The Joint Hindu family businesses consist of the common grandparent(ancestor).
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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“.
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Conditions for existence of Joint Hindu Family Business:
1) Two male members should be there in the business of HUF. Thus, one person cannot start this type of business.
2) Condition related to property inherited by a Hindu Family from his great grandfather.
The members who share the ancestral property and entitled to get a share in the profit of HUF are known as Coparceners.
Characteristics of Joint Hindu Family Business:
The main characteristics of the HUF business are as follows:
1) Formation of the business:
This type of business is formed by at least two members of the family. In this, a business does not need any agreement because the membership is automatically formed by the birth of a new member in the family.
This business is governed by the Hindu Succession Act 1956 which is covered under Hindu law.
2) Member’s liability:
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.
The 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. On the other hand, other members have no right to make decisions in the overall management of HUF’s Business.
4) Minor Members:
There are no restrictions for a minor to become a member of HUF’s Business. Any child under Hindu Family becomes a member of the HUF business by his/her birth.
5) Existence of business:
The death of any member does not affect the existence of the business of the Joint Hindu Family.
The Joint Hindu Family Business can be dissolved at the will of all the members of the family, no member can dissolve the business alone.
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