Dissolution of Firms
Dissolution of Firms or Firm Winding up is made in accordance with Partnership Act 1961 or Partnership Deed. Other Statutory Registration associated with the Firm also need to be surrendered such as PAN, TAN, GST etc.
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A Partnership Firm incorporated under Partnership Act and registered by the Registrar of firms or is operated based upon the executed partnership deed need to adhere the compliance as per the provisions contained in Partnership Act or as per the partnership deed executed. There are many circumstances which lead to the decision of dissolution of firms, these circumstances depend upon the facts and situation of the firms, however some most common circumstances which leads to dissolution of firms are:
- The partnership firm unable to commence business after incorporation, there might be situation that the partnership firm is incorporated for a business but after incorporation the business might not got started, then eventually it leads to dissolution of firm after some significant time period say one year.
- The objective for which the partnership firm is incorporated is fulfilled and there is nothing left to operate the partnership firm. There are certain partnership firm which got incorporated for the purpose of specific task or objective, after fulfilment of such task or objective the partnership firm need to be dissolved.
- The business of the partnership firm no longer exist and it incur losses, there might be circumstances wherein the partnership firm was successfully operating but after some years its business doesn’t exist and the partnership firm incur losses, thus such firm may got dissolved
- The partners / management of the partnership firm dies and remaining partner doesn’t want to continue the firm.
- The partnership firm become insolvent and unable to pay to its debt, in such cases there are circumstances for dissolution of firm by the competent court.
- There might arises conflict amongst the partners and eventually it leads to the decision for dissolution of firm.
- The partnership firm has operated in the manner which is against the interest of sovereignty and integrity of India, security of state, friendly relation with foreign state etc.
- The partnership firm activity was conducted in fraudulent manner and the statement of affairs has been guilty of fraud, misfeasance or any misconduct then such circumstances leads to dissolution of firms.
- Voluntary Dissolution of Firm: In this case the partners of the firm proceed for finalizing the books of account and distributing the assets of the company as per partnership deed.
- Dissolution of Firm by order of Court: In this case any competent court or tribunal has ordered for dissolution of firm due to reasons recorded in writing and mentioned in the order of dissolution of firm.
- Dissolution of Firms as per occurance of any event, if any Partnership is formed for any project related work then after completion of such project, Firm need to be dissolved.
- Dissolution of Firms as per Notice: In the event of any court notice for the dissolution of firms based upon any default or non-compliance.