July 26, 2024

The government has been introducing various reforms affecting the economy. One of these reforms allows sports associations including football clubs to become Sports Corporations (SAD) if they wish.

For football clubs, this is a significant change. Currently, the statute of the governing body of this discipline, the Argentine Football Association (AFA), establishes that clubs must be non-profit civil associations to be members of the AFA.

Unlike non-profit civil associations, Sports Corporations (SAD) operate for profit, meaning they seek individual benefits and profits. This new rule allows football clubs and other sports associations to receive private investments.

In December 2023, the Executive Branch issued a decree (DNU 70/23) modifying some aspects of the Sports Law (Law No. 20,655).

The most relevant changes are:

• Corporations can now be part of the Institutional System of Sport and Physical Activity (SIDAF), which includes clubs, federations, confederations, the Argentine Olympic Committee, and the Argentine Paralympic Committee. Previously, this was not allowed.
• Governing sports organizations (e.g., AFA) cannot impede, hinder, deprive, or undermine any rights of a sports organization, including its right to affiliation.
• Sports associations, federations, and confederations must amend their statutes to comply with the new regulations. To do this, they will have one year from the moment the Executive Branch regulates DNU 70/23. In the case of football clubs, this means that the AFA must amend its statute to allow SAD to affiliate.

Both the AFA and football clubs, in general, have expressed their disagreement with the incorporation of SAD.

In January of this year, the Salto Football League, an entity affiliated with the AFA, filed a lawsuit claiming the DNU 70/23 rules related to the SAD's to be unconstitutional. The court handling the case issued a precautionary measure and suspended the application of these rules until a final judgment is reached. The Government filed an appeal, and the case is currently under review by the Supreme Court.

Despite this judicial dispute, on July 16, the Office of Corporations (IGJ) issued Resolution No. 15/2024, which introduces new rules allowing civil associations and foundations to participate as shareholders in corporations and to transform into corporations. It also provides that the registration process for foreign non-profit entities in Argentina should be simplified. These rules will take effect on November 1st of this year.

According to media reports, the Executive Branch is expected to soon regulate the provisions of DNU 70/23 concerning SAD.