New Legislation Has Recently Been Enacted Regarding Sports Clubs in Turkey.
The Code of Sport Clubs and Sport Federations numbered 7405 (Law No. 7405) was published in the Official Gazette and come into force on 26 April 2022. Law No. 7405 mainly regulates the establishment, organs, duties, powers and liabilities and supervision of sport clubs, sport joint stock companies and sport federations, as well as any contributions to be made to them and several other issues relevant to those.
Following the entry into force of the Law No. 7405, a series of regulations and communiques for implementation of the code came into effect. The regulations and communiques that came into effect are as follows in chronological order:
Regulation on Registry of Sport Clubs and Sport Joint Stock Companies “Spor Kulüpleri ve Spor Anonim Şirketleri Tescil Yönetmeliği”, the Communique Regarding Minimum Content of Articles of Association, Shareholders’ Structure, Shareholding, Capital and Organs of Sport Joint Stock Companies “Spor Anonim Şirketlerinin Esas Sözleşmesinin Asgari İçeriği, Ortaklık Yapısı, Pay Sahipliği, Sermayesi ve Organlarına İlişkin Usul ve Esaslar Tebliği”; Regulation on Books and Records to be Kept by Sport Clubs “Spor Kulüpleri Tarafından Tutulacak Defter ve Kayıtlar Hakkında Yönetmelik” and Regulation on Mergers and Transfer of Assets of Sport Clubs “Spor Kulüplerinin Birleşmesi ve Malvarlığı Devri Yapmalarına İlişkin Esaslar Hakkında Yönetmelik”.
As Law No. 7405 has introduced new regulations and liabilities regarding Sports Clubs and Sports Joint Stock Companies, in this paper, we will specifically address the basis of Regulation on Mergers and Transfer of Assets of Sport Clubs.
A New Definition for the Legal Status of Sports Clubs and New Rules for the Transfer of Their Assets Have Been Introduced.
Prior to said Regulation, sports clubs were once associations that were established to carry out youth activities, sports activities or both activities together, and took the name of “club” by registering with the General Directorate of Youth and Sports. With the Law No. 7405, the definition of sports club has been changed and it has been determined as private-law legal entities that have registered with the Ministry (the Ministry of Youth and Sports) to participate in the activities of the Ministry and sports federations. The legislation defines the legal status of the sport clubs as private-law legal entities, which is a new definition regarding the sports clubs. Accordingly, Sports Joint Stock Company is a joint stock companies established as a subsidiary or affiliate of a sports club or established independently in accordance with the “Turkish Commercial Code” No. 6102 dated 13 January 2011 and registered with the Ministry to engage in sports activities.
Only the Merger of Two Sports Clubs Is Applicable.
Law No. 7405 has made the merger of two sports clubs legally possible. The legal entities that are subject to merger must be sport clubs. In other words, a merger of a sport club and a sports joint stock company is not allowed. Therefore, a merger is defined as acquisition of a sport club by another sport club.
For merger of two sport clubs, each sport club must make resolution in its general assembly meeting for such merger with at least the majority of the attendees in this general assembly meeting to be held with at least three quarters of the total number of members of the general assembly meeting. Further, the two sport clubs must be based in the same province of the country to perform such a merger. The merger becomes valid upon registration in the registry of sports clubs, and all the active and passive assets of the transferred sports club at the time of registration are automatically transferred to the sports club that takes over (the acquiring sports club). With this merger, the members of the transferred sports club automatically become members of the acquiring sports club, the transferred sports club is terminated without liquidation and is deleted from the registry of sports clubs.
The sportive history and sportive successes of transferred sport club are deemed to be transferred to the acquiring sports club. The acquiring sports club cannot make any changes in the participation of the league or its registered name that will give the impression of the transferred sports club. The name or title of the transferred sport club cannot be registered again.
The merger of the sports clubs is subject to permission of the Ministry. The examination of Ministry for such permission is only made whether there is a violation of provisions in the Law No. 7405.
