ENTREPRENEURSHIP PPT – JOINT

HINDU FAMILY
 HINDU UNDIVIDED FAMILY/JOINT HINDU FAMILY

Joint Hindu family or Hindu Undivided Family Business

is a unique form of business organisation prevailing only
in India. It is governed by Hindu law and represents a
form which is owned, managed and controlled by the
male members of a joint Hindu family.
This is one of the classical methods of business structure
in the nation. It is administered by the Hindu Law. The
source of membership in the company is birth in a family
and 3 consecutive generations can be members of the
company.
 FORMATION OF HINDU UNDIVIDED FAMILY

 There should be at least two male members in the family to form

a Hindu Undivided Family.
 Ancestral property should have been inherited by members of
Hindu Undivided Family.
 All of the members enjoy this property and have an equal share
in that property.
 Thus, any child taking birth in that family becomes a member of
the Hindu Undivided Family.
 There is no requirement for an agreement to become a member.
Hindu Undivided Family
The family who runs or carry on the business organization.
Hindu Undivided Family includes an eldest male member ‘Karta’ and the other male
members called co-parceners.

(2) Karta
He is the person who is the head and eldest member of the family.
Karta is the person who has full control over business activities.

(3) Ancestral Property

It is the property of forefather or an ancestor and over which the members have equal
right.

(4) Co-parceners
It consists of propositus and three lineal descendants.
They have equal ownership rights over the property of an ancestor.
 Schools of law under Hindu Undivided Family

Dayabhaga – It is prevalent in West Bengal and

Assam. As per this school of law, the son acquires
the right in the family property only after the
death of his father
Mitaakshara – It is prevalent in rest of India under
which, the son acquires the right in the family
property right from his birth.
 Characteristics of Hindu undivided family

1) Creation: It arises by status or operation of

Hindu Law.
2) Membership: A male member becomes a
member merely by his birth. By adoption, an
outsider can be admitted to its membership but
not otherwise.
3) Management: The senior most male member of
the family known as 'Karta' manages the affairs,
having unlimited powers. The other male
members called 'Coparceners' have no right to
4) Right of Accounts: The members other than Karta do
not have right to inspect and/or copy contents of the
account books.
5) Minor as member: A male from the time of his birth
becomes the member in this form of enterprise.
6) Dissolution: The HUF continues to operate forever as
death of members does not effect it. As upper links are
removed by death, the lower ones are added by birth. So
there is no limit to its membership. But if all members
want to mutually dissolve the firm, they can do so.
 MERITS OF JOINT HINDU FAMILY

Effective Control
The Karta has full control over the business activities and takes a decision
quickly.
No one can interfere in the decision of Karta as every member is bound to accept
his decision.
Hence, it avoids clashes among the members and results in very speedy decision
making

Continued Business Existence

After the death of Karta, the next eldest member takes up his position. So, it does
not affect the
activities of the business.
Hence, all the business activities are done smoothly, continuously without any
threat.
 Limitations of a Joint Hindu Family Business

1)Limited Resources
All the members of Joint Hindu Family Business totally depend upon the ancestral property
due to their limited liability.
Many commercial banks resist extending the credit limit due to the weak financial position of
the business.

(2)Unlimited Liability of Karta

All the important decision regarding management of various business activities are taken by
Karta.
But there is a disadvantage with the Karta that he has unlimited liability.
Hence, all the business debts are paid by using the personal assets of the Karta.

(3)Dominance of Karta
The Karta takes all the decisions individually and manages the business
He also involves other members in decision making.
Mahindra & Mahindra Limited
Haldiram's Private Limited