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Reconstitution of a firm

The term ‘reconstitution of a firm’ may be defined as a change in the constitution i.e., composition of the firm. If there is any change in the number or status of a partner, the firm is said to be reconstituted. However, mutual rights and duties of partners in a reconstituted firm remains the same as they were before the change, subject to the contract between the partners.
A firm is said to be reconstituted, when any of the following occurs and the firm continues:
  • Admission of a partner
  • Retirement of a partner
  • Expulsion of a partner
  • Insolvency of a partner
  • Death of a partner
  • Transfer of partner’s share

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