What is meant by Reconstitution of a Partnership Firm?

Whenever there is a change in the relationship of partners, i.e., a change in the terms of the agreement, it results in the reconstitution of the firm.

In other words,

Any change in the existing agreement of partnership is the reconstitution of the firm.

As a result, the existing partnership agreement comes to an end and a new partnership agreement comes into existence.

However, the firm continues.

A firm is reconstituted on:

i) Change in the profit-sharing ratio among the existing partners.

ii) admission of a new partner or partners

iii) retirement of a partner

iv) death of a partner

v) amalgamation of two or more partnership firms.