Leaving or Winding Up an Ordinary Partnership in Turkey: Valuation, Debts and TCO 633–645
Leaving a Turkish ordinary partnership does not always mean that the entire partnership must be wound up, and winding it up does not erase its obligations to outsiders. Articles 633–636 of the Turkish Code of Obligations address departure or exclusion where the relationship continues with the other partners. Articles 639–645 address ending the partnership and liquidation. The two routes use different questions about the effective date, valuation and ongoing business. A settlement should therefore identify whether one participant is leaving a continuing venture or everyone is closing the relationship before any final payment is calculated.
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Confirm the legal structure and the agreed continuation terms
An ordinary partnership, or adi ortaklık, is the common-purpose relationship defined by Article 620. It must be distinguished from shareholding in a registered limited or joint-stock company. Company exit, company liquidation and the winding up of an ordinary partnership are not interchangeable procedures merely because the participants use the same business name.
Read the formation agreement, amendments, contribution records and continuation clauses together. A clause continuing the venture with surviving participants is different from a clause involving the heirs of a deceased partner. The wording determines which statutory route must be assessed when a death, insolvency or departure occurs.
For ongoing information and annual accounting rights, our partnership accounts guide addresses Articles 620–632. This article instead concentrates on the transition out of the relationship and the resulting settlement. An unresolved annual account should be included in that process, not silently treated as already agreed.
Article 633 allows continuation with the remaining partners in specified cases
Article 633 concerns a partner giving termination notice, being restricted in legal capacity, becoming bankrupt, having a liquidation share realised through enforcement, or dying. Where the agreement provides for continuation with the other partners, the affected partner, representative or heir can leave, or the others can exclude that person through written notification.
The continuation clause and the relevant event are both important. The provision should not be paraphrased as a general power for a majority to expel any unpopular partner at any time. A notice relying on Article 633 needs to identify the event and the contractual basis for continuing without the affected participant.
Preserve the written notice and proof of its communication. Record the date partnership status ended and the evidence supporting that date. The financial rights described in the following provisions are assessed by reference to departure, so an unsupported or ambiguous date can affect the entire settlement calculation.
The departing share passes to the others, but payment obligations remain
Under Article 634, the departing or excluded partner’s share passes automatically to the other partners in proportion to their shares. The remaining partners must return items that the departing person supplied merely for use and pay the liquidation share that would have been due had the partnership been liquidated on the date membership ended.
This is not simply repayment of the amount originally invested. The statutory measure requires a departure-date account of the partnership. Contributions, assets, liabilities, advances and the relevant profit or loss position must be identified. A bank balance alone cannot show the value of the interest being settled.
Article 634 requires a person expert in financial matters to calculate the share as at the end of partnership status. If the parties cannot agree on that expert, the judge appoints one. A unilateral spreadsheet can be useful working material, but it should not be presented as the mutually accepted or judicially determined valuation where that is not what occurred.
Due debts and future debts are treated differently in the exit settlement
The remaining partners must release the departing person from joint and several responsibility arising from the partnership’s due debts. For debts not yet due, Article 634 permits security to be provided instead of release. The settlement schedule should therefore distinguish matured liabilities from future liabilities rather than placing them in one generic provision about business debts.
The obligation between partners to procure release is not proof that an outside creditor actually agreed to release its debtor. Obtain the creditor documents and identify the legal mechanism used. Our debt-assumption guide explains why an internal allocation and an effective creditor-side substitution are different matters.
Personal suretyships, security documents and direct undertakings must also be listed separately. A person can cease to participate in a venture while remaining bound under a distinct instrument unless a valid ending or release applies. The exit agreement should not describe every separate undertaking as cancelled merely because the partners have reached a financial settlement among themselves.
A negative departure account can require payment by the leaving partner
Article 635 addresses the case where the partnership’s assets at the end of membership are insufficient to cover its debts. The departing or excluded partner must pay the others the portion of debt allocated under the rules on participation in losses. Exit is therefore not a statutory guarantee that the leaving person always receives a positive amount.
The loss allocation needs its contractual and statutory basis. Distinguish a contribution percentage, a profit-sharing percentage and the applicable loss share. The general allocation rules in Article 623 are relevant, but the actual agreement must be examined before the figures are settled.
