Which of the following is NOT Reconstitution of Partnership?

Dissolution of partnership firm

The correct answer is option 2- Dissolution of partnership firm.

Dissolution of partnership firm is NOT Reconstitution of Partnership.

The dissolution of partnership firm and reconstitution of a partnership firm are two different concepts. The dissolution of partnership firm puts an end to the partnership, but reconstitution keeps it going on with new terms and conditions.

Reconstitution of a partnership firm usually takes place in any of the following ways:

Admission of a new partner: A new partner may be admitted when the firm needs additional capital or managerial help. According to the provisions of Partnership Act 1932 unless it is otherwise provided in the partnership deed a new partner can be admitted only when the existing partners unanimously agree for it.

Change in the profit sharing ratio among the existing partners: Sometimes the partners of a firm may decide to change their existing profit sharing ratio. This may happen an account of a change in the existing partners’ role in the firm.

Retirement of an existing partner: It means withdrawal by a partner from the business of the firm which may be due to his bad health, old age or change in business interests. In fact, a partner can retire any time if the partnership is at will. 

Death of a partner: Partnership may also stand reconstituted on death of a partner, if the remaining partners decide to continue the business of the firm as usual.