Start-up Lawyers Bangalore

Start-up Lawyers Bangalore Startup Lawyers Bangalore

START UP LAWYERS at KREIOZ Legal Solutions Bangalore render advice to clients who intend to incorporate new companies, innovative ideas and various legal entities to further develop their business plan and commence business activities. The start up lawyers team at KREIOZ advices clients on various start ups such as Proprietorship, Partnership, Limited Liability Partnership, Private Limited Compa

ny, Public Limited Company, Co-operative Society, Trusts, Joint stock company, Association etc. Legal advice, opinion and due diligence for start ups in India constitutes a very essential and diligent field of specialized practice wherein our team of start up lawyers guides the new generation entrepreneurs to form legal entities to suit their commercial and innovative needs, more so our team assists foreign entities in setting up their businesses in India through various collaborations, joint venture and project offices and including opening up of branches and liasoning offices. The start up lawyers team at KREIOZ assesses the needs of each client and gives advice as to which legal entity would suit their commercial needs and how they could assist in incorporating the same and after incorporation the start up lawyers team at KREIOZ would render essential advice on due diligence with respect to acquisition of property, making contracts with other business entities and also setting up of corporate policy including employee manuals, marketing contracts, non disclosure agreement, employee contract and all necessary documentation/document essential for starting up a company. The start up Lawyers team at KREIOZ provide services which include

Ø Advice to Entrepreneurs.

Ø Incorporation of start up Companies

Ø Setting up of proprietor ship concerns/Firm

Ø Compliance of various Statutory Laws

Ø Registration of Partnership firms

Ø Incorporation of Private Limited companies/company

Ø Lease Deeds

Ø Due diligence

Ø Labour Compliances

Ø Business Contracts

Ø Employee Contracts

Ø Employee Manuals

Ø Company Policies

Ø Joint Ventures

Ø AoP’s

Ø International collaboration

15/02/2021

Advocate intending to practice in courts and tribunals .

Start up gyaan
06/01/2014

Start up gyaan

03/09/2013

1. WHAT IS LIMITED LIABILITY PARTNERSHIP?
A new trend that has been observed of-late is that more and more entrepreneurs have started opting for Limited Liability Partnerships. But what is a Limited Liability Partnership?
Till few years back there used to be only 2 forms of organisation
1. Limited Liability Organisations i.e., Companies
2. Unlimited Liability Organisations i.e., Partnership/Proprietorship

But these organisations have their own plus and minuses. However as Businesses grew there was a need for a form of organisation which was a hybrid between the 2 forms of organisations. Moreover, the rapid growth of service sector created an environment and a demand for a new form of Organisation. Thus, the concept of Limited Liability Partnership was evolved which incorporates the benefits of both Companies as well as Partnerships.

MEANING OF LLP
The Law defines LLP as:-
“A corporate business vehicle that enables professional expertise and entrepreneurial initiative to combine and operate in flexible, innovative and efficient manner, providing benefits of limited liability while allowing its members the flexibility for organising their internal structure as a partnership”

2. WHAT ARE THE FEATURES OF LLP?
1. The LLP has Separate Legal Entity i.e., the LLP and the partners are distinct from each other.
2. Minimum of 2 partners are required to for, a LLP. However, there is no limit on the maximum number of partners.
3. No requirement of Minimum Capital Contribution.
4. Registration is compulsory.
5. The LLP Act does not restrict the benefit of LLP structure to certain classes of Professionals only and would be available for use by any enterprise.
6. Company Law Board has jurisdiction over the affairs of the LLP.

3. WHAT ARE THE BENEFITS OF FORMING A LLP?
1. The Liability of each partner is limited to his share as written in the agreement filed at the time of creation of LLP.
2. It has Low Cost of Formation and is Easy to Form.
3. The Partners are not liable for the acts of each other and can be held liable only for their own acts.
4. Less restrictions and compliance are enforced on a LLP by the Government.
5. As a Juristic Legal Person, a LLP can sue in its name and be sued by others.

