Joint Hindu Family Business

Joint Hindu Family Business is a form of organization in existence only in India. It is one of the oldest form
of organizations and in existence only in some parts of the country. This form of organization has ownership
in the hands of members of a Hindu undivided family.

The business is under the control of the head of the family known as the 'Karta'. The members of the family
business are known as 'Co-parceners'

Features
• Organization Existence: A joint Hindu family business exists due to the operation of Hindu law
and not out of contract. The rights and liabilities of co-parceners are determined by the general
rules applicable in the Hindu law.

• Membership: A person born in the family gets an automatic membership of the business and
legality is not affected by the minority of the member. There is no limit to the maximum number of
members in this type of organization.

• Registration of Organization: It is not necessary to get the business registered

• Management: The business is manged and controlled by the head or the 'Karta'. He has the power
to obtain loans against the family property etc. The Co-parceners do not have the power to raise
loans or enter into contracts.

• Unlimited Liability: 'Karta ' has unlimited liability and the co-parceners have limited liability to the
extent of their individual investment in the family business.
Advantages
• Ease of formation

• Continuous operations
Disadvantages
• Applicable to Joint Hindu families

• Limited capital

• Limited managerial talents

• Unlimited liability of the Karta