Joint Hindu Family Business

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Meaning of Joint Hindu Family Business

Any form of business which is owned by the members of a Joint Hindu family and in which the family possesses some inherited property. It’s known as “Joint Hindu Family Business”. It is also known as “Hindu Undivided Family”.

Features of the Joint Hindu Family Business

Hindu Joint Family

Hindu Joint Family

Hindu Joint Family

  • Membership by birth: Membership of a Joint Hindu family business is automatic by birth of a male child. It's not created by an agreement among family members.

  • Management: The management vests in the Karta, the eldest member of the family. The Karta may associate other members of the HUF to assist him.

  • Liability: The Karta has unlimited liability.

  • No Maximum limit: There is no restriction on the number of coparceners of the HUF business. The membership is restricted to three successive generations.

  • Minor members: A male child at the time of birth becomes a coparcener. An HUF does not restrict membership to minors.

  • Unaffected by death: The HUF business continues even after the death of a coparcener including the Karta. It may come to an end if all the members notify that they are not members of the Joint Hindu Family.

Merit of Joint Hindu Family Business

Hindu Joint Family Merits

Hindu Joint Family Merits

Hindu Joint Family Merits

  • Economic security and status to the members: The Joint Hindu Family business provides members a sense of security and belonging because of the financial stake they possess in it also gives them status in society while dealing with others.

  • Continuity of business: The business has a continuity. Till such time that the members jointly do not decide to terminate it, the business continuous to exist.

  • Family pride: Members are likely to work with dedication, loyalty and care, because the work involves the family name. The business is not only an economic unit but also a matter of family prestige.

Limitations of Joint Hindu Family Business

  • Unlimited liability: The Karta is personally liable for all business obligations.

  • Limited access to capital: The Karta has limited scope for raising capital.

  • Karta too powerful: incompetent Karta may ruin the business since all business decisions are taken by him.

  • This form of business organization is perhaps the natural economic extension of the joint Hindu family. It serves to provide economic security and status to members.

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