4. WHAT ARE THE DISADVANTAGES OF FORMING A LLP?
The only disadvantage of forming a LLP is that it cannot come out with its IPO (Initial Public Offer) and Raise Money from the Public

5. HOW TO REGISTER LLP?
Pre-requisites for registering a LLP
• Minimum 2 Partners (Individual or body corporate)
• Minimum 2 Designated Partners who are individuals and at least one of them should be resident in India.
• Digital Signature Certificate
• LLP Name
• LLP Agreement
• Registered Office
Pre-requisites for registering a LLP
An LLP should have minimum 2 partners. In case any Body Corporate is a partner, then it will be required to nominate any person (natural) as its nominee for the purpose of the LLP.

Partner of LLP can be consisted of
• Companies incorporated in and outside India
• LLP incorporated in and outside India
• Individuals Resident in and outside India
Partners of LLP
Every LLP should have minimum 2 designated partners who are individuals and at least one of them should be resident in India.

A person or nominee of a body corporate, intending to be appointed as who is appointed as designated partner of LLP should hold a Designated Partner Identification Number (DPIN) allotted by the Ministry of Corporate Affairs.

DPIN can be obtained by submitting application along with address proof and identity proof of the individuals.

Digital Signature Certificate
All forms for registration of LLP shall be filed online after signing digitally and for this purpose, one of the designated partners shall take digital signature certificate.

LLP Name
Selection of business name is crucial for the image of your venture. You select a name which reflects the business you plan. Ensure selected name satisfy LLP Name Guidelines of Ministry of Corporate Affairs.

LLP Agreement
Like partnership, partners of LLP can frame agreement for defining their terms, profit sharing ratio etc. The basic contents of Agreement are, Name of LLP, Name of Partners and Designated Partners, and Form of contribution, Profit Sharing ratio and Rights and Duties of Partners.

In case no agreement is entered into, the rights & duties as prescribed under Schedule I to the LLP Act shall be applicable. It is possible to amend the LLP Agreement but every change made in the said agreement must be intimated to the Registrar of Companies.

Registered Office
The Registered office of the LLP is the place where all correspondence related with the LLP would take place, though the LLP can also prescribe any other for the same. A registered office is required for following purposes. At the time of incorporation, it is necessary to submit proof of ownership or right to use the office as its registered office with the Registrar of Companies.

6. WHAT ARE THE TAX IMPLICATIONS OF LLP’s?
In India, the Government has notified that LLP’s would be taxed in the same form as Partnership i.e. Tax would be levied on the LLP and the partners would be exempt from the tax.
Moreover, as LLP’s would be taxed in the same form as Partnership Firms, no tax would be levied on the conversion of Partnership Firms into LLP’s.
LLP’s are taxed at a flat rate irrespective of income for the A.Y.2013-14 as follows

Income Tax at 30% of total income.
Surcharge at 10% if total Income Exceeds Rs. 1 Crore.
Educational Cess is payable at 3% of the total of Income Tax.

03/09/2013

1. WHAT IS HINDU UNDIVIDED FAMILY (HUF) BUSINESS?
It is one of the oldest forms of business organisation found only in India. Business is owned and carried on by the members of the Hindu Undivided Family (HUF). It is governed by the Hindu Law.
There are two conditions for existence of Joint Hindu Family Business:
1. Minimum two members must be there in the family.
2. Existence of some ancestral property.

2. WHAT ARE THE FEATURES OF A HUF?
Membership: Membership of the Joint Hindu Family Business is automatic by birth. All members have equal ownership right over the ancestral property and they are known as ‘Co-parceners’. There are two systems which govern membership:
Dayabhaga system – It prevails in West Bengal and allows both the male and female members to be co-parceners.
Mitakashara system – It prevails all over India except West Bengal and allows only the male members to be co-parceners.
There is no restriction on the number of co-parceners of the HUF business. However, only three successive generations can be members in the business.
Formation: There should be at least two members and ancestral property to form a Joint Hindu Family Business. It is not created by an agreement between persons.
Control: The business is controlled by the head of the family, who is the eldest member and is called ‘Karta’. He takes all the decisions to manage the business.
Continuity: The business continues even after the death of the Karta as the next eldest member takes up the position of Karta. The business is stable.
Minor Members: Since membership is by birth, minors can also be members of the business.

