"Governments must continuously fulfil 3 conditions in order to maintain their status. If any of the conditions concerning the number of planets, systems, and population under control are not met for 25 days, then the government will be transformed back into its previous faction type."
So if membership falls below 21 min required does it disband or go back to the old faction type.
Can factions change their type? eg Item producer becomes shipbuilder or religious becomes paramilitary.
As Wilhelm said, they revert to their original type. All "old" governments (i.e. govs that were governments before the function to convert to gov was coded) should have picked an "original" faction type by now.