Which of the following will lead to the Reconstitution of a partnersh…

Which of the following will lead to the Reconstitution of a partnership Firm?

(A) Admission of a new partner

(B) Change in the profit sharing ratio among the existing partners

(D) Death of a partner

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → (A), (B), (C) and (D)

A partnership rests on an agreement among its partners. Any change in that agreement ends the old partnership and brings a new one into existence, while the firm itself continues. This is called the reconstitution of the firm.

(A) Admission of a new partner Correct. A new member joins, so a new agreement among all the partners is needed.

(B) Change in the profit sharing ratio among the existing partners Correct. The partners stay the same, but the terms of their agreement change, which is enough to reconstitute the firm.

(C) Retirement of an existing partner Correct. A partner leaves the business, and the remaining partners carry it on under a new agreement.

(D) Death of a partner Correct. When the surviving partners continue the business, the firm stands reconstituted among them.

NCERT (2026-27 edition):
Modes of Reconstitution of a Partnership Firm – “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.”

NCERT (2026-27 edition):
Modes of Reconstitution of a Partnership Firm – “… 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. For example, Ram, Mohan and Sohan are partners in a firm sharing profits in the ratio of 3:2:1. With effect from April 1,2017 they decided to share profits equally as Sohan brings in additional capital. This results in a change in the existing agreement leading to reconstitution of the firm.”

NCERT (2026-27 edition):
Modes of Reconstitution of a Partnership 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.”

NCERT (2026-27 edition):
Modes of Reconstitution of a Partnership Firm – “… 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.”