3. WHAT ARE THE ADVANTAGES OF HUF?
1. Ease of formation
2. Continuity of operations

4. WHAT ARE THE DISADVANTAGES OF HUF?

1. Confined to Joint Hindu families
2. Relatively limited capital
3. Limited managerial talents
4. Unlimited liability of the Karta

5. WHAT ARE THE STEPS INVOLVED IN CREATION OF HUF?

1) Capital and members – For an HUF to be created the major requirements is the capital and persons. Capital can be in the form of ancestral property, assets gifted by relatives and friends, or received by the HUF through a will. The minimum no. of members required is two who can be a husband and wife. Both the spouse can create a family and constitute a HUF. They don’t have to wait till they have a baby to constitute their HUF.
2) Select a suitable name – The HUF to be created should have proper name. Select a proper name for the HUF and the name should not violate the laws or have any negative impact. The members can choose a suitable name before starting a HUF business form.
3) Form a Deed – Formation of HUF should be embodied in a deed which provides that a proper legal deed or agreement is required before creating a HUF. The agreement/ deed should have all the details, including the name of Karta, co-parceners, address and source of funds in the corpus. Deed will facilitate that the business or the formation of HUF is valid and true.
4) Apply for PAN – Application for PAN (Permanent Account Number) is also an important step to be undertaken while forming a HUF. After executing the deed, the Karta is required to obtain a permanent account number PAN for the HUF. Obtaining PAN is a mandatory requirement as all financial transactions shall carry PAN.
5) Open a Bank Account – After PAN has been allotted, the Karta is required to open a Bank a/c in the name of the HUF. It is also advisable to get some stationery printed for official communication. The HUF is now ready to function. The Karta will have to invest in tax saving instruments and file tax returns on behalf of the HUF. Only the money related to the business of HUF shall be invested in such Bank accounts.
Formation of HUF is no more a cumbersome process for any individual. Forming HUF can help you save taxes to an extent.

6. WHAT ARE THE TAX IMPLICATIONS ON HUF?
Up to Rs. 2, 00,000 No Tax
Rs. 2, 00,001 – 5, 00,000 10%
Rs. 5, 00,001 – 10, 00,000 20%
Above 10, 00,000 30%
Educational Cess is Payable at 3% on Tax Calculated.
Surcharge at 10% if total Income Exceeds Rs. 1 Crore.

03/09/2013

1. WHAT IS A PUBLIC LIMITED COMPANY?
A public limited company is a voluntary association of members which is incorporated and, therefore has a separate legal existence and the liability of whose members is limited. Its main features are :-
The company has a separate legal existence apart from its members who compose it.
Its formation, working and its winding up, in fact, all its activities are strictly governed by laws, rules and regulations. The Indian Companies Act, 1956 contains the provisions regarding the legal formalities for setting up of a public limited company. Registrars of Companies (ROC) appointed under the Companies Act covering the various States and Union Territories are vested with the primary duty of registering companies floated in the respective states and the Union Territories.
A company must have a minimum of seven members but there is no limit as regards the maximum number.
The company collects its capital by the sale of its shares and those who buy the shares are called the members. The amount so collected is called the share capital.
The shares of a company are freely transferable and that too without the prior consent of other shareholders or without subsequent notice to the company.
The liability of a member of a company is limited to the face value of the shares he owns. Once he has paid the whole of the face value, he has no obligation to contribute anything to pay off the creditors of the company.
The shareholders of a company do not have the right to participate in the day-to-day management of the business of a company. This ensures separation of ownership from management. The power of decision making in a company is vested in the Board of Directors, and all policy decisions are taken at the Board level by the majority rule. This ensures a unity of direction in management.
As a company is an independent legal person, its existence is not affected by the death, retirement or insolvency of any of its shareholders.

2. WHAT ARE THE ADVANTAGES OF A PUBLIC LIMITED COMPANY?
1. Continuity of existence
2. Larger amount of capital
3. Unity of direction
4. Efficient management
5. Limited liability

3. WHAT ARE THE DISADVANTAGES OF A PUBLIC LIMITED COMPANY?
1. Scope for promotional frauds
2. Undemocratic control
3. Scope for directors for personal profit
4. Subjected to strict regulations

4. HOW TO REGISTER A PUBLIC LIMITED COMPANY?
A Public Limited Company is a Company limited by shares in which there is no restrictions on the maximum number of shareholders. It can offer its shares or debentures to Public can make or accept deposits from Public and there are no restrictions on the transfer of shares. The liability of each shareholder is limited to the extent of the amount of shares subscribed. However, the liability of a Director/ Manager of such a Company can at times be unlimited. The minimum number of shareholders is 7 and Directors is 3. It also has a minimum share capital requirement of Rs.500, 000. A Public Limited Company should be registered under the companies act, 1956 with Registrar of Companies of the respective State. Although the company registration with RoC is on State level, it is free to do Business anywhere in India.