Supporting records should identify the liabilities included, their connection with partnership business and any payments already made. A disputed claim and an admitted debt should remain distinguishable. The financial expert’s task is assisted by a complete liability schedule, not by treating every amount asserted by one partner as automatically payable.
Unfinished transactions can survive the partner’s departure
Article 636 keeps the former partner involved in profit or loss arising from business that had not been completed during that person’s membership. At the end of the accounting year, the former partner can request any profit share from completed transactions and the necessary information about business still continuing.
The departure file should therefore include an open-transaction register. Identify each unfinished contract, the work already performed, receipts, expected obligations and the records needed when the result becomes known. Closing the person’s access to all information immediately can conflict with the specific continuing information right in Article 636.
An exit payment should state how unfinished matters are treated. A provisional calculation, a final settlement of identified transactions and a broad release have different effects. The parties should not assume that an unexplained final-payment label resolves every future result from work already underway.
Article 639 identifies when the whole partnership ends
The partnership ends when its agreed purpose is achieved or becomes impossible; in the specified death, capacity, bankruptcy or enforcement circumstances where the required continuation arrangement is absent; by unanimous decision; on expiry of the agreed term; through a qualifying termination notice; or by court decision on a request supported by just cause.
These grounds need to be matched to the actual event. Completion of a defined project is different from one partner simply losing interest. A fixed term ending is different from an indefinite venture continuing after that date by the partners’ implied intention. The formation documents and later conduct determine which situation is being examined.
Article 639 permits judicial dissolution for just cause without another condition being required. It should not be described as an automatic dissolution whenever a partner alleges misconduct. The ground, supporting evidence and court relief sought still need to be identified in the proceeding.
The six-month notice rule also depends on the accounting year
Under Article 640, each partner can give six months’ prior termination notice where the partnership is indefinite or intended to continue for one partner’s lifetime. Notice cannot be given contrary to good faith, particularly at an inappropriate time, and it takes effect only at the end of an accounting year.
A notice analysis must therefore consider more than counting six months from dispatch. Identify the accounting-year end, the contractual duration, the notice’s delivery and the good-faith circumstances. A statement that every venture ends exactly six months after any message is sent would omit important parts of the rule.
If the partners continue the partnership by implied agreement after the stated term has expired, Article 640 treats it as indefinite. Retain the records showing whether operations continued and on what basis. A term printed in the original agreement does not, by itself, resolve the status of a venture that both sides continued to operate afterwards.
Ending the relationship does not justify abandoning urgent business
Article 641 addresses management where the partnership ends other than by termination notice. The relevant partner’s management authority continues until that person learns, or would have learned through the required care, that the partnership ended. The actual knowledge position therefore matters to the treatment of acts during the transition.
Where a partner’s death ends the partnership, the heir must immediately inform the others. Until necessary measures are taken, the heir continues the deceased’s former tasks in accordance with good faith, while the other partners temporarily continue partnership affairs in the same way. The provision provides continuity for protective handling, not permission to conceal the death or start unrelated projects.
Make a handover list of pending payments, documents, assets and urgent contractual obligations. The end of an internal relationship should not be used as a reason to discard records or leave an avoidable loss unaddressed. Preserve the chronology of who knew what and which protective actions were taken.
Property contributed in ownership is not automatically returned in kind
Article 642 states that a partner who contributed ownership of an item cannot simply take that same item back through liquidation. The partner can request the value assigned to the contribution; if no value was assigned, the relevant value is the item’s value when contributed.
This differs from an item supplied merely for use, which Article 634 addresses on an individual departure. The original contribution record therefore has a direct effect on the claim. A vehicle, equipment or property record should show whether ownership was contributed or only temporary use was made available.
The physical location of an asset is not a complete answer to ownership or liquidation entitlement. A departing participant should not remove equipment merely because it was originally purchased with that person’s money. Establish the contribution’s legal effect and the agreed settlement before treating the asset as personally recoverable.
Article 643 provides the financial sequence for liquidation
After partnership debts are paid and partners’ advances, partnership expenses and contributions are returned, the remaining surplus is shared as profit. If the assets remaining after debts, expenses and advances are paid are insufficient to return contributions, the loss is shared between partners.
