Maharashtra State BoardHSC Commerce 12th Board Exam
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Features of Joint Hindu Family Business - Organisation of Commerce and Management

Answer in Brief

Features of Joint Hindu Family Business

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Introduction: - When a business enterprise is run by the family member and they run the business as family business is called Joint Hindu Family business. It is said that the Joint Hindu Family firm comes into existence by the law of inheritance. It is important to note that the Joint Hindu Family firm with the Joint ownership of the business is created by the operation of Hindu law and not by the contract between the co-parceners 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-parceners”.

Definition: - “When a Joint Hindu Family (Hindu Undivided Family) conducts business inherited by it as per Hindu law, it is called Joint Hindu Family firm. Thus in a Joint Hindu Family firm, the business is passed on from one generation to another.”

The following are some of the features of a Joint Hindu Family Business

  1. Formation: - Joint Hindu Family firm is formed as per the operation of Hindu law. Each member of the family becomes the co-parceners in the family business by birth and not by the virtue (because of talent) of an agreement with other co-parceners
  2.  Karta and Co-parceners: - The senior most member of the Hindu Joint family becomes head of the firm who manages the business on behalf of the other members. He is known as Karta.
  3. Joint Ownership: - The property of a Hindu business is jointly owned by the three generations. Karta is the custodian of the joint property of the Joint Hindu Family firm.
  4. Membership: -The membership of Joint Hindu Family firm is unlimited. In other words, there is no limit for membership in joint Hindu family business. Every child (even girls in the Maharashtra state) born in the Joint Hindu Family becomes the co-parceners in the Joint Hindu Family firm by his/her birth.
  5. Management: - The membership of Joint Hindu Family business managed by the senior most member of the Joint Family is called Karta. Karta is only manager, controller and co-coordinator of the business. He can enter into contracts with third party with or without consulting with co-parceners.
  6. Profit-Sharing: - The Hindu law does not specify the ratio of the profits and losses shared by Karta and co-parceners in a Hindu family firm. The profit sharing ratio keeps on changing depending upon the births and deaths in the family.
  7. Quick decisions: -Karta, being the sole decision maker, can make quick decisions and act upon them immediately. It is assumed that Karta’s decisions are always correct.
  8. Good Relations: -Small scale business, which is operated in local market with a few employees. It is possible for Joint Hindu Family firm to maintain personal contact with its customers and good relations with employees..
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