21-04-2017, 01:51 PM
Joint Hindu Family Business is a different type of organization, found only in India. As its name suggests, it is the type of organization in which all members of the Undivided Hindu Family manage and control the business with the direction of the head of the family. It is not an association. It is like an association where only members of the family can participate. It is not even an exclusive commercial concern, it is the extension of the only commercial concern in which continuity is guaranteed. The business is carried out from generation to generation. It comes to exist by the operation of Hindu law. It is the result of the Hindu Undivided Family system followed in India. Wherever, there are divided Hindu family, there is the scope of the Hindu common family business.
Joint Hindu Family Business, although it is an expanded form of unique commercial concern, but it enjoys stability. It is recognized by the Income Tax Act of 1961 and by the Joint Indian Succession Act of 1956, but lacks legal status. The status of the Joint Indian Family company and its members is one and the same. Joint Hindu Family Business is a distinct type of organization that is unique in India. Even within India its existence is restricted to only certain parts of the country. In this form of business ownership, all members of an undivided Hindu family do business together under the control of the head of the family who is known as the 'Karta'. The members of the family are known as "Co-parceners". Thus, the common Hindu family enterprise is a business owned by the co-parcelers of an undivided Hindu property. Its main characteristics are: -
It comes to exist by the operation of the Hindu law and not out of contract. The rights and obligations of co-recipients are determined by the general rules of Hindu law.
Affiliation to this form of business is the result of the status derived from the birth in the family and its legality is not affected by the minority. Originally, only three successive generations in the masculine line (grandfather, father and son) constituted the membership of this organization. Under the Hindu Succession Act, a relative of a deceased member or a male relative of such female member became eligible for participation in the interest of the related member (called a co-partero) at the time of his death. There is no legal limit for the maximum number of members.
Enrollment is unnecessary, but the rights of its members to sue third parties for debt claims are not affected.
It is generally managed by Karta. You have the authority to obtain loans against family property or in other ways. Other members have no management rights or contract loans for the joint family property.
The manager or Karta has the last word in the formulation of all the policies and in their execution. Has unquestioned authority in the conduct of family business.
Karta has unlimited liability while the responsibility of other members is limited to the value of their individual interests in the common family.
The company enjoys continuity of operations since its existence is not subject to the death or insolvency of a co-owner or even Karta himself. Thus, it has a perpetual life as the corporation.
Advantages
Easy training
Continuity of operations
Disadvantages
Confined to common Hindu families
Relatively limited capital
Limited management talents
Karta's unlimited liability
Joint Hindu Family Business, although it is an expanded form of unique commercial concern, but it enjoys stability. It is recognized by the Income Tax Act of 1961 and by the Joint Indian Succession Act of 1956, but lacks legal status. The status of the Joint Indian Family company and its members is one and the same. Joint Hindu Family Business is a distinct type of organization that is unique in India. Even within India its existence is restricted to only certain parts of the country. In this form of business ownership, all members of an undivided Hindu family do business together under the control of the head of the family who is known as the 'Karta'. The members of the family are known as "Co-parceners". Thus, the common Hindu family enterprise is a business owned by the co-parcelers of an undivided Hindu property. Its main characteristics are: -
It comes to exist by the operation of the Hindu law and not out of contract. The rights and obligations of co-recipients are determined by the general rules of Hindu law.
Affiliation to this form of business is the result of the status derived from the birth in the family and its legality is not affected by the minority. Originally, only three successive generations in the masculine line (grandfather, father and son) constituted the membership of this organization. Under the Hindu Succession Act, a relative of a deceased member or a male relative of such female member became eligible for participation in the interest of the related member (called a co-partero) at the time of his death. There is no legal limit for the maximum number of members.
Enrollment is unnecessary, but the rights of its members to sue third parties for debt claims are not affected.
It is generally managed by Karta. You have the authority to obtain loans against family property or in other ways. Other members have no management rights or contract loans for the joint family property.
The manager or Karta has the last word in the formulation of all the policies and in their execution. Has unquestioned authority in the conduct of family business.
Karta has unlimited liability while the responsibility of other members is limited to the value of their individual interests in the common family.
The company enjoys continuity of operations since its existence is not subject to the death or insolvency of a co-owner or even Karta himself. Thus, it has a perpetual life as the corporation.
Advantages
Easy training
Continuity of operations
Disadvantages
Confined to common Hindu families
Relatively limited capital
Limited management talents
Karta's unlimited liability