Question

State the features of Joint Hindu Family Business.

Answer 1

The features of the Joint Hindu Family Business are as follows:

1. Formation as per the Hindu Law: The Joint Hindu Family Business comes into existence by the operation of the Hindu Law. The members of a Hindu Undivided Family are the joint owners of the family business by virtue of birth.
2. Karta and Coparceners: The senior-most member of the Hindu Undivided Family (HUF) becomes the head of the family business. He is called Karta. He has the sole right to conduct the business on behalf of other members of HUF. All other members of HUF are the joint owners of the business. They are called Coparceners.
3. Joint ownership: The property, as well as the business of a Hindu, is jointly owned by all the members of the HUF. Three successive generations jointly inherit the property and business by virtue of their birth in the family. This property and business (also called ancestral property) remain under the custody of Karta.
4. Membership: There is no restriction on the minimum and maximum number of members in the Joint Hindu Family Firm. Every child (even a girl in the State of Maharashtra) born in the HUF becomes its member by virtue of birth. The number of members (coparceners) fluctuates or changes with the births and deaths in the family.
5. Management: The joint Hindu family business is managed by the Karta. He is the only manager, controller, and co-coordinator of the business. While conducting the business, Karta can make contracts with third parties, draw bills of exchange, issue receipts, sell or mortgage property of HUF, and purchase a new property in the interests of coparceners.
6. Profit-sharing: The Hindu law does not mention the ratio in which profits or losses of the business are to be divided among its members, including the Karta. The profit-sharing ratios vary according to the number of births and deaths in the family.
7. Quick decision: The Karta, being the single manager, decision-maker, and controller of business, can take quick decisions on various matters relating to business and implement them immediately.
8. Good relations: On account of the business conducted by the Joint Hindu Family in the local market with a few employees, it is possible for this organisation to establish and maintain personal and close contacts with its customers. This also helps to maintain good relations with the employees.