Page 2 - Lesson Note 4

existence: The death, Lunacy of Karta will not affect the business as

next eldest member will then take up the position. 3. Limited liability:
The liability of all members except Karta is limited. It gives them a

relief. 4. Secrecy: Complete secrecy regarding business decisions can be
maintained by Karta.5. Loyalty and Co-operation: It helps in securing

better co-operation and greater loyalty from all the members who run the
business.

LIMITATION

1. Limited capital: There is shortage of capital as it is limited to the ancestral
property. 2. Unlimitedliability of Karta: there is unlimited liability of
Karta. This puts undue pressure on him.in case of business insolvency, the

pressure becomes almost unbearable in many cases.
3. Dominance of Karta: Karta manages the business and sometimes he

ignores the valuable advice of other members. This may cause conflict
among the members and may lead to break down of the family limit.

4. Hasty decisions: As Karta is over burdened with work; he may take
hasty and unbalanced decisions. 5. Limited managerial

skills: Limited managerial skill of Karta also pose a serious problem. The
Joint Hindu family business is on decline because of the diminishing no.
of joint Hindu families in the country.

ASSESSMENT

Multiple questions______1mark each

1. Who has power to manage the HUF business?
(a) All members

(b) Karta
(c) Government

(d) None of the above
2. The financial resources of HUF Business is__
(a) Limited