STEP 1: Finalizing a Business Name
• 6 names of the company should be proposed in preferential order along with suitable justification for the proposed names. This must be followed by the word "Limited".
• The proposed names should not be identical or very similar to any existing company name.
• Few words are restricted to be part of the name e.g. "India", "Institute", "National" etc. are allowed in certain circumstances and may also carry higher minimum capital condition.
• Confirmation about availability of a specific business name must be obtained before proceeding ahead with other steps.
• Applicable Form: Form 1A.
1. Registered Office Address
• All communication from Regulatory authorities is done at this address.
• This can be different from the actual place where the business is conducted.
• The ownership/ rental agreement should be in favour of proposed company or proposed directors/ shareholders.
• This will govern the selection of State, whose RoC will be used for registering/ incorporating the proposed company.
STEP 2: Executing Power of Attorney
• Power of Attorney should be executed by All Directors authorizing a person to carry out any changes in the documents, if required, and also to submit all the documents to the RoC and collect the Certificate of Incorporation.
STEP 3: Drafting Memorandum of Association (MoA)
• The memorandum of association of a company is the document that governs the relationship between the company and the outside world.
• A memorandum of association is required to state the name of the company, the type of company (such as public limited company or private company limited by shares), the objectives of the company, its authorized share capital, and the subscribers. A company may alter particular parts of its memorandum at any time by a special resolution of its shareholders, provided that the amendment complies with company law.
• Should be done on prescribed value of Stamp Paper
STEP 4: Drafting Articles of Association (AoA)
• The articles of association of a company are the regulations governing the relationships between the shareholders and directors of the company.
• Articles of association typically cover the issuing of shares, the different voting and dividend rights attached to different classes of share, restrictions on the transfer of shares, the rules of board meetings and shareholder meetings, and other similar issues.
• Should be done on Prescribed value of Stamp paper
2. List of all persons who have consented to Act as Directors alongwith their individual consent letters
3. Obtaining Director Identification Number ( DIN) for every proposed Director of the company.
• Applicable Form: Form DIN-1
• Should be applied individually for every Director
4. Obtaining Digital Signature for at least 1 Director
• Digital signatures are now madatory for companies. At least 1 Director should have a digital signature.
5. Obtaining PAN for every proposed Director
• Applicable Form : Form 49A from Income Tax Department
• Should be applied individually for every Director
6. Submitting different forms for registering the company alongwith their applicable fees:
• Declaration of compliance - Form 1
• Notice of situation of registered office of the company - Form 18
• Particulars of the Director's, Manager or Secretary - Form 32
• MoA and AoA
• List of Directors and their consent letters
• Pay applicable fees online or offline for various forms to be submitted
• All the Forms and Documents should be submitted in Electronic form (eFiling) and Physical form both
• All the forms and documents should be signed by at least 1 Director and a professional (Chartered Accountant, Company Secretary or Cost Accountant in Full time practice)
7. Obtaining Certificate of Incorporation
• The RoC will issue a Certificate of Incorporation after verification of all submitted documents.
8. Obtaining PAN for the Company
• Applicable Form: Form 49A from Income Tax Department
9. Register with all other regulatory authorities and obtain compulsory permissions
• Income Tax Department - PAN (Permanent Account Number) and TAN (Tax Deductor Account Number)
• Sales Tax/ VAT registration, if applicable
• Service Tax, if applicable.
• Provident Fund, if applicable.
• ESIC (Employee State Insurance Corporation)
• STPI/ SEZ registration and custom bonding, if applicable
10. Rubber Stamps and Seal
• "For Director" Stamp, Address Stamp etc.
• Common seal for the company.

