Dissolution of Firms

Dissolution of a partnership firm is a process in which the relationship between partners of a firm is dissolved or terminated. If a relationship between all the partners of the firm is dissolved then it is known as dissolution of the firm. In case of dissolution of partnership of firm, the firm ceases to exist. This process includes the discarding and disposing of all the assets of the firm or and settlements of accounts, assets, and liabilities.

Section 39 of the Indian Partnership Act 1932 states that the dissolution of a partnership firm among all the partners of the partnership firm is the Dissolution of the Partnership Firm. The dissolution of a partnership firm ceases the existence of the organization.

After this, the partnership firm cannot enter into any transaction with anybody. It can only sell the assets to realize the amount, pay the liabilities of the firm, and discharge the claims of the partners.

The dissolution of partnership takes place in any of the following ways:

• Change in the existing profit sharing ratio.
• Admission of a new partner
• The retirement of an existing partner
• Death of an existing partner
• Insolvency of a partner as he becomes incompetent to contract. Thus, he can no longer be a partner in the firm.
• On completion of a specific venture in case, the partnership was formed specifically for that particular venture.
• On the expiry of the period for which the partnership was formed.

For any assistance regarding Dissolution of Firms, you may get in touch with our experts on +91 – 9999347181 or mail us at info@senixalegal.com.