On 6 August 2021, Law No. 14,193 (PL 5,516/2019) was approved with vetoes, allowing the transformation of football clubs into football corporations (Sociedade Anônima de Futebol – SAF), to be governed, in a subsidiary manner, by the provisions of Law No. 6,404/1976 on corporations (Sociedade Anônima or sociedade por ações). This development is aimed primarily at attracting investments to professional football, thereby confronting the current problem of over-indebtedness.
The Law introduces a new form of organization that provides accountability mechanisms for managers, with the establishment of standards of governance, control, and transparency for professional football. This better-defined responsibility is key for the granting of credit and is an indication of solidity for the entire sector.
In addition, the Law allows SAFs to create subsidiaries (provided they undertake football activities), which in practice can mean better risk delimitation in relation to football-related assets. It also expands forms of fundraising, authorizing typical means of financing that are accessible to companies incorporated under the format of corporations, such as the issuance of debentures, or rather (under the terms of the Law), fut debentures, with a minimum maturity of two years and a minimum remuneration similar to that of savings accounts, variable and fixed-term.
The expectation is that access to fundraising will be possible under more favorable financial conditions than those currently practiced in the financial market, since the respective operations will be subject to inspection by the Brazilian Securities Commission (CVM), which should provide greater security to investors.
Another change to circumvent over-indebtedness is the possibility of establishing a centralized enforcement system (judicial procedures for debt collection) and regulation of the succession of existing debts for the SAFs. The Law provides specific rules for debt installments, the separation between civil and labor obligations, and disallows any constraints on the assets or revenues of the SAFs, while the installments are being fulfilled.
As an additional solution to the over-indebtedness of football clubs, in addition to the procedure that avoids an indiscriminate attack on their assets, the Law ends the recent discussion that has divided experts in the area: the possibility, or not, of restructuring the debt of football clubs through judicial or extrajudicial reorganization. The Law now provides that SAFs will be definitively entitled to submit reorganization requests, under the terms of Law No. 11,101/2005 (provided they meet the other legal requirements).
Finally, some provisions contained in the PL that originated the Law were vetoed, in particular, those related to the proposal to create the Specific Taxation Regime for Football (“TEF”) for the SAFs, which provided for the monthly payment of IRPJ/CSLL/PIS /COFINS/INSS at the unified rate of 5% (in the first five years, decreasing to 4% as of the 6th year), on a cash basis. According to the government, the provisions related to the tax waiver were removed as such provisions would violate the Fiscal Responsibility Law and the Budget Guidelines Law. Despite the veto of the TEF, the provision was maintained that clubs or legal entities with tax liabilities prior to the constitution of the SAF and not included in federal government refinancing programs may submit a transaction proposal pursuant to Law No. 13,988/2020. Vetoes will be reviewed by the legislature and may be upheld or rejected.
The changes instituted by Law No. 14,193/2021 aim to increase transparency in management and the implementation of governance rules that guarantee the efficiency of services, essential elements that allow for diversification in the raising of absolutely necessary resources due to the high level of indebtedness of football clubs. The approval of Law No. 14,193/2021 therefore brings significant changes to the world of football and may encourage clubs to increase investments, ensuring not only the perpetuation of our national sport but also a real solution to the debt plaguing Brazilian football clubs.