Corporate Department

After 22 years, the second period began for Sports Joint Stock Companies (“SAD”), which were created in order to be a more efficient vehicle for investors in sports clubs, thus promoting the entry of capital into sports in our country and especially in football, which since it began to become professional, had significant economic difficulties.

Nine articles of Accountability Law No. 20,212 for the period corresponding to fiscal year 2022, approved by Parliament on October 18 and promulgated on November 6 (hereinafter “Accountability Law”) modify and provide clarity on some aspects of these companies that were created by Law No. 17,292 of 2001 (hereinafter the “Law”).

The Law was especially important insofar as it was established that sports clubs can adopt the legal form of civil association or SAD.

In the case of SADs, it was established that these companies are subject to the general regime of Commercial Public Limited Companies with the particularities established in the Law, among others, a specific corporate purpose, limitations regarding simultaneous participation in two or more SADs that participate in the same competition, and administration by a Board of Directors.

Nor may the SAD participate with more than one team in the same category of a sports competition.

Unlike Civil Associations, an instrument traditionally used by sports clubs and which are non-profit, SAD shareholders can withdraw dividends.

The Law provides for registration in the Registry of Sports Clubs, under the authority of the National Sports Secretariat and the oversight in charge of the General Auditor’s Office of the Nation.

For its part, the Accountability Law specifically provided for the following changes and additions:

• The Registry of Sports Clubs changes its name to Registry of Sports Institutions.
• The requirement that capital contributions must be exclusively in money is eliminated, consequently allowing contributions in kind as permitted in the general regime for Public Limited Companies.
• Regarding the limitation of simultaneous participation in two or more SADs that participate in the same competition, it provides that no person may simultaneously own shares in a proportion greater than 1% in two or more SADs. Thus, sports clubs that are constituted as civil associations are included in these restrictions, and cannot own more than 25% of the shares of a SAD.
• Sports clubs (civil associations) may not be shareholders of the SADs that participate in the same competition.
• A change is established regarding the administration of the SAD, establishing that the board of directors will be composed of at least 2 members and the president, unless otherwise agreed in the statute, will represent the company.
• It is expressly provided that sports clubs (civil associations) may enter into contracts with the SAD for the transfer of sports assets, regulating the formalities, registration in the Registry, content of the contract, as well as majorities for its approval, which cannot be less than affirmative vote of 60% of the members with voting rights present at the meeting.
• The Law established in article 78 the possibility of transforming a sports club (civil association) into SAD but no conditions and formalities were provided. All of this is corrected in the Accountability Law in an article that establishes the specific formalities regarding convocation, special majorities and the right to integrate capital of the partners not present at the meeting that resolves it.
• Regarding the seizure of the shareholder, it refers to the rules that govern the shares for public limited companies, which state that