JOINT HINDU FAMILY BUSINESS
It is one of the oldest forms of
business found in India. It is owned by the individuals of Hindu family and it
is controlled by the Mitakshara School of Hindu Law. The business is managed by the eldest male
member known as “ Karta ”. The liability of Karta is unlimited.
Features of Joint Hindu Family Business
o
It is created on the basis of Hindu Law
and not out of a contract.
o
Only male members of Hindu family can
become members.
o
The membership is obtained only through
the birth of particular family conducting business.
o
Business undertaken for the benefits of
members of the family.
o
The liability of members is limited
except of Karta
o
The capital for the business is from
their ancestral properties.
Advantages of Joint Hindu Family
Business
Ø
It enjoys greater stability in the
running and continuity of business.
Ø
It provides scope for division of
labour.
Ø
There is no limit for number of
members.
Ø
Enables to take accurate decisions.
Ø
Business secrecy can be maintained easily.
Ø
The members have only limited
liability.
Ø
It enjoys better creditworthiness than
the sole trading concern.
Ø
It enjoys flexibility in organisation.
Ø
It provides an excellent training
ground for the junior members.
Disadvantages of Joint Hindu Family
Business
Ê
The resources of Joint Hindu Family are
limited than joint stock company.
Ê
The management is in the hands of the
Karta who may lack skill, initiative and efficiency.
Ê
There is no direct relationship between
reward and effort.
Ê
Disputes may arise among the members in
the case of partition of property and closing of business.
Ê
The liability of members is limited so
they take little interest in the business activities.
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