Transfer of Sports Branches of a Sport Club to a Sports Joint Company
As stated above, it is not allowed a merger of a sports club with a sports joint stock company. However, it is possible for sports clubs to transfer one or more of the sports branches in which they operate, together with their active and passive assets, to a sports joint stock company or sports club as a whole. Indeed, in the Regulation, the transfer of one or more of the sports branches as a whole in which a sports club operates with its active and passive assets to another sports club or sports joint stock company is defined as the transfer of assets.
For the transfer of the assets to take place, the sports club is required take the resolution for such transfer with majority of the attendees at the general assembly meeting in which at least three quarters of the total number of members will attend.
The transfer of assets becomes valid upon registration of the transfer, depending on its relevance, with the sports clubs’ registry or sports joint stock companies’ registry by the Ministry. Upon such transfer, all active and passive assets of the transferred sports branch at the time of registration are automatically transferred to the sports club or sports joint stock company that takes over the sports branch.
Liability for the Debts
The acquiring sports club or sports joint stock company together with the transferred sports club is jointly liable for the debts of the transferred sports club provided that such debts have arisen before the registry of the resolution for transfer, or the cause of debt has arisen before such registry. In terms of the acquiring sports club in the transfer of assets, the classification degree in the league and similar competitions in which the transferred sports branches were located before the transfer and the rights arising from this degree are maintained. The sports club that has transferred its sports branches may restart its activities in the same sports branches, starting from the lowest level of the related sports branch.
The agreements for merger and transfer of assets must be made in writing. The agreements for merger and transfer of assets must be signed by the representatives authorized to represent the parties after the resolutions of the boards of directors of sports clubs or sports joint stock companies participating in the merger or transfer of assets.
Timing for Merger and/or Transfer of Assets
The proceedings for merger may be performed from the date of the end of the season determined and registered by the sports federation to the beginning of new season.
In case the seasons in which the sports club that are parties to merger or transfer of more than one sports branch they participated are different, the Ministry determines on which season will be taken as basis. In case the season interval of the relevant sports branch does not allow the merger or transfer of assets, the dates between which the merger or transfer of assets can be made are determined by the Ministry upon the opinion of the relevant sports federation.
The transfer of assets can be made from the date of the end of the season determined and registered by the sports federation in which the subject sports branches are included to the beginning of the new season.
Applications regarding the merger and the transfer of assets must be made no later than 15 days before the new season competition program is determined by the sports federation in which the relevant sports branches are included.
Mergers Between Sports Joint Stock Companies and Transfer Of Assets From Sports Joint Stock Companies To Sports Clubs Are Not Regulated in The Regulation.
Consequently, merger, division and transfer of assets between sports joint stock companies and transfer of assets from sports joint stock companies to sports clubs are excluded from the scope of the Regulation. Therefore Articles 202 and 203 of the Turkish Code of Obligations (Law No. 6098) and Articles 134 and 194 of the Turkish Commercial Code apply to such mergers and transfer proceedings.
Merger, division and transfer of assets between sports joint stock companies and transfer of assets from sports joint stock companies to sports clubs must be notified to the Ministry within 30 days after the completion of these proceedings.
The Regulation Also Applies to Publicly Traded Sports Joint Sport Companies As Long As Its Provisions Are Not In Contradiction With the Capital Markets Legislation.
All publicly traded sports joint stock companies, including sports joint stock companies whose shares are traded on the stock exchange, are subject to capital market legislation. The provisions of the Regulation for publicly traded sports joint stock companies can be applied as long as they are not in contradiction with the capital market legislation for publicly traded companies. In case of different provisions on the same subject matter in these legislations, the provisions of the capital market legislation prevail and are applied to the publicly traded sports joint stock companies.
Please see the relevant copy of the Official Gazette regarding the Regulation (only in Turkish) at:
https://www.resmigazete.gov.tr/eskiler/2022/09/20220914-2.htm