FEATURES OF JOINT HINDU FAMILY BUSINESS?
Meaning: -The joint Hindu family business firm is a distinct form of business organization existing only in India. It comes into existence by the operation of Hindu law, via Hindu Succession Act, 1956. The business of joint Hindu family is controlled and managed by the eldest male member of the family who is known as ‘Karta’ and other members of the family are called as “co-parcener”.
Following is the features of Joint Hindu Family business
1. Joint ownership
2. Limited liability of co-parceners
3. Unlimited liability of karta
4. Minimum government control
5. Business secrecy
7. Quick Decision Making
The above Import features are briefly explained as under.
1. Joint Ownership: - The business is jointly owned by all the members of a joint Hindu family. Three successive generations inherit the business by reason of their birth in the family.
2. Limited Liability of Co-parceners: - The joint owners i.e. the co-parceners liability is limited to the extent of their share in the family business.
3. Unlimited Liability of Karta: -The liability of the karta is Unlimited. This is because,
He is total authority to take decisions.
He is the leader or head of the joint Hindu family.
He is liable to pay the dues out of his personal assets, so, the Liability of the karta is unlimited.
4. Minimum Government Control: - This type of business is subject to less government control. This is because there is less legal formalities are required .Hence; the karta can start a new business or close down the existing one without much legal formalities.
5. Business Secrecy: - There is a great deal of business secrecy. This is because the joint Hindu family business need not have to publish accounts and other data to any outside persons.
6. Flexibility: - This type of business offers a good deal of flexibility in business operations. The karta can expand the business, change the line of the business, or even close down the business if the situation so demand.
7. Quick Decision Making: - -In this type of business, there can be quick decision making. This is because the karta can take quick decisions with or without consultation with the co-parceners.
8. Absence of Legal Status: -The joint Hindu family business does not have any legal status. The members of the joint Hindu family are also not treated as separate entities. The business activities of this organisation are monitored by the Hindu Law, 1956.