An Assessment of the Regulation on the Procedures and Principles Regarding the Merger of Sports Clubs and the Transfer of Assets

The Regulation on the Procedures and Principles Regarding the Merger of Sports Clubs and the Transfer of Assets, which entered into force in 2022, determines the procedures and principles to be applied in the event that the intended sports clubs merge or transfer one or more of the sports branches in which they operate, together with their active and passive assets, to another sports club or sports joint-stock company.

Merger of Sports Clubs

The merger of sports clubs is subject to certain conditions in accordance with the Regulation, and the merger process takes place if these conditions are met. It should be noted that sports clubs can only merge by taking over another sports club. On the other hand, a sports club can only merge with another sports club located in the same province.

In addition, a number of qualified meeting and decision quorums are envisaged for the merger of sports clubs. According to the Regulation; Sports clubs can merge with another sports club by a decision taken by a simple majority vote of at least three-quarters of the total number of general assembly members.

Another condition is the merger report. The management bodies of the sports clubs that are parties to the merger must prepare a merger report separately or together. The merger report must include the purpose, results, legal and economic aspects of the merger, as well as the estimated balance sheet after the merger.

It is important to emphasize that the merger of sports clubs is subject to the permission of the Ministry of Youth and Sports. Sports clubs wishing to merge can apply to the Ministry of Youth and Sports by submitting the following documents:

• Application petitions of sports clubs regarding the merger request.
• Board of directors decisions of sports clubs regarding the merger.
• Merger agreement signed between the parties.
• General assembly decisions of sports clubs regarding the approval of the merger agreement.
• Latest balance sheets of sports clubs including their assets and liabilities.
• Merger report.

• Report of an independent audit institution, certified public accountant or freelance accountant financial advisor stating that the financial tables underlying the merger were prepared in accordance with the relevant legislation in sports clubs that keep books in accordance with the Accounting System Implementation General Communiqués published by the Ministry of Treasury and Finance; and an independent audit report prepared by an independent audit institution authorized by the Public Oversight, Accounting and Auditing Standards Authority in sports clubs that keep their financial tables in accordance with the Turkish Accounting Standards.

The merger becomes valid upon registration in the sports clubs registry by the Ministry. In addition, all assets and liabilities of the sports club transferred by the merger at the time of registration are automatically transferred to the transferee sports club. The members of the sports club transferred by the merger also automatically become members of the transferee sports club. The sports history and sports success of the sports club transferred by the merger are deemed to be transferred to the transferee sports club. The transferee sports club cannot make any changes in its participation in leagues and similar competitions or in its registered name that would give the impression of being the transferee sports club. In addition, the name or title of the transferee sports club for participation in competitions is not re-registered. The legal personality of the sports club transferred by the merger is terminated without being liquidated and is deleted from the sports clubs registry.

Transfer of Assets

As in mergers, qualified meeting and decision quorums are required for the transfer of active and passive assets of sports clubs. According to the regulation; One or more of the sports branches in which sports clubs operate, together with their active and passive assets, can be transferred to another sports club or sports joint stock company as a whole with a decision to be taken with the vote of the absolute majority of the participants in the general assembly meeting attended by at least three-quarters of the total number of general assembly members.

In addition, the regulation stipulates that an asset transfer report be prepared in order for the asset transfer to be carried out. A detailed and reasoned report on the transfer of assets must be prepared separately or together by the management bodies of the sports clubs and sports joint stock companies that constitute the parties to the asset transfer. The report includes the purpose of the asset transfer, its results, the legal and economic aspects of the transfer agreement and the estimated balance sheets after the transfer.

In addition to these critically important conditions, other documents required for the application to be made by a sports club that wants to transfer one or more of the sports branches in which it operates to the Ministry of Youth and Sports with its active and passive assets as a whole to another sports club or sports joint stock company regarding the transfer of assets are as follows:

• Application petition regarding the request for the transfer of assets.
• Board of directors’ decision regarding the transfer of assets.
• Asset transfer agreement signed between the parties.
• General assembly decision regarding the transfer of the transferred sports branches as a whole with their active and passive assets, that the transferee sports club or sports joint stock company is jointly and severally liable for the debts that arose before the registration of the transfer decision or the reasons giving rise to the debts occurred before the registration date, and that the asset transfer agreement is approved.
• The latest balance sheet of the sports club including its assets and liabilities.
• Asset transfer report.

A sports club that wishes to take over one or more of the sports branches belonging to a sports club as a whole with its active and passive assets shall apply to the Ministry with the following documents:

• Application petition regarding the request for the takeover of assets.
• Board of Directors decision regarding the takeover of assets.
• Bylaws containing the right and authority to operate in the transferred sports branches.
• Asset transfer agreement signed between the parties.
• General assembly decision regarding the transfer of the transferred sports branches as a whole with their active and passive assets, that the transferee sports club is jointly and severally responsible for these debts, provided that the reasons that arose before the registration of the transfer decision or that the debts arose before the registration date, and that the asset transfer agreement is approved.
• The latest balance sheet of the sports club including its active and passive assets.
• Asset transfer report.

A sports joint stock company that wants to take over one or more of the sports branches of a sports club as a whole with their active and passive assets shall apply to the Ministry with the following documents:

• Application petition regarding the request for the takeover of assets.
• Board of directors decision regarding the takeover of assets.
• Articles of association of the company, which includes the right and authority to operate in the transferred sports branches.
• Asset transfer agreement signed between the parties.
• General assembly decision stating that the transferred sports branches were taken over as a whole with their active and passive assets, that the transferring sports joint stock company is jointly and severally liable for these debts, provided that the reasons that arose before the registration of the transfer decision or that the debts arose before the registration date, together with the transferring sports club, and that the asset transfer agreement is approved.
• Notarized copy of the company share ledger.
• Trade registry certification.
• Asset transfer report.

It should be noted that the transfer of assets becomes valid when the transfer is registered by the Ministry in the sports clubs registry or sports joint stock companies registry, depending on the relevance. In addition, all assets and liabilities of the transferred sports branch at the time of registration are automatically transferred to the transferring sports club or sports joint stock company.

The transferring sports club or sports joint stock company is jointly and severally liable for debts, together with the transferring sports club, provided that they arose before the registration of the transfer decision or the reasons giving rise to the debts occurred before the registration date.

In the transfer of assets, the ranking degree of the transferred sports branches in the leagues and similar competitions before the transfer and the rights arising from this degree are preserved for the transferring sports club. The sports club transferring the sports branches may start operating again in the same sports branches starting from the lowest level of the relevant sports branch.