what do you understand by reconstitution of a partnership firm?
Reconstitution of a partnership refers to a situation when there is a change in the existing partnership agreement. A Partnership agreement is an agreement between two or more persons for carrying out various business activities. In case of reconstitution, a new partnership agreement is formed to replace the old partnership agreement. It means the firm continues to exist and the only change will take place in existing partnership agreement.
Thus, the cases such as admission of a new partner, death / retirement / insolvency of a partner, change in profit sharing ratio, etc., leads to a reconstitution of partnership.