First Regulation of the New Turkish Law on Sports: Regulation on Registration of Sports Clubs and Sports Joint Stock Companies

31.08.2022 Ece Özsü

Introduction

Law No. 7405 on Sports Clubs and Sports Federations ("Law on Sports"), which entered into force after being published in the Official Gazette dated 26 April 2022 and numbered 31821, introduced many new provisions on clubs and federations.^[1] One of the most significant and noteworthy of these provisions is that sports clubs, which had been organized as associations before the Law on Sports, were granted a new kind of legal entity.^[2] The new form of legal entity is called a "sports club." According to the Law on Sports, joint stock companies are another form of incorporation of clubs.

Numerous provisions of the Law on Sports, state that the Ministry of Youth and Sports ("Ministry") shall create a regulation governing the procedures and conditions regarding the registration of sports clubs and sports joint stock companies, as well as various other matters.

With this regard, the Ministry issued its first regulation under the Law on Sports. The Regulation on Registration of Sports Clubs and Sports Joint Stock Companies ("Regulation”) which entered into force after being published in the Official Gazette dated 8 July 2022 and numbered 31890. This article will examine the issues covered by the Regulation regarding sports clubs and sports joint stock companies.

First Regulation of the New Turkish Law on Sports: Regulation on Registration of Sports Clubs and Sports Joint Stock Companies

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Purpose and Basis of the Regulation

The purpose of the Regulation is to govern the procedures and principles concerning the establishment of sports clubs, their bodies, the registration of sports clubs and sports joint stock companies by the Ministry, the conditions of registration, the documents required for registration, the content of the bylaws of sports clubs and the articles of association of sports joint stock companies, the names, colors, badges and other distinctive signs to be used by sports clubs and sports joint stock companies in sports activities and the establishment of a superior organization (federations formed by the union of clubs engaged in joint stock sports activities or formed by the union of sports joint stock companies and confederations formed by federations).

The Regulation has been drafted based on Article 3 paragraph 6, Article 12 paragraph 9 and Article 14 paragraph 6 of the Law on Sports.

The Establishment, Registration, Bylaws and Liquidation of Sports Clubs

The Law on Sports has given Sports clubs a separate legal personality from associations. Accordingly, the establishment and registration of sports clubs are regulated by the Law on Sports and the Regulation.

Sports clubs established by at least seven real or legal persons shall apply to the Provincial Directorate of Youth and Sports in which they will be incorporated and submit the following documents:

An establishment notification signed by the founders and attached in Annex-1 of the Regulation.
Sports club bylaws with each page signed by the founders.
In case there are legal entities among the founders, a document showing the title and headquarters of these legal entities, and a copy of the decision taken by the management bodies of the legal entities, which must also specify the real person authorized by the management bodies of the legal entities.
In case there are foreign nationals among the founders, documents showing that they have a residence permit in Turkey.
In case the sports club is established within public institutions and organizations or educational organizations, a letter of permission from the relevant institution or organization.
Founding member information.

The Provincial Directorate examines these documents within 60 days, without holding a hearing. If there is no violation of the legislation or deficiency in the documents (or if the violation or deficiency is eliminated by the applicant), the relevant Provincial Directorate registers the sports club and the sports club acquires legal personality with this registration. It should be noted that this procedure is different from the free establishment procedure which is the procedure for associations to acquire legal personality.

Article 7 of the Regulation contains the mandatory matters that must be included in the bylaws of sports clubs. These mandatory matters must comply with the Law on Sports and the Regulation. For instance, while the procedure for the preparation, implementation and enforcement of the budget of the sports club and the debt procedure should be regulated in the bylaws, a procedure contrary to Articles 18 to 21 of the Sports Law cannot be drafted.

Sports clubs that amend their bylaws must submit the general assembly decision concerning the amendment and the amended version of the bylaws to the Provincial Directorate of Youth and Sports.^[3] As stated in Article 6 of the Regulation, the amendment of the bylaws is also examined by the Provincial Directorate within 60 days, without a hearing, and if a violation of the legislation or a deficiency exists, the rectification of the deficiency is requested. If there is no violation of the legislation or deficiency, or if this deficiency has been eliminated, the amendment to the bylaws shall be registered.

Article 8 of the Regulation contains the requirement that sports clubs must be registered in the sports in which they wish to engage by the sports federation for that sport. It also includes a list of documents which must be submitted to the relevant sports federation for this registration. Accordingly, sports clubs that are free to engage in the sports of their choice can register with the relevant federation by submitting the following documents:

The decision of the board of directors regarding the sports that the club engages in.
A coaching certificate of at least the second level for the coaches to be assigned in the committed sports disciplines and at least the third level for the specialized clubs.^[4]
The employment contract signed between the sports club and the coach.
Information on the facilities where the sports activities undertaken by the sports club shall be carried out.
According to the characteristics of the sport, other documents specified in the relevant sports federation instructions.

Article 28 of the Regulation also regulates those aspects of the liquidation of sports clubs which are not stipulated in the Law on Sports. Accordingly, the liquidation of the funds, assets and rights of a sports club that has been terminated by the decision of the General Assembly, or that has been determined by a court to have ceased to exist ipso facto pursuant to Articles 9(1) and 9(2) of the Law on Sports, shall be carried out in accordance with the principles specified in its bylaws. The transfer of their funds, assets and rights shall be made by a liquidation board consisting of the members of the last board of directors. During the liquidation period, the phrase "[name of sports club] in liquidation" shall be used in the name of the sports club in all transactions.

