Secret partnerships, which arise as a sub-type or appearance of ordinary partnerships in partnership law, are established by agreement of at least two persons to share the profit or loss they will incur as a result of a joint activity to be undertaken together. The partnership agreement is not subject to any particular form. In a secret partnership, only one of the partners appears against third parties, has undertaken the work alone, appears to be the owner and responsible of everything in the external relationship. We call this partner an active partner. The other partner or partners do not only remain in the internal relationship but appear in the external relationship. In no way do they appear to be owners of external partnership assets and responsible for the work performed. So everything takes place through the active partner. We call this partner a secret partner because they remain internal in this way and are in a passive position. Secret partnership is a completely legal partnership and a special kind of ordinary partnerships. (Ancak) However, as clearly stated by many authors in the Turkish legal doctrine, secret partnerships have a widespread practice and power, as opposed to being explicitly regulated by law.

Confidential partnerships as a subspecies of the internal partnership relationship can be described as short and simple as follows:

The share of the participation of the secret partner (the person who participates) by the participation of the secret partner (the person who participates) by participating in the profit and loss of a business activity carried out by another person on the basis of the contract between them (secret partner) is transferred to the assets of the active partner and the secret partner is is an ordinary partnership with which third parties are authorized to carry out transactions and can be held liable for this operation. ii

As can be understood from the above definitions and the judicial decisions concerning the confidential partnership, the confidential partnership is legally recognized and is a legally valid type of ordinary partnership.

The secret partner becomes a partner in the business of which the partner is a partner, and no one other than the active partner has knowledge of this partnership (unless they themselves wish). Only the active partner is the third party, but the secret partner can interfere with the active partner in internal affairs.

Financial Obligations of the Secret Partner in the Partnership

In addition to being regarded as a legally valid partnership, a confidential partnership is a company that can be understood from its description and the secret partner participates in the profit and loss of this enterprise.