About Joint Hindu Family Business
HUF (Hindu Undivided Family) or the Joint Hindu Family Business is considered an exclusive kind of business organization that you will find only in India. The Hindu Law governs and dictates it and it is one of the many religious laws that are prevalent in India.
Joint Hindu Family Business Project
A person regardless of his sex can be a member of a Joint Hindu Family Business Project and this person is also known as a co-parcener. The “Karta '' becomes the head of a HUF and he is also the eldest member of that family. This person remains liable for the finances and business of the house.
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Joint Hindu Family Business Examples
There are several Joint Hindu Family Business examples and they are:
Reliance Industries Limited – This is an example of a Hindu Joint Family business that is headquartered in Mumbai. The founder of this company was Dhirubhai Ambani. This company is involved in many businesses, such as petrochemicals, textiles, energy, retail, and telecommunications. The present Karta of this business is Mukesh Ambani, son of Dhirubhai Ambani.
Mahindra and Mahindra Limited – Mahindra and Mahindra Limited is a car manufacturing business that is headquartered in Mumbai. This company was formed in the year 1945 and earlier, it was called Muhammad and Mahindra. However, later on, it was called Mahindra and Mahindra. Today, Anand Mahindra is the chairman of this company and he is the grandson of Jagdish Chandra Mahindra, one of the earlier owners of Mahindra and Mahindra Limited.
Tata Sons Pvt. Ltd. – Tata Sons Private Limited is a joint family Hindu business that has its headquarters in Mumbai. Jamsetji was the founder of this company. He founded it in 1868. Today, his generations are managing this business. Tata Sons Pvt. Ltd. is involved in many businesses, such as airlines, automobiles, telecommunications, chemicals, and power. Present chairman of Tata Sons Pvt. Ltd. is Natarajan Chandrasekaran.
Haldiram’s Pvt. Ltd. – Haldiram’s Private Limited too is an example of a Joint Hindu family business. This company was founded in Rajasthan, India and it has its headquarters in Nagpur. This company is engaged in producing food products but earlier, it started its journey as a namkeen and sweet shop only. Currently, Rajendra Agarwal is the CEO of Haldiram’s.
Features of Joint Hindu Family Business
Formation – For beginning a HUF, there should be present nearly a couple of related family members. Again, there should be some ancestral or business property and assets that they will inherit eventually or already inherited. To form a HUF, you don’t need documentation as a new member gets admitted naturally by birth.
Control – The Karta becomes the controller of the entity and he might select to bestow the coparceners different decisions. However, his decision can emerge as an independent. His actions would be legally binding and final.
Liability – The coparceners have limited liabilities but as Karta is the head of the Hindu Undivided Family, he has got limitless liabilities.
Minority – The members of a HUF are qualified for being the coparceners due to their birth. Hence, in this instance, even the minor members would be a portion of the HUF. However, they will continue to enjoy the benefits of an organization.
Continuity – The Hindu Undivided Family can be continual, perpetually. When the Karta dies, then the next eldest person of the family turns into the Karta. Nonetheless, a person should be mindful that a HUF can also be dissolved when all the members of the family do agree mutually.
HUF Advantages and Disadvantages
Advantages
Management – The Karta controls and manages the business. It results in non-interference and unity of command and this non-interference helps in making fast decisions.
Stability – The presence of the HUF firm doesn’t meet an end due to the bankruptcy, insanity, and death of a coparcener.
Membership – The membership of the HUF firm is limitless. Nonetheless, it is confined to 3 generations in the line of males.
Disadvantages
No Outside Member is Allowed – In the HUF, no outside member is allowed. And so, it turns tough to get extra capital.
A Load of Limitless Liability – Though Karta has got every power, he is also burdened with limitless liability.
The Karta is Not Always the Most Qualified Person– At times, the Karta of the family isn’t sufficiently qualified for leading the business.
FAQs on HUF Full Form
1. What are the two elements of Hindu Law?
The Hindu Law controls the business venture of a Hindu Undivided Family Business and it comprises two elements:
Dayabhaga – This system is hugely followed in Assam and West Bengal where both female and male members of a family are permitted to turn into coparceners. A son does have the right to his ancestral property but only after his father dies.
Mitakshara – This model is followed by every state except West Bengal. The mitakshara model permits proprietorship to just one male member. It means only the men are permitted to turn into coparceners.
In both the Dayabhaga and Mitakshara models, the Karta does exercise ultimate control on the business activities and his decision tends to be final.
2. How can a person start a HUF?
For starting a HUF, you need to be backed by a business plan. You need to take some steps for achieving your target. Some vital things you need to do are:
You should be a Hindu.
The HUF must be formed by your marriage. Again, there should be funds too.
You need to have a family, which means, you should be married.
There should be a Karta present who would control the entire family.
You must apply and also get a PAN card and its date of creation would be your date of marriage.
3. What are the characteristics of Joint Hindu Family Business?
The Hindu Law governs the Joint Hindu Family Business – The Hindu Law controls and manages the Joint Hindu Family Business.
Management – The Manager or Karta controls and manages all the issues of the Joint Hindu Families. Karta happens to be the most senior male member on whom other members have confidence and full faith.
Membership by birth – When a child gets born into a family, that child turns into a member automatically and for being a member, he doesn’t need an agreement or consent.
Liability – Except for the manager, every other member remains liable for his share in the business.
