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How to Dissolve a Partnership Firm in Pakistan

Do you know that How to Dissolve a Partnership Firm in Pakistan as in Pakistan the Partnership firms and businesses are being overlooked through the legislation of the Partnership Act of 1932, which is being formed before the independence of the state but even after the independence is being continued. The term dissolution means coming to an end or discontinuation. The dissolution of the firm implies a complete breakdown of the partnership relation among all the partners. Dissolution of the partnership (owing to retirement, death or insolvency of a partner), merely involves change in the relation of the partners but it does not end the firm; the partnership would certainly come to an end but the firm, the reconstituted one might continue under the same name.

How to Dissolve a Partnership Firm in Pakistan

dissolve a partnership firm in Pakistan

So the dissolution of the partnership Firm in Pakistan may or may not include the dissolution of the firm but the dissolution of the firm necessarily means the dissolution of the partnership. On dissolution of the firm, the business of the firm ceases to exist since its affairs are would up by selling the assets and by paying the liabilities and discharging the claims of the partners. The dissolution of partnership among all partners of a firm is called dissolution of the firm. In Pakistan and according to the Partnership Act there are several scenarios through which the partnership between any two or more individuals is being dissolved. These respective situations and scenarios are being defined below;

Dissolve a Partnership by Agreement: In the dissolution of the a firm through the agreement is being done with the mutual consent of all the partners and is dissolved in case;

  • All the partners give consent
  • As per the terms partnership agreement.

Compulsory dissolution: There are various situations in which the partnership is being automatically being dissolved permanently, with no possible revert. A firm is bieng dissolved compulsorily in the following cases;

  • When all the partners or all excepting one partner becomes insolvent or of unsound mind.
  • When the business becomes unlawful.
  • When all the partners excepting one decide to retire from the firm.
  • When all the partners or all excepting one partner die.
  • A firm is also dissolved compulsorily if the partnership deed includes any provision regarding the happening of the following events
    • Expiry of the period for which the firm was formed.
    • Completion of the specific venture or project for which the firm was formed.

Dissolve a Partnership by notice: In case of a partnership at will, the firm may be dissolved if any one of the partner gives a notice in writing to the other partners.

Dissolve a Partnership by Court: A court may order a partnership firm to be dissolved in the following cases;

  • When a partner becomes of unsound mind
  • When a partner becomes permanently incapable of performing his/her duties as a partner.

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