electronic — that is:
- Created under or required by the Companies Act, 2013 (or earlier Acts), or
- Adopted by the company's own constitutional framework (its Memorandum and Articles), or
- Produced in the ordinary course of business to record decisions, transactions, or relationships involving the company.
These documents range from the foundational (the Memorandum of Association that births the company) to the routine (a board resolution approving a bank account) to the public (annual financial statements filed with the Registrar of Companies).
The Major Categories (with Examples)
| Category | Purpose | Examples |
|---|---|---|
| Constitutional documents | Define the company's identity, powers, and internal rules | Memorandum of Association, Articles of Association |
| Procedural documents | Record decisions made by directors or shareholders | Board resolutions, shareholder resolutions, minutes of meetings |
| Financial documents | Show the company's financial position and performance | Balance sheet, profit & loss account, auditor's report |
| Statutory registers | Maintain legally required records of key facts | Register of members, register of directors, register of charges |
| Filing documents | Submitted to the Registrar of Companies to update public records | Annual return, change in directors, alteration of capital |
| Transactional documents | Govern specific business dealings | Contracts, agreements, share certificates, debenture trust deeds |
Why This Matters for Exams
When you see a question about "company law documents," the examiner is testing whether you understand that:
- A company is a creature of law — it exists only because documents say it does. …
A company usually does not distribute its entire profit as dividend; the part kept back in the business is an internal source of finance. …
Retained earnings = undistributed profits ploughed back into the business; merits include being cost-free and increasing self-reliance.
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Showing the 12 most recent of 58 on this concept.
- CBSE 2026Set MARCH1 markMCQQ.The possibility of loss is known as __________(a) Profit(b) Risk(c) Insurance(d) Investment
›Reveal solutionSolution
The correct answer is (b) Risk. Risk means the possibility that a business may suffer a loss.
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- CBSE 2026Set MARCH1 markMCQQ.Minimum number of members in a public company is __________.(a) 3(b) 7(c) 6(d) 10
›Reveal solutionSolution
The correct answer is (b) 7 members, which is the statutory minimum to form a public company.
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- CBSE 2026Set MARCH1 markMCQQ.Indian Railway is an example of __________(a) Statutory Corporation(b) Global Enterprises(c) Government Company(d) Departmental Undertakings
›Reveal solutionSolution
The correct answer is (d) Departmental Undertakings; Indian Railways is run directly by a government department.
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- CBSE 2026Set MARCH1 markMCQQ.Which of the following is not a feature of services?(a) Intangibility(b) Inseparability(c) Transparency(d) Inventory
›Reveal solutionSolution
The correct answer is (c) Transparency, which is not a feature of services.
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- CBSE 2026Set MARCH1 markMCQQ.Which type of e-commerce takes place among various departments within a firm?(a) B2B(b) B2C(c) C2C(d) Intra-B
›Reveal solutionSolution
The correct answer is (d) Intra-B, which covers e-commerce within the departments of a firm.
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- CBSE 2026Set MARCH1 markQ.The socially determined moral principles which should govern business activities are known as __________.
›Reveal solutionSolution
The missing term is Business Ethics.
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- CBSE 2026Set MARCH1 markQ.Fill as per hint given :(a) Equity share – Ownership Capital(b) Debenture – ?
›Reveal solutionSolution
The blank against debenture is Borrowed Capital (loan / debt capital).
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- CBSE 2026Set MARCH1 markQ."I offer a wide variety of products at low cost under one roof." Who am I?
›Reveal solutionSolution
The answer is a Departmental Store.
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- CBSE 2026Set MARCH1 markMCQQ.Find the odd one out :(a) Letter of credit(b) Commercial Invoice(c) Certificate of Origin(d) Bill of Lading
›Reveal solutionSolution
The odd one out is (a) Letter of credit.
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- CBSE 2026Set ANNUAL1 markQ.Answer in one word: Which is the most important document of a company?
›Reveal solutionSolution
The most important document of a company is the Memorandum of Association.
The Memorandum of Association (MOA) is the charter/constitution of a company. It defines the company's relationship with the outside world and lays down its name, registered office, objects, liability and capital. As it fixes the very scope …
- CBSE 2025Set MARCH1 markMCQQ.Which among the following is not an objective of business?(a) Market standing(b) Innovation(c) Social responsibility(d) Business risk
›Reveal solutionSolution
The odd one out is (d) Business risk, because it is a feature of business, not an objective to be attained.
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- CBSE 2025Set MARCH1 markMCQQ.Identify the form of organization from given below, where mutual help and welfare is the basic value.(a) Joint Stock Company(b) Co-operative Society(c) H.U.F.(d) Public Company
›Reveal solutionSolution
The answer is (b) Co-operative Society, whose basic value is mutual help and the welfare of its members.
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