Question

State any two occasions when reconstitution of partnership take place..

Answer 1

Reconstitution of partnership takes place when there is any change in the partnership i.e. business, profit sharing ratio, office address etc. signed in the existing deed. These changes can be constituted in the existing partnership by drafting supplementary deed with proper franking and notarization on the same.

Following are some occasions where reconstitution of partnership can take place:

1. When there is change in profit sharing ratio
2. When a new partner is admitted to the firm
3. There is retirement of the existing partner
4. In case of death of the partner
5. When there is amalgamation, merger or demerger of the firms

Answer 2

The reconstitution of a firm means a change in the constitution i.e., the composition of the firm and it takes place in the following places.

1) Admission of a partner

A new partner can be admitted into an existing firm in any of the following ways :

a) with the consent of all the partners

b) In accordance with a contract already entered into between the partners for the admission of a new partner

2) Retirement of a partner

A partner may retire

a) with the consent of all other partners

b) in accordance with an express agreement by the partners

c) where the partnership is at will, by giving notice in writing to all the other partners of his intention to retire.

3) Expulsion of a partner.

4) Insolvency of a partner

5) Death of a partner.