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The Undisclosed Partnership under Syrian Law

The undisclosed partnership is the strangest of the five corporate forms: a company in fact, and no company at all in law as against third parties. It is governed by Legislative Decree No. 29 of 2011, Articles 51 to 54.

First: Definition

It is a company concluded between two or more persons, not intended to be disclosed to third parties, whose existence is confined to the contracting parties, and whose business is carried on by an apparent partner dealing with third parties in his own name.

It has no legal personality and is not subject to the publication formalities imposed on other companies. For that reason it is the only form exempted from publication.

Second: The Position of Third Parties

A third party has a legal relationship only with the partner who contracted with him. He is the debtor before him, and the creditor; the remaining partners are no concern of his.

The law has, however, made a decisive exception: where the undisclosed partnership appears to third parties in that capacity, it may be treated as a de facto company, and its partners become jointly liable towards that third party.

Its concealment is thus not merely an advantage but the condition on which the protection rests. Once disclosed, it turns in effect into something close to a general partnership.

Third: The Contract and Proof

The contract determines the reciprocal rights and obligations of the partners, the company's term, the manner of paying up capital, and the division of profits and losses.

Proof is facilitated: the contract is proved by all means of evidence admissible in commercial matters where its object is commercial, and by the means prescribed in civil matters where its object is civil.

This is a second exception in its favour: the rule is that partners may prove a company among themselves only by a written contract — and the undisclosed partnership alone is exempted.

Fourth: A Note on Translation

Many render "sharikat al-muhasa" into English as "joint venture", an error into which even professionals fall.

A joint venture is an entity with an apparent, declared existence; the undisclosed partnership is its opposite, concealment being of its essence. The more accurate equivalent is "undisclosed partnership".

The point is not linguistic: one who signs an English agreement on the footing of a joint venture and then relies on the rules of muhasa finds himself before two different regimes.

Conclusion

The undisclosed partnership suits a single defined transaction, or a case where a partner wishes not to appear for a legitimate reason.

It does not suit a continuing, visible activity — for it then loses its concealment, and with it the protection on which it was founded.

This article is a general overview and does not substitute for legal advice in a particular case.