Question

process taken when a partnership is termination?

Answer 1

The termination of partnership is called a Dissolution of Partnership Firm. In this, the business of the partnership firm is discontinued and partners start the termination process. The partners need to Fill and file the relevant form as per the statutory requirement of the country they are operating in. For Example, Partnership in India is governed by "The Indian Partnership Act, 1932". Partnership termination can take various forms such as Dissolution by partners, Compulsory Dissolution, Dissolution by agreement or Dissolution by the Court. Process followed in each of these forms of termination differs and is governed by law.

So, after filling th relevant form for dissolution, the partners may look to hire a official liquidator who can liquidate the firm. The role of Liquidator is to sell firm's asset and pay of its liabilities. He charges a remuneration for his work. The proceeds left after settling all liabilities are distributed to partner's capital account in their Profit sharing ratio. In case assets realise short of liabilities payable, partners are asked to contribute capital to settle all external debts.

After, the assets are sold, liabilities are paid and partners' capital are settled, the firm is dissolved and the Registrar of Firms is duly informed in accordance with applicable statutory requirement.