6. WHAT ARE THE VARIOUS PROCESSES FOR REGISTRATION OF PUBLIC LIMITED COMPANY?

1. Select, in order of preference, suitable names, not less than four, indicative of the main objects of the company. The name should not resemble that of any other registered company or violate the provisions of the Emblems and Names (Prevention of Improper Use) Act, 1950.
2. Apply to the concerned ROC to ascertain the availability of a name by using the Form 1-A (General Rules and Forms), along with a fee. If the proposed name is not available, or is rejected, apply for a fresh name using the same application.
3. Draft M & A: Draft the Memorandum and Articles of Association with the help of an advocate, have it vetted by the ROC, and print it. These documents state the company's objectives. It is best to take professional help in drafting to take into account the company's expansion in the future.
4. Stamp it: After finalising the Memorandum and Articles of Association, it needs to be stamped with the Registrar of Stamps after paying the appropriate stamp duty
5. Sign & witness: Get the Memorandum and Articles signed by at least two subscribers (with the number of shares they have subscribed for), and witnessed by at least one person.
6. Fill forms: the following forms duly filled and signed:
a) Declaration of compliance.
b) Notice of the situation of the registered office of the company.
c) Particulars of the director, manager or secretary.

7. Public Ltd Co.
These are the additional steps required to form a public limited company:
a) Get the consent of directors to act as such in Form no. 29.
b) Get payment for the application and allotment money by directors on shares taken or agreed to be taken.
c) File the statement in lieu of prospectus with the ROC as per Schedule IV of the Companies Act.
d) File a declaration on Form 20, and get it signed by one of the directors.
e) Obtain the Certificate of Commencement of Business.
8. Incorporate
Get the Certificate of Incorporation from ROC.

7. WHAT ARE THE INCOME TAX IMPLICATION ON PUBLIC LIMITED COMPANY
Income Tax charged at 30% of total income.
Surcharge at 10% if total Income Exceeds Rs. 10 Crore.
Educational Cess is payable at 3% of the total of Income Tax.

03/09/2013

1. What do you mean by co-operative society?

A co-operative society is a special type of business organization different from other forms of organization. The term co-operation is derived from the Latin word co-operari, where the word co means ‘with’ and operari means ‘to work’. Thus, co-operation means working together. So those who want to work together with some common economic objective can form a society which is termed as “co-operative society”. It is a voluntary association of persons who work together to promote their economic interest. It works on the principle of self-help as well as mutual help. The main objective is to provide support to the members. Nobody joins a cooperative society to earn profit. People come forward as a group, pool their individual resources, utilize them in the best possible manner, and derive some common benefit out of it.

2. What are the characteristics of co-operative society?

1. Open membership: The membership of a Co-operative Society is open to all those who have a common interest. A minimum of ten members are required to form a cooperative society. The Cooperative societies Act do not specify the maximum number of members for any co-operative society. However, after the formation of the society, the member may specify the maximum number of members.
2. Voluntary Association: Members join the co-operative society voluntarily, that is, by choice. A member can join the society as and when he likes, continue for as long as he likes, and leave the society at will.
State control: To protect the interest of members, co-operative societies are placed under state control through registration. While getting registered, a society has to submit details about the members and the business it is to undertake. It has to maintain books of accounts, which are to be audited by government auditors.
3. Sources of Finance: In a co-operative society capital is contributed by all the members. However, it can easily raise loans and secure grants from government after its registration.
4. Democratic Management: Co-operative societies are managed on democratic lines. The society is managed by a group known as “Board of Directors”. The members of the board of directors are the elected representatives of the society. Each member has a single vote, irrespective of the number of shares held. For example, in a village credit society the small farmer having one share has equal voting right as that of a landlord having 20 shares.
5. Service motive: Co-operatives are not formed to maximize profit like other forms of business organization. The main purpose of a Co-operative Society is to provide service to its members. For example, in a Consumer Co-operative Store, goods are sold to its members at a reasonable price by retaining a small margin of profit. It also provides better quality goods to its members and the general public.
6. Separate Legal Entity: A Co-operative Society is registered under the Co-operative Societies Act. After registration a society becomes a separate legal entity, with limited liability of its members. Death, insolvency or lunacy of a member does not affect the existence of a society. It can enter into agreements with others and can purchase or sell properties in its own name.
7. Distribution of Surplus: Every co-operative society in addition to providing services to its members also generates some profit while conducting business. Profits are not earned at the cost of its members. Profit generated is distributed to its members not on the basis of the shares held by the members.
8. Self-help through mutual cooperation: Co-operative Societies thrive on the IS principle of mutual help. They are the organizations of financially weaker sections of society. Co-operative Societies convert the weakness of members into strength by adopting the principle of self-help through mutual co-operation. It is only by working jointly on the principle of “Each for all and all for each”, the members can fight exploitation and secure a place in society.

