Profit distribution in an OHG (offene Handelsgesellschaft, the German general commercial partnership) refers to how the annual commercial profit (and loss) is allocated among the partners. If the partnership agreement does not set its own rule, a three-tier statutory distribution formula has applied since the MoPeG reform of January 1, 2024 (§ 121 HGB in conjunction with § 709 (3) BGB): primarily by the agreed profit-sharing ratios, failing that by the ratio of the agreed value of each partner's contributions, and only if neither is determinable, in equal shares per head.
What does profit distribution regulate in an OHG?
Profit distribution determines what share of the year's result belongs to each individual partner. Unlike corporations, no separate profit-appropriation resolution is required: once the annual financial statements are adopted, each partner's share is credited directly to their capital account. The statutory rules are non-mandatory (dispositive). They apply only to the extent the partnership agreement does not provide otherwise, which in practice is nearly always the case.
How does the statutory distribution formula work under the MoPeG?
The formula in force since January 1, 2024 follows a three-tier order of precedence. First, profit is distributed in proportion to the participation ratios agreed in the partnership agreement. If no such agreement exists, the ratio of the agreed value of each partner's required contributions applies instead. If that too cannot be determined, distribution falls back to equal shares per head, regardless of the size of each partner's capital account. The same order applies equally to loss distribution.
How does the new rule differ from the previous legal position?
Until December 31, 2023, the old § 121 HGB provided that each partner first received a preliminary dividend of 4% of their capital contribution, with the remaining profit then distributed in equal shares per head. This construction was rarely applied in practice, since partnership agreements almost always contained deviating provisions. The MoPeG therefore aligned the statutory default rule with actual contract practice, shifting the focus from a fixed return on capital to the agreed participation ratio.
Criterion | Old law (until Dec 31, 2023) | New law (from Jan 1, 2024) |
|---|---|---|
First distribution step | 4% preliminary dividend on the capital contribution | Distribution by agreed participation ratios |
Second distribution step | Remaining profit split equally per head | Failing that, by the ratio of agreed contribution values |
Third distribution step | – | Subsidiary only: equal shares per head |
Practical relevance | Low, usually overridden by contract | Closer to typical partnership agreement terms |
What withdrawal rights do partners have?
The MoPeG also tightened partners' withdrawal rights: every partner now has, in principle, an unconditional claim to payment of their determined profit share (§ 122 HGB), replacing the previous, more limited "restrained" claim. Exceptions apply where withdrawal would manifestly harm the company or where a partner has outstanding contribution obligations. A profit share that falls due but is not withdrawn must be recorded as a liability owed to the partner and is subject to the standard three-year limitation period.
Can the partnership agreement deviate from the statutory rule?
Yes, the statutory distribution rule is purely a fallback for cases where the partnership agreement contains no provision of its own. In practice, partnership agreements almost always set their own terms for profit distribution, for example through fixed ratios, preferential compensation for managing partners, or different loss-sharing rules. Existing OHGs (and KGs) are advised to review their partnership agreements in light of the MoPeG reform, particularly regarding the now-unconditional withdrawal right and its impact on liquidity planning.