Principles: Provisions applicable distribution of profit and loss in ordinary partnership are below:
i. Partners shall divide all the profits and losses of the ordinary partnership between them according to the Art. 622 of the Turkish Code of Obligations No.6098. Unless otherwise agreed, this distribution shall be made equally regardless of the amount and nature of partner’s contribution. Although a partner does not pay the contribution, he/she can still contribute the distribution of profit and loses.
Court of Appeals for the 13.Circuit discussed this matter in its decision dated 16.10.1980, 1980/4202 docket number and 1980/5464 decision number and stated that, administrator is obliged to render account and pay shares of profit each year and although a partner does not pay the contribution, he/she can still contribute the distribution of profit and loses.
ii. Distribution of profit and losses may be determined by the partners. If there is not any regulation about this matter in the partnership contract, regardless of their share, the partners share the profit or loss equally according to the Art. 623 of Turkish Code of Obligations No.6098. If the procedure of profit or loss distribution and rates are regulated in the partnership contract and other is not, that rule which regulates of them shall be applied for both the distribution of profit and losses.
Article 623 of Turkish Code of Obligations No.6098 states that;
“Unless otherwise agreed in the agreement, each partner’s profit and loss participation shares shall be equal regardless of the value and nature of their participation.
If the share of participation of profits or losses is specified in the contract, this specification shall be applied both.
Agreement states that one partner will only participate in profits without participating in loses, applies only to the partner whose contribution consists of labour.”
Court of Appeals for the 13.Circuit discussed this matter in its decision dated 07.12.2000, docked number 2000/10639 and decision number 2000/11091. According to the decision of Court of Appeals, partners have obliged to share profit and loss pursuant to the Article 522 of Turkish Code of Obligations No.818 and unless otherwise agreed, regardless of the contributions, partners shall divide the profit and loss equally.
The regulation in Swiss Code of Obligations regarding distribution of profit and loss in ordinary partnership is in the same direction with the regulation in Turkish code of Obligations No.6098.
According to the Article 553 of Swiss Code of Obligations,
“Unless otherwise agreed, each partner has an equal share in profits and losses regardless of the nature and amount of his contribution.
Where only the partner’s share in both profits or his share in the losses is agreed, such agreement applies to both.
It is permitted to agree that a partner whose contribution to the common purpose consists of labour will participate in profits but in the losses.”
As consequence, according to Turkish Laws, partners of ordinary partnership is obliged to participate in losses in addition to the profits. Thus, if partners agreed upon partners’ share in profits, such agreement shall be applied to both profits and losses.