Features of Joint Hindu Family Business

This articles gives information about the features and characteristics of Joint Hindu Family Business.

The features of Joint Hindu Family Business are as follows:-
(1) Formation: Joint Hindu Family cannot be formed or created by any contract or agreement because this organization came into existence by the operation of the "Hindu Law". It is not formed by any agreement like partnership firm. Whenever, there is Hindu Undivided Family, there is the scope for Joint Hindu Family Business.

(2) Registration: It is not at all compulsory to register this organization because it is the result of Hindu Law.

(3)) Membership: There are two types of members i.e Karta and Co-parceners. Karta is the elder male member of the family who controls and manages the business. The other family members are called as the co-parceners. There is no limit on membership because the membership is by birth.

(4) Management: The head of the family has full responsibility of the management of Joint Hindu Family Business. He is free to take any decision without any interference of any co-parceners but he can take advice and help from the family members.

(5) Liability: The liability of Karta is unlimited because he is the only deciding authority whereas the liability of co-parceners is limited up to their share in the capital of the family.

(6) Sharing of Profits and Losses: According to Hindu Succession Act, 1956, all the members of Hindu Undivided Family have equal rights to share the profits as well as losses of the business.

(7) Legal Status: Any organization gets separate legal status only after its registration with appropriate authorities. In case of Joint Hindu Family firm registration is not at all compulsory; hence it does not enjoy any legal status.

Though, Joint Hindu Family Business is enlarged form of sole trading concern and it has got due recognition by Income Tax Act, 1961, and Joint Hindu Succession Act, 1956, then also it does not enjoy separate legal status because of Joint Hindu Family firm and its members are one and the same that is inseparable.

(8) Partition: As Joint Hindu Family Business is totally controlled by Karta, and co-parceners do not have the right to interfere in the decisions of Karta. But, as per Hindu Law any member who is unsatisfied with the decision of Karta can demand partition.

(9) Continuity and Stability: This organization enjoys a long and stable life as it is not affected due to death, insolvency, insanity of any of its member. In other words, if Karta dies or becomes incapable of managing the business then the succeeding co-parceners will act as Karta.
(10) Conduct of Business: A Joint Hindu Family business is generally run by a senior member of the family called as Karta or the Manager, and he had the full authority to conduct the business activities and business operations.

(11) Rights of Karta:The Karta can give receipts, make contracts and draw bills, but he cannot give up debts already due to the Joint Hindu Family Business. He had the authority to sale or mortgages the property of Joint Hindu Family while conducting the business of the firm.

(12) Dissolution:If the family business becomes insolvent, the adult co-parceners and the manager will be adjudged insolvent, although their share in the family property can be used to pay off the debts of the Joint Hindu Family Business.

(13) Flexibility: There is a great deal of flexibility in business operation. The Karta can expand or change the line of business or he can even close down the business. The co-parceners normally agree with the decisions taken by Karta in the conduct of business.

(14) Business Secrecy: There is a great deal of business secrecy in this organization. The business secrets are known to co-parceners in general and Karta in particular. It is not obligatory for them to publish their accounts which results in great deal of privacy and secrecy.

(15) Credit Standing: This type of business enjoys greater credit in the market specially because of unlimited liability on Karta. As a result of this he does business on better terms. He also gets liberal financial facilities from banks and others. Better credit standing in the market increases competitive strength of this business.


  • Do not include your name, "with regards" etc in the comment. Write detailed comment, relevant to the topic.
  • No HTML formatting and links to other web sites are allowed.
  • This is a strictly moderated site. Absolutely no spam allowed.
  • Name: