Sports Clubs and Sports Joint Stock Companies under the New Sports Law
Introduction
The Sports Clubs and Sports Federations Law (“Sports Law”), published in the Official Gazette dated 26.04.2022 and numbered 31821, introduced detailed regulations on sports clubs, sports joint stock companies, and sports federations. The Sports Law, which entered into force on the date of publication, encourages the incorporation of sports clubs. This move has been expected for many years by the sports-loving public, and gives sports federations the authority to adopt the mandatory incorporation of sports clubs. The Sports Law is intended to solve the financial problems of football clubs and includes general regulations covering all areas of sports.
In this Newsletter, the regulations regarding the establishment, registration, capital, and shareholding structure of sports clubs and sports joint stock companies under the Sports Law will be examined.
A General Overview of the Sports Law
The most striking change brought about by the Sports Law concerns the structuring of sporting organizations. These organizations, which are currently structured as associations, will now be structured in the form of a new legal entity called a “sports club.” Although it is likely that Law of Associations No. 5253 will be applied to specific articles of the Sports Law regarding sports clubs, this is actually a new kind of structure. The main purpose behind the creation of this new legal entity is to pave the way for structuring sports clubs as joint stock companies, as this will ease difficulties related to investment and financing and help them to deal with their financial problems.[1] It is also significant that this legislation gives enforcement authority to the Ministry of Youth and Sports, unlike in existing practice.
Establishment and Registration of Sports Clubs
Before the Sports Law entered into force, amateur sports organizations could be structured as associations, while only professional football clubs could be established as joint stock companies.[2] However, the most common form of organization for all sports organizations, including football clubs, was that of the association. This resulted in a structure that was far from flexible and effective, and which was not facilitating investment and financing. The legislature, correctly identifying this disadvantage, created the sports club as a new legal entity. When both article 3 of the Sports Law regarding the establishment of sports clubs and the general preamble of the Law are read together, it is clear that the legislature envisaged the organization of sports clubs as a different kind of legal entity than an association. As a matter of fact, instead of the free establishment form, which is the way that associations acquire legal personality, the legislation provides for the creation of legal personality by registration for sports clubs which are joint stock companies. In addition, the fact that this application must be made to the Ministry of Youth and Sports instead of the Ministry of Interior is another significant difference between the new law and the old one.
The Establishment and Registration of Sports Joint Stock Companies
The principles regarding the establishment of sports joint stock companies are found in Article 14 of the Sports Law. According to this article, the first condition sought for sports joint stock companies is the existence of a joint stock company and a legal entity in accordance with the Turkish Commercial Code No. 6102 (“TCC”). Although sports joint stock companies are specific to sports, the legislation emphasizes that these companies should primarily be joint stock companies established according to the TCC. Apart from this, the registration of sports joint stock companies is one of the essential requirements of the Sports Law. Joint stock companies that gain legal personality upon registration with the Trade Registry Directorate must also be registered by the Ministry of Youth and Sports to become sports joint stock companies. The creation of a sports joint stock company registry is authorized by Article 14/2 of the Sports Law. According to Article 14/2, a sports joint stock company must be recorded in this registry within 30 days if there is no contradiction or deficiency following the application to the Ministry of Youth and Sports. In addition to all these registration procedures, Article 14/5 stipulates that sports joint stock companies must be registered with the sports federations in which they will operate. For this reason, it would not be wrong to say that there is almost double regulation in sports joint stock companies, unlike in other joint stock companies. Finally, it should be noted that if the sports joint stock company is a publicly listed corporation, specific regulations can be brought by taking the opinion of the Capital Markets Board.
Capital and Shareholding Structures of Sports Joint Stock Companies
When the partnership structure of sports joint stock companies is examined, it is seen that the legislature wanted a tight bond between the sports club and the sports joint stock company. In the new system created by the Sports Law, a sports joint stock company can be established individually without being affiliated with any sports club. However, if it is established in connection with a sports club, it must remain within the framework of Article 15/2 of the Sports Law, which requires sports clubs affiliated with a sports joint stock company to establish dominance over these sports joint stock companies with one of the types of domination defined in Article 195 of the TCC. As a matter of fact, in sports joint stock companies that do not have a partnership structure with the sports club within the meaning of Article 195, no privilege can be established for any share group other than sports clubs. With this regulation, the direct or indirect dominance of the sports club within the meaning of Article 195 of the TCC was sought, but it was prevented from granting more privileges to another group than the sports club.
Conclusion
The new Sports Law has brought two new structures, sports clubs and sports joint stock companies, into the legal system. Although criticisms could certainly be made about aspects of the new system, regulating the establishment of sports clubs and sports joint stock companies is a positive step compared to the previous system. Finally, the regulation and encouragement of incorporation brought by the Sports Law, which has many advantages, will contribute to the formation of more sustainable structures for sports clubs.
- Çolgar, Tuna: Corporatization of Football Clubs, Erdem & Erdem Newsletter, April 2019.
- See Turkish Football Federation Statute Article 76/5.
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