Joint
Hindu Family Business
Joint Hindu Family Business is a form of organization in existence only
in India. It is one of the oldest form of organizations and in existence
only in some parts of the country. This form of organization has
ownership in the hands of members of a Hindu undivided family.
The business is under the control of the head of the family known as
the 'Karta'. The members of the family business are known as
'Co-parceners'
Features
- 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.
- Unlimited Liability: 'Karta ' has unlimited liability and
the co-parceners have limited liability to the extent of their
individual investment in the family business.
Advantages
- Ease of formation
- Continuous operations
Disadvantages
- Applicable to Joint Hindu families
- Limited capital
- Limited managerial talents
- Unlimited liability of the Karta