Soccer Corporations (SAFs) - The future of Brazilian Soccer
- Beto Cardoso
- Jan 16
- 6 min read
Attached is the Law's full-text along with the Proposed Law number 2978/2023
Law 14193/2021 (The Soccer Corporation Act) enacted on August 6, 2021, established the Soccer Corporations. The law defines a Soccer Corporation as a company primarily engaged in professional soccer activities. The law outlines three ways to develop a Soccer Corporation: club transformation, spin-off, or initiative. It also details the governance structure, including mandatory bodies like the board of directors and fiscal council, and outlines shareholder rights and restrictions.
Soccer Corporations or Sociedades Anônimas do Futebol (SAFs), are subject to specific regulations regarding board member eligibility, financial transparency, and liability. Clubs or original legal entities that establish SAFs must adhere to strict financial obligations, including debt repayment plans and creditor transparency. The centralized creditor regime, outlined in Articles 13-17, provides a structured approach for debt settlement, prioritizing certain creditors and offering potential extensions for debt repayment.
Soccer Corporations, formed to manage professional soccer clubs, are subject to a specific tax regime (TEF) with a unified monthly tax rate of 5% for the first five years and 4% thereafter. They can issue debentures to finance activities, including debt repayment, and must establish an Educational and Social Development Program (PDE) promoting education through soccer. The TEF tax revenue is distributed according to constitutional guidelines, prioritizing clubs that have converted into Soccer Corporations.
Soccer corporations can use assets as capital or collateral. Associations engaged in professional soccer activities are considered business entities.
Some of its key points:
Soccer Corporation Definition: A company whose primary activity is professional soccer, governed by this Law and, subsidiarily, by Law No. 6,404, of December 15, 1976, and Law No. 9,615, of March 24, 1998.
Soccer Corporation Activities: Promoting and developing activities related to soccer practice, mandatorily for both women’s and men’s modalities.
Related Definitions: Club (civil association dedicated to promoting and practicing soccer), Original Legal Entity (business organization dedicated to the promotion and practice of soccer), Administrative Entity (confederation, federation, or league that governs, regulates, or organizes professional soccer competitions).
Business Activities: Training professional soccer players, generating revenue from sports rights, exploiting intellectual property rights, commercializing assets, and conducting related activities.
Intellectual Property Rights: Exploring third-party intellectual property rights related to soccer and exploiting intellectual property rights owned or transferred by the club.
Company Denomination: The Soccer Corporation must include the term “Soccer Corporation” or the abbreviation “S.A.F.”
Soccer Corporation Establishment: This can be formed through the transformation of an existing entity, the spin-off of a soccer department, or by an individual, legal entity, or investment fund.
Succession of Relationships: Soccer Corporation inherits relationships with administrative entities and professional soccer players from the original entity.
Transfer of Rights and Obligations: Soccer Corporation acquires rights to participate in competitions, labor contracts, image rights, and other agreements related to soccer activities.
Transfer of Rights and Assets: Transferred to the Soccer Corporation without creditor or interested party authorization unless otherwise specified.
Sports Facility Usage: If not transferred, clubs must agree with the Soccer Corporation to use sports facilities.
Club Participation in Soccer Competitions: Prohibited, with the Soccer Corporation holding exclusive rights.
Shareholder Consent Requirements: Class A common shareholder consent is required for changes to the corporate name, team identifiers, and corporate headquarters relocation.
Additional Shareholder Rights: The statute of the Soccer Corporation may grant further rights to Class A common shareholders.
Share Modification Restrictions: Amendments to the statute that modify, restrict, or remove Class A share rights require prior approval by the club or original legal entity.
Restrictions on Shareholder Involvement: Controlling shareholders and shareholders with a 10% or more stake in a Soccer Corporation are prohibited from holding stakes in other Soccer Corporations.
Board and Council Composition: The soccer corporation's board of directors and fiscal council are mandatory, permanent bodies.
Ineligibility Criteria for Board and Council Members: Individuals with specific affiliations, including roles in other Soccer Corporations, clubs, administrative entities, and active soccer professionals, are ineligible to serve on the board of directors, fiscal council, or executive management of a Soccer Corporation.
Board of Directors Eligibility: Members of the board of directors cannot hold positions in the club or original legal entity while it remains a shareholder of the Soccer Corporation.
Executive Management Eligibility: Employees or members of the club or original legal entity are ineligible for election to the fiscal council or executive management.
