The difference between Company and Joint Hindu Family Business is related to the formation. Formation of the company is very lengthy and expansive and it also required registration. whereas Joint Hindu Family business is easy to form and this type of business is free from registration.
Meaning of company?
Company is a legal entity formed by a group of individuals to engage in the commercial or industrial business. We can classify the company as a partnership, joint-stock company, private company, public company. The company have its own common seal and it is an artificial person because it has its own name and bank account.
According to the definition of a company by the Indian Act 2013
“A registered association which is an artificial legal person, having an independent legal, entity with perpetual succession, a common seal for its signatures, a common capital comprised of transferable shares and carrying limited liability.”
Meaning of Joint Hindu Family Business:
The business which is run by a Hindu Undivided family is called a Joint Hindu family. This kind of business is governed by Hindu law. Therefore, the profit of the business is shared by all the members, and this business is controlled by the senior member of the family “Karta“.
The members who share the ancestral property and entitled to get a share in the profit of HUF are known as Coparceners.
The Chart of difference between Company and Joint Hindu Family Business :
|
Points of differences |
Company |
Joint Hindu Family Business |
| Meaning | Company is a legal entity formed by a group of individuals to engage in the commercial or industrial business. | The business which is run by a Hindu Undivided family is called a Joint Hindu family. This kind of business is governed by Hindu law |
| Formation | Company is formed by getting registration under the company act. | This type of business is formed by at least two members of the family. |
| Liability | The liability of the members is limited according to the capital invested by them. | The liability of the members of HUF is limited up to their share in the business. on the other hand, “Karta” is having unlimited liability so his personal assets can be used for the payment of debts of the business. |
| Management |
Board of directors and professionals are managing the operations of the company. |
HUF business is fully controlled and managed by the senior member of the family “Karta” and the important decisions of the business are taken by the Karta. |
| Continuity | The company stable and continues as the death of any member does not affect the existence of the company due to a separate legal entity. | The death of the senior member does not affect the existence of the business, next senior-most male member becomes Karta. |
| Distribution of profit | In the company, profit is distributed according to the number of shares of the members. | In Joint Hindu Family Business, distribution of profit is equal in all members. |
| Contribution of capital | Capital is contributed by large financial resources. |
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Conclusion:
Thus, the company is formed with compulsory registration and liability is limited according to capital contributed by all the members. Whereas Joint Hindu Family business is very less legal procedures and it is easy to form and the liability of Karta (senior member) is unlimited except other members.
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