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Question
Distinguish between.
Joint Hindu Family Firm and Joint Stock Company.
Solution
| Points | Joint Hindu Family Firm | Joint Stock Company |
| 1. Meaning | In a Joint Hindu Family Firm, the Joint Hindu Family conducts business according to Hindu Laws. | Joint Stock Company is an incorporated association created by law, having an independent legal status, owned by shareholders and managed by the Board of Directors. |
| 2. Number of members | Membership of the firm depends upon the birth and death in the family. There is no limit on membership. | Private company- Minimum - 2 Maximum - 200 Public company- Minimum - 7 Maximum- No limit |
| 3. Registration | Registration is not required. | Registration is compulsory. |
| 4. Liability | Karta has unlimited liability, and Co-parceners have limited liability. | The liability of shareholders is limited up to the extent of the unpaid amount on shares by them. |
| 5. Capital | The Whole of ancestral property is used as capital. | The company has huge capital. |
| 6. Secrecy | Secrecy can be maintained within the family. | Less business secrecy. |
| 7. Management | Karta manages the business and he is assisted by coparceners. | Books of accounts have to be published. Business secrecy cannot be maintained. |
| 8. Government Control | There is limited government interference. | Board of Directors manages the Joint Stock company. There is strict government control. |
| 9. Act | Joint Hindu Family Firms are governed by the Hindu Succession Act, 1956. | Joint Stock Companies are governed by the Indian Companies Act, 2013. |
| 10. Formation | It is comparatively easy to form. | Formation of a Joint Stock Company is difficult, costly, and time-consuming. |
| 11. Legal existence | A Joint Hindu Family firm does not have a separate legal existence independent of its members. | A Joint Stock Company has a separate legal existence. It is distinct from its members. |
| 12. Minor member | Minors can become a member of the firm. | Minors cannot become a member of the company. |
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