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TVD Rajkumar (Advocate)     08 December 2008

Reconstitution or Dissolution

Dear Friends,

We have an interesting situation. There is firm which consisted of 4 partners. On a particular date say 1/12/2008 all the parters resigned vide a deed titled dissolution deed. In the same deed it is stated that 3 new partners will continue as partners in the same firm and all assets are accodingly transferred. They have also informed the Registrar of Firms who had entered the 3 new partners as partners and the earlier as having retired (same date as dissolution deed). There is no change in name or location of the firm.

Now the following questions arise:

  1. If it is possible for all the partners to retire and still handover the firm to new partners?
  2. Whether the firm from 1/12/08 is a new firm or simply continuation of the old firm?
  3. Is the firm dissolved vide the deed dated 1/12/08?
  4. Does the firm from 1/12/08 require fresh registration?
  5. What is the status of the assets (movable & immovables) held by the old partners/firm and transtrred to new partners/firm?

Iam of the view that it is simply a reconstitution of the firm and not dissolution as stated in the document. There is no transfer of assets as the properties still continue in the name of the Firm.

Please confirm if Iam correct...

 



Learning

 2 Replies

Shambasiv (n/a)     10 December 2008

 6. MODE OF DETERMINING EXISTENCE OF PARTNERSHIP. 





In determining whether a group of persons is or is not a firm, or whether a person is or is not a partner in a firm, regard shall be had to the real relation between the parties, as shown by all relevant facts taken together. 





Explanation I : The sharing of profits or of gross returns arising from property by persons holding a joint or common interest in that property does not of itself make such persons partners. 





Explanation II : The receipt by a person of a share of the profits of a business, or of a payment contingent upon the earning of profits or varying with the profits earned by a business, does not itself make him a partner with the persons carrying on the business; 





and, in particular, the receipt of such share or payment - 





(a) by a lender of money to persons engaged or about to engage in any business 





(b) by a servant or agent as remuneration, 





(c) by the widow or child of a deceased partner, as annuity, or 





(d) by a previous owner or part-owner of the business, as consideration for the sale of the goodwill or share thereof, does not of itself make the receiver a partner with the persons carrying on the business.

TVD Rajkumar (Advocate)     12 December 2008

Mr Shambasiv I believe you are off topic...


could you pls elaborate, in your own words, what you are attempting to tell me...


with regards


 


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