Information Requirement for Major Shareholders: Legal entities holding a stake equal to or exceeding 5% of the Soccer Corporation's share capital must inform the Corporation and the national sports administrative entity of the name, qualifications, address, and contact information of the natural person exercising control or serving as the ultimate beneficiary.
Administrative Report Frequency: The administration report on corporate activities, including the Educational and Social Development Program and key administrative events, must be updated monthly.
Administrator Liability: Administrators are personally liable for non-compliance with the article's provisions, including maintaining an updated monthly list of creditors.
Financial Transparency: Clubs or original legal entities under recovery must maintain an updated monthly list of creditors on their website.
Soccer Corporation Liability: The Soccer Corporation is not liable for obligations of the club or original legal entity except for specific activities within its corporate purpose.
Labor Debt Creditors: Creditors for labor debts include soccer players, technical staff, and employees directly linked to the soccer department.
Pre-Establishment Obligations Settlement: The club or original legal entity is responsible for settling obligations incurred before the Soccer Corporation’s establishment using its revenues and specific revenue transfers from the Corporation.
Liability for Financial Transfers: The Soccer Corporation's administrators are personally and jointly liable for obligations concerning financial transfers.
Protection from Asset Seizure: Any form of asset seizure or revenue garnishment related to obligations incurred before the establishment of the Soccer Corporation is prohibited as long as the corporation complies with the payments provided for in this Section.
Methods of Settlement Obligations: The club or original legal entity can pay obligations directly to creditors through a centralized creditor regime or judicial or extrajudicial recovery.
Centralized Creditor Regime: Clubs or legal entities opting for this regime face consolidated debt collection and distribution in a centralized court.
Regulation and Term: The Judiciary regulates the regime, setting a six-year payment term that could be extended upon 60% debt repayment.
Creditor Plan Requirement: Applicants must submit a detailed financial plan, including balance sheets, financial statements, and cash flow projections, within 60 days.
Creditor Ranking: Priority creditors include elderly individuals, individuals with serious illnesses, individuals with salary claims under 60 minimum wages, pregnant individuals, individuals who suffered workplace accidents related to the club or original legal entity, and creditors who agree to reduce the original debt by at least 30%.
Payment Priority: Payment of obligations under Article 10 of this Law prioritizes labor claims, and the creditor payment plan submitted by the club or original legal entity determines their allocation.
Debt Adjustment: Once executions are centralized, civil and labor debts are adjusted only by the reference rate of the Special Clearance and Custody System (SELIC) or its market replacement.
Debt Conversion: If allowed by its bylaws, creditors can convert debt into shares or securities of the Soccer Corporation.
Debt Settlement: Creditors can agree to discounts or transfer their credit rights to a third party.
Liability Protection: The Soccer Corporation is not liable for pre-formation obligations if the club complies with payment obligations.
Debenture Issuance: The Soccer Corporation can issue debentures with a minimum term of two years, interest rate compensation, and periodic yield payments.
Debenture Allocation: Funds raised through soccer debentures must be used for activities or expenses related to the Soccer Corporation’s statutory purposes, including debt payment.
Contract Protection: Bilateral contracts, including those with professional soccer players, will not be terminated due to judicial or extrajudicial recovery requests.
Educational Program Goal: Promote education through soccer and soccer through education.
Program Investment: Renovation or construction of public schools, transportation system, meals, training for former professional soccer players, hiring auxiliary professionals, and acquiring equipment and materials.
Program Eligibility: Only students regularly enrolled in partner institutions who maintain attendance and performance standards are eligible to participate.
Tax Regime Applicability: Soccer Corporations are subject to the Specific Tax Regime for Soccer (TEF).
Taxes and Contributions: Corporate income tax, contribution to social integration programs, social contribution to net profit, contribution to social security financing, and payroll taxes.
Payment Due Date: Monthly unified payments are due by the 20th day of the following month.
The Tax Rate for Soccer Corporation is 5% of monthly revenue for the first five years and 4% for the remaining years (after the new Tax Reform, it will be 8.5%).
Tax Revenue Distribution: Regulated by the Ministry of Economy based on the Federal Constitution and applicable legislation.
Tax Settlement for Existing Clubs: Clubs with tax liabilities before the Soccer Corporation’s formation can propose a settlement under Law No. 13,988, prioritizing converted clubs.
Legal Amendment: Article 27 of Law No. 9,615 of March 24, 1998, is amended to allow entities to use their assets to contribute to the capital of a Soccer Corporation or as collateral.
Soccer Association Classification: Article 971 of Law No. 10,406, of January 10, 2002 (Civil Code), is amended to classify associations engaged in professional soccer activities as business entities.
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