Explanation of Article 534
The article refers to the provisions related to the division of profits and losses in the company. The first paragraph outlines the general rule for dividing profits, which is that they should be in proportion to each partner's share in the company; because the default is that if the partners do not agree on the division of profits, their intention is directed towards division according to each one's shares; this is merely an interpretation of the contracting parties' intent. However, if the company contract specifies each partner's share of the profits, this agreement must be adhered to, whether there is an explicit or implicit agreement. The partner's share of the profit does not have to be proportional to their share in the company's capital; it may be more or less. The second paragraph outlines the general rule for dividing losses, which is that losses are divided in proportion to each partner's share in the company, and the paragraph does not mention the possibility of agreeing otherwise; because the loss follows ownership, the partner must bear the loss according to what they own. Thus, it is permissible for the division of profit in the company to differ from the division of loss, such as when the company consists of two partners with equal shares, and they agree that one receives 70% of the profit and the other 30%, while the loss is according to the shares, meaning each bears half.
Related To
Article 534
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Profits shall be divided among the partners in proportion to each partner’s share in the company, unless agreed otherwise.
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Losses shall be divided among the partners in proportion to each partner’s share in the company.