Military Sports Clubs and Specialized Sports Clubs

Military sports clubs are defined in the Regulation as sports clubs included in the staff and organization of the Ministry of Defense. These clubs may be established in accordance with the procedures and principles stipulated in the legislation of the Ministry of Defense, without being bound by the procedures for applying for registration and establishment of sports clubs.^[5] In other words, registration is not required for the establishment of military sports clubs. Military sports clubs established in this way must notify the relevant provincial directorate within thirty days from the date of establishment and shall be registered in the registry. In addition, military sports clubs must be registered with the federation associated with the sports discipline in which they will be active.

The Law on Sports defines specialized sports clubs as those that are established to engage in no more than two sports disciplines and that are involved in all categories of their chosen sports discipline. The Regulation also adopts this definition. Pursuant to Article 10 of the Regulation, it is mandatory for specialized clubs

to be active in all categories of their chosen sport,
to employ a contracted coach with at least a third level coaching certificate in the sport they shall be active in,
to have registered, allocated or rented facilities related to the sports discipline in which they shall be active.

A sports club that has failed to fulfill the requirements to become a specialized sports club shall be given a period of one year, in writing, to complete the required requisites. If the necessary requirements cannot be met by the end of the given period, the sports club loses its specialized status.

Establishment, Registration and Articles of Association (“AOA”) of Sports Joint Stock Companies

Sports joint stock companies are established and acquire legal personality in accordance with Turkish Commercial Code No. 6102 ("TCC"). However, they only qualify as sports joint stock companies when they are registered by the Provincial Directorate of Youth and Sports.^[6]

Joint stock companies apply to the Provincial Directorate of Youth and Sports for registration and submit the following documents:

The decision of the board of directors.
AOA, which includes the right and authorization to engage in all kinds of activities related to the sports discipline.
If there are legal entities among the shareholders of the joint stock company, a document showing the title and headquarters of these legal entities.
If the joint stock company is incorporated within public institutions and organizations or educational institutions, a letter of permission from the relevant institution or organization.
A copy of the books and similar records regarding existing shareholder information.

Nevertheless, if the shares of the joint stock company are listed on the stock exchange, it is not obligatory to include shareholding and other information regarding these shares.

The Provincial Directorate must conclude the registration application within 30 days. If there is a violation of the legislation or a deficiency in the application, it asks the applicant to resolve the issue within that time. If there is no violation of the legislation or deficiency in the application, or if any violations and deficiencies are eliminated, the company shall be registered.

Article 17 (2) of the Regulation stipulates that the procedures and principles regarding the minimum content of the AOA, shareholding structure, shareholding, capital and bodies of sports joint stock companies shall be determined by a communiqué to be issued by the Ministry if these matters are not regulated in the Law. In addition, Article 23 of the Regulation introduces the procedure for the notification of amendments to the AOA of sports joint stock companies. Accordingly, amendments to the AOA defining the trade title, field of operation, headquarters of the company, the colors, badges and other similar distinctive signs to be used in sports activities and the sports disciplines which the company undertakes to engage in are subject to the permission of the Provincial Directorate of Youth and Sports. This provision constitutes a significant difference from the pre-Regulation period. The permission application requires the submission of a notarized copy of the board of directors' resolution on the amendment of the articles of association in both their existing form and with the proposed amendments. The Regulation stipulates that the Provincial Directorate shall be informed within 30 days following the registration of the amendment of the AOA via the trade registry gazette copy of the registration.

Article 18 of the Regulation contains the requirement that sports joint stock companies must be registered in the sports branches in which they wish to engage by the sports federation to which the relevant branches are affiliated. In addition, it defines the documents which must be submitted to the relevant sports federation for this registration as is the case for sports clubs. Accordingly, sports joint stock companies that are free to engage in the sports disciplines of their choice may register with the relevant federation by submitting the following documents:

At least the second level coaching certificate for the coaches to be assigned in the sports that the Club will engage in.
The employment contract signed between the sports joint stock company and the coach.
Information on the facilities where the sports discipline activities undertaken by the sports joint stock company shall be executed.
Other documents specified in the relevant sports federation instructions according to the characteristics of the sport.

Other Considerations

Apart from the issues mentioned above, the Regulation stipulates the names and titles of sports clubs and sports joint stock companies, their colors, badges and other distinctive signs, the requirements that must be met if they wish to relocate and the prohibitions on engaging in political activities. It also includes provisions on the formation, establishment, bylaws, bodies, fields of activity, termination and liquidation of superior organizations.

Articles 37 to 41 of the Regulation contain the procedures and principles for keeping the registry records of the registration affairs and transactions carried out within the framework of the Regulation.

Conclusion

The Regulation clarifies certain issues regarding the registration of sports clubs and sports joint stock companies that are not covered by the Law on Sports. Meanwhile it repeats various provisions of the Law on Sports. It also indicates that various matters may be regulated by a communiqué to be issued by the Ministry of Youth and Sports. In addition, the Ministry of Youth and Sports is authorized to make all kinds of sub-arrangements to ensure the implementation of the Regulation.

References

Bozdaş, Abdullah: “Sports Clubs and Sports Joint Stock Companies under the New Sports Law”, Erdem & Erdem Newsletter, April 2022.
In Turkish law, an association is a legal entity formed by seven natural or legal persons in order to continuously combine their knowledge and work for achieving a specific and common purpose not prohibited by law, other than profit sharing. In this article the word of “association” is used in this context and not used as understood by FIFA legislation.
Art. 22 of the Regulation
For the definition of specialized sports clubs please see below
Art. 9 of the Regulation
Art. 16 of the Regulation

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