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In this article, Law No. 7405 on Sports Clubs and Sports Federations, referred to in public as the new sports law, will be examined broadly from the standpoint of sports clubs.
In this article, Law No. 7405 on Sports Clubs and Sports Federations, referred to in public as the new sports law, will be examined broadly from the standpoint of sports clubs.
The new Law defines a new legal entity under the name of sports joint stock company (spor anonim şirketi), and the establishment of sports joint stock companies is regulated in Article 14 of the Law. The principles relating to registration have, by reason of a reference in the Law, been determined in the regulation issued by the Ministry. Once the regulation is published, the registration of sports joint stock companies will be elaborated in detail.
Sports joint stock companies are established by the registration by the Ministry of joint stock companies that are established under Law No. 6102 and acquire legal personality. Sports joint stock companies are required to register with the relevant sports federation the sport branch in which they will operate. Under the Law, sports federations may impose the obligation to hold the status of sports joint stock company in order to take part in certain leagues, together with a minimum capital requirement for these companies such that their paid-in capital is not less than one million Turkish lira. Therefore, sports joint stock companies will not take part in every league of every federation. In amateur sports the dominance of sports clubs may continue; however, an obligation to hold sports joint stock company status and a minimum capital requirement of not less than one million Turkish lira in paid-in capital for these companies may be imposed in the leagues determined by the relevant federation, and the league to which this requirement is applied may be made professional. Naturally, this will have consequences in terms of insurance, labour and tax law.
One of the most important changes concerns the audit and declaration procedures of sports clubs. Changes have been made to the practice that existed before the entry into force of the Law, and new provisions have been introduced, regarding the audit and declaration procedure regulated in Article 13 of Law No. 7405 on Sports Clubs and Sports Federations.
The formation, duties and powers of the club audit board were regulated in Article 14 of the Regulation on Youth and Sports Clubs of the General Directorate of Youth and Sports, which entered into force upon its publication in Official Gazette No. 25869 dated 08.07.2005, and the audit of clubs was regulated in Article 22 of the same Regulation. Accordingly, before the new sports law entered into force, it had been provided that clubs would be audited by the provincial directorates. However, the provisions of the Law on Associations and the Regulation on Associations had been excepted.
Under Law No. 7405, on the other hand, all kinds of administrative and financial transactions and activities of sports clubs, sports joint stock companies and umbrella organisations, in particular whether they operate in line with the purposes set out in the relevant legislation, their statutes and their articles of association, and whether they keep their books and records in accordance with the legislation, will be audited by the Ministry. However, this does not mean that they will be audited only by the Ministry. Pursuant to Article 19 of the Law on Associations, clubs will continue to be audited by the Ministry of Interior or the civil administrative authority as well.
The audit by the Ministry may also be carried out by having the financial position and the profit-and-loss accounts of sports clubs and sports joint stock companies operating in certain leagues audited, in annual periods, by an independent audit firm authorised by the Public Oversight, Accounting and Auditing Standards Authority.
Under the Law, sports clubs and sports joint stock companies are obliged to submit to the Ministry, within three months of the end of each accounting period, a declaration in which they set out, as of year-end or according to the period in which the competitions in the sport branch with the highest expenditure are held, the results of their income and expense transactions and their profit, loss and balance sheet accounts.
One of the quite important rules newly introduced by the Law is that persons who, within the last five years, have received a penalty of deprivation of rights of one year at one time or two years in total from Arbitration Boards, the Ministry’s disciplinary boards or the international organisations to which sports federations are affiliated may not serve in management, audit, disciplinary and other board memberships in a sports club or in its subsidiaries and affiliates having the status of sports joint stock company. Accordingly, the decisions given by the disciplinary boards of sports federations in accordance with the relevant federation’s disciplinary instructions are now important not only for duties such as coaching and refereeing but also in terms of membership of sports clubs and sports joint stock companies. Fairness should be observed, particularly in the disciplinary instructions of sports federations, in determining the lower and upper limits of the disciplinary penalty prescribed for a disciplinary offence.
According to the transitional provisions set out in the Law, youth and sports clubs established under the Law on Associations must, within two years at the latest from 26.04.2022, make their choice as either a sports club or a youth association, according to the field in which they wish to operate, and notify the Ministry. Likewise, sports clubs and their umbrella organisations must, within one year at the latest from 26.04.2022, bring their statutes and their administrative and financial structures into conformity with the provisions of this Law. Those who cannot achieve conformity within this period may be granted an additional period of up to six months. Notwithstanding this, the registrations with the Ministry of those who still cannot achieve conformity are cancelled.
Likewise, joint stock companies that were established before the date on which this Law entered into force and that operate in the field of sports become sports joint stock companies by fulfilling the obligations prescribed for them in the Law within one year at the latest from 26.04.2022. Those who cannot achieve conformity within this period may be granted an additional period of up to six months. Joint stock companies that do not fulfil their obligations by the end of this period may not take part in sports activities.
For detailed information on sports clubs and the new sports law, you can reach our colleagues by filling in the form in the contact section of our website.