3. How is the REGISTRATION OF A CO-OPERATIVE SOCIETY done?
A Co-operative Society can be formed as per the provisions of the Co-operative Societies Act, 1912. At least ten persons having the capacity to enter into a contract with common economic objectives, like farming, weaving, consuming, etc. can form a Co-operative Society. A joint application along with the bye-laws of the society containing the details about the society and its members has to be submitted to the Registrar of Co-operative Societies of the concerned state. After scrutiny of the application and the bye–laws, the registrar issues a Certificate of Registration.

4. What is the basic REQUIREMENTS FOR REGISTRATION in Co-operative societies?

1. Application with the signature of all members

2. Bye-laws of the society containing:

(a) Name, address and aims and objectives of the society;

(b) Names, addresses and occupations of members;

(c) Mode of admitting new members;

(d) Share capital and its division.

5. What is the Income Tax Rates for Co-operative Societies?

A. Where the total income does not exceed Rs. 10,000. 10%
B. Where the total income exceeds Rs. 10,000 but does not exceed Rs. 20,000. 20%
C. Where the total income exceeds Rs. 20,000. 30%

03/09/2013

HOW TO RECONSTITUTE A PARTNERSHIP FIRM?

A partnership firm is not a legal entity. It has no perpetual existence as in case of a company incorporated under Companies Act. However, the Act gives the partnership limited rights of continuity of business despite change of partners. In absence of specific provision in partnership deed, death or insolvency of a partner means dissolution of the firm. However, partnership can provide that the firm will not dissolve in such case.
Change in partners may occur due to various reasons like death, retirement, admission of new member, expulsion, insolvency, transfer of interest by partner etc. After such change, the rights and liabilities of each partner are determined afresh. This is termed as reconstitution of a firm.
Any change in this relationship amounts to reconstitution of the partnership firm. A change in the partnership agreement brings to an end the existing agreement and a new agreement comes into being. This new agreement changes the relationship among the members of the partnership firm. Hence, whenever there is a change in the partnership agreement, the firm continues but it amounts to their constitution of the partnership firm. Reconstitution of the firm can take place on the following occasions:

1. Change in the profit sharing ratio of the existing partners: Sometimes, the partners of a firm may agree to change their existing profit sharing ratio. As a result of this, some partners will gain in future profits while others will lose. In such a situation, the partner who gains by change in profit sharing ratio must compensate the partner who has made the sacrifice. This effectively amounts to one partner buying the share of profits from another partner.

2. Admission of a new partner: When firm requires additional capital or managerial help or both for the expansion of its business a new partner may be admitted to supplement its existing resources. According to the Partnership Act, 1932, a new partner can be admitted into the firm only with the consent of all existing partners unless otherwise agreed upon. With the admission of a new partner, the partnership firm is reconstituted and a new agreement is entered into to carry on the business of the firm.

3. Retirement of an existing partner: When one or more partners leave the firm and the remaining partners continue to do the business of the firm, it is known as retirement of a partner. A Partner has the right to retire from the firm after giving due notice in advance. Due to retirement, the existing partnership comes to an end and the remaining partners form a new agreement and the partnership firm is reconstituted with new terms and conditions. The terms and conditions of retirement of a partner are normally provided in the partnership deed. If not, they are agreed upon by the partners at the time of retirement.

4. Death of a partner: When there are two partners, and one of them dies, the firm is automatically dissolved even if there is clause in the partnership deed that the firm will continue in existence. However in case of more than 2 partners, the existing partners may decide to continue the partnership and may do so after settling the claims of deceased partner and by creating a new partnership deed.

5. Amalgamation of two partnership firms: Amalgamation of firms takes place when two or more firms working independently merge their business into a single unit. The firms engaged in identical business combine their business activities by entering into new partnership agreement/deed and form into a new firm known as amalgamated firm. The result of amalgamation is that the combining units lose their independent identity and the partners of the combining firms become the partners of the new firm.

03/09/2013

WHAT IS DISSOLUTION OF PARTNERSHIP?
The word Dissolution implies “the undoing or breaking of a bond ties”. In other words, dissolution implies that the existing state of arrangement is done away with.
An existing partnership dissolves whenever the reconstitution of the existing firm is caused by admission, retirement or death of a partner. However, the dissolution of partnership does not lead to the dissolution of the firm since the two situations are different. In case of dissolution of partnership, the firm continues, only the partnership relation is reconstituted, but in case of dissolution of firm, not only partnership is dissolved but the firm also loses its existence, implying thereby that the firm ceases to operate as a partnership firm (Section 39 of the Partnership Act, 1932). After dissolution of firm, the firm does not remain in business. The only business to be carried out is akin to its funeral ceremony, i.e., closing ceremony of all existing activities.

Dissolution of a Partnership
The relation of partnership among different partners is changed without changing the partnership firm. Thus, in case of dissolution of partnership, the economic basis of relationship of partners is reconstituted without affecting the entity of the firm which continues to remain in business as ever before. A partnership is dissolved by change of mutual contract in the following cases :
1. Change in profit sharing ratio among partners;
2. Admission of a new partner;
3. Retirement of a partner, where at least two persons remain as partners;
4. Death of a partner (Section 42);
5. Adjudication of a partner as an insolvent;
6. Completion of a venture if partnership is formed for that;
7. Expiry of the period of partnership if partnership is for a pre-determined period;
8. Merger of one partnership firm into another.

Dissolution of a Firm
Dissolution of a firm takes place in the following cases:
(1) Dissolution by agreement: A firm is dissolved in case:
(a) All the partners give consent to it, or
(b) As per the terms of partnership agreement.
(2) Compulsory dissolution: A firm is dissolved compulsorily in the following cases:
(a) Where all the partners or all except one partner, become insolvent or insane rendering them incompetent to sign a contract;
(b) Where the business becomes illegal;
(c) Where all the partners except one decide to retire from the firm;
(d) Where all the partners or all except one partner dies;
(e) Where the partnership deed includes any provision regarding the happening of the following:
(i) Expiry of the period for which the partnership was formed;
(ii) Completion of the specific venture or project for which the firm was formed.
(3) Dissolution by notice: In case of partnership at will, the firm may be dissolved if any of the partners gives a notice in writing to the other partners signifying his intention of seeking dissolution of the firm.
(4) Dissolution on the happening of certain contingencies:
Subject to contract between the partners, a firm can be dissolved on the happening of following circumstances:
i. Expiry of the term when constituted for a fixed term.
ii. Completion of the venture or undertaking when the firm constituted to carry on a venture or undertaking.
iii. Death of a partner.
iv. Adjudication of a partner as an insolvent.
The partnership agreement may provide that the firm will not be dissolved in any of the above circumstances.

(5) Dissolution by court:
When the partners are having difference of opinion regarding dissolution of the firm on certain grounds, a suit can be filed by any partner in the court to dissolve the firm. Depending upon the merits of the matter, the court may order for dissolution of the firm. Under Section 44 of the Act, the court may dissolve the firm on the following grounds:

i. Insanity:
When a partner becomes insane, the court may order to dissolve the firm. The suit can be filed by any of the other partners or even by any friend of the insane partner.
ii. Permanent incapacity:
When a partner becomes permanently incapable of doing his duties as a partner, the court may dissolve the firm. The suit for dissolution must be filed by a partner other than the incapacitated partner.
iii. Misconduct:
When a partner, other than the partner suing is guilty of misconduct and such misconduct is likely to affect the carrying on of the business, the court may dissolve the firm. The misconduct may be outside the business (punishment for an offence, adultery of a partner etc.
iv. Persistent breach of agreement:
When a partner persistently or wilfully commits breach of agreement or conducts himself in such a manner that it is impossible on the part of other partners to carry on the business with him, the court may dissolve the firm. Maintaining wrong accounts, taking away the books of accounts, continuous quarrelling with other partners are good grounds.
v. Transfer of interest:
When a partner transfers his whole interest in the firm to a third party or all his shares are sold or attached by the court under a decree, the court may dissolve the firm.
vi. Continuous losses:
When the business cannot be carried on except at a loss, the court may dissolve the firm.
vii. Any other ground:
The court may dissolve the firm on any other ground where the court considers it just and equitable to wind up the business.

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