Page 2 - LN DISSOLUTION OF FIRM
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The firm is wound up.
Assets and liabilities of the
Winding up Assets are realized and
firm are only revalued.
liabilities are settled.
A Court Order can dissolve A Court Order cannot
Court order
a firm. dissolve a partnership.
It involves the dissolution It does not involve the
Scope of partnership between dissolution of the firm.
all partners.
Final closure of
Yes No
books
Modes of Dissolution of a Firm
Types of dissolution of firms: A Partnership firm can be dissolved in any the
following ways:
(A)Without the intervention of the court:
(1) When all partners agree to dissolve the firm (Sec. 40);
(2) Compulsory Dissolution (Sec. 41)
(i) When all or except but one partner of the firm become insolvent
(ii) When business of the firm become unlawful.
(3) On the happening of any of the following events: (Sec. 42)
(i) On the insolvency of a partner.
(ii) On the fulfillment of the objective of the firm for which the for was formed.
(iii) On the expiry of the (period) for which the firm was formed.