The calculation therefore needs separate categories. External debts, partner advances, reimbursable expenditure, contributions and residual profit are not one interchangeable account. A proposed distribution that pays investment capital while ignoring established partnership liabilities fails to reflect the statutory sequence.
| Record | Purpose in settlement |
|---|---|
| Asset and receivable inventory | Identify property and collectible claims available for liquidation |
| Creditor schedule | Identify liabilities and payment or dispute status |
| Partner advance and expense ledger | Separate these claims from contributions and profit |
| Contribution schedule | Establish the agreed or statutory return value |
| Open-business register | Track unfinished transactions and later results |
| Distribution account | Explain the remaining surplus or loss and each person’s share |
A traceable account should connect each figure to its source document. The receipts and discharged-debt guide explains why evidence of payments and the return or cancellation of debt instruments also matter during close-out.
All partners participate in liquidation unless a proper arrangement changes the work
Article 644 provides for liquidation jointly by all partners, including those who were not managers. Where the contract assigns particular transactions to a partner acting in that person’s own name for the partnership account, that partner must continue those transactions after termination and account to the others.
The partners can appoint a liquidator. If they cannot agree, any partner can request judicial appointment. Disputes about the liquidation procedure or the distribution share can also be resolved by the judge on an interested person’s request. The former manager is not automatically entitled to determine every liquidation issue alone.
Where no contractual fee provision or unanimous fee decision exists, the judge determines the liquidator’s remuneration by reference to the work and partnership-asset income. Payment comes from partnership assets and, if that is not possible, from the partners jointly and severally. The appointment process should therefore address both authority and the source of the liquidation costs.
Article 645 preserves obligations to third parties
Article 645 states directly that ending the partnership does not change obligations towards third parties. An internal closing agreement is not a general creditor release. Claims arising from transactions undertaken together or through a representative also require the Article 638 responsibility analysis and the actual contract documents.
Where joint and several liability applies, the creditor’s external claim must be distinguished from the partners’ internal contribution arrangement. The joint-debtor guide explains that distinction. An internal promise to bear a debt should not be reported as if the creditor had accepted a different debtor.
For an overseas partner, the practical review should end with a clear statement of the exit date, settlement amount, unresolved business, retained documents and outstanding external exposure. Include every served claim and its service date. Liquidation discussions do not themselves suspend a court or enforcement deadline.
Frequently asked questions
Does one partner leaving always dissolve the entire venture?
No. Article 633 provides a continuation route in specified circumstances where the agreement allows the partnership to continue with the remaining partners.
Is the departing partner automatically repaid the original investment?
Article 634 uses the liquidation share that would be due at the date partnership status ended. The actual assets, liabilities and contribution records must be valued.
Who calculates a disputed exit share?
Article 634 requires a financial expert. If the parties cannot agree on the person, the judge appoints the expert.
Can the leaving partner owe money instead of receiving it?
Yes. Article 635 requires payment of the relevant loss share where the departure-date assets do not cover the partnership’s debts.
Do unfinished contracts stop affecting the former partner?
Not automatically. Article 636 preserves participation in profit or loss from unfinished business and provides the relevant year-end information and profit rights.
Does six months’ notice always end the partnership on any chosen date?
No. Article 640 applies to the specified indefinite or lifetime arrangements, requires good faith and makes notice effective only at the accounting-year end.
Can an ownership contribution be reclaimed as the same physical item?
Article 642 generally gives a claim to the assigned contribution value, or its value when contributed if none was assigned, rather than return of the same item in kind.
Can a non-managing partner take part in liquidation?
Yes. Article 644 includes all partners in joint liquidation, subject to its arrangements for particular transactions and an appointed liquidator.
What happens if no liquidator can be agreed?
Any partner may request judicial appointment under Article 644. The article also provides a route for disputes over liquidation procedure and distribution shares.
Does winding up erase creditor claims?
No. Article 645 expressly preserves obligations to third parties. Internal settlement and an effective creditor release are different legal acts.
Official statutory sources
Turkish Code of Obligations No. 6098, Articles 633–645; official Ministry text, pages 129–132. This English explanation is not an official translation; the Turkish text governs.
Ask about a partnership exit
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