Joint Hindu Family Business is a form of commercial organization where a business is owned by the members of a Hindu Family living jointly.
When the business continues from one generation to another in a Hindu family it becomes a Joint Hindu Family Business.
It is a business where a person becomes a member only by virtue of birth in the Hindu family.
The Joint Hindu Family Business is a distinct form of business organization existing only in India.
It is an enlarged form of sole trading concern.
The business comes into existence by the operation of the Hindu Law.
The family is headed by a patriarch, usually the oldest male called "Karta", who makes decisions on economic and social matters on behalf of the entire family and has unlimited liability.
The inheritors of the Joint Hindu Family Business are called Coparceners·. Their liability is limited.
All money goes to the common pool and all property is held jointly.
There are several schools of Hindu Law, such Mitakshara, the Dayabhaga, the Murumakkattayam, the Aliyasanthana etc.
Broadly, Mitakshara and Dayabhaga systems of laws are very common. Family ties are given more importance than marital ties.
• Organization Existence: A joint Hindu family business exists due to the operation of Hindu law and not out of contract. The rights and liabilities of co-parceners are determined by the general rules applicable in the Hindu law.
• Membership: A person born in the family gets an automatic membership of the business and legality is not affected by the minority of the member. There is no limit to the maximum number of members in this type of organization.
• Registration of Organization: It is not necessary to get the business registered
• Management: The business is manged and controlled by the head or the 'Karta'. He has the power to obtain loans against the family property etc. The Co-parceners do not have the power to raise loans or enter into contracts.
• Liability: 'Karta ' has unlimited liability and the co-parceners have limited liability to the extent of their individual investment in the family business.
| | | |ADVANTAGES |DISADVANTAGES | | | | | |Applicable to Joint Hindu families | |Ease of formation | | | | | |Continuous operations | | | |Limited capital | | |Limited managerial talents | |Flexibility of operations | | | | | |Minimum Government Regulations |Unlimited liability of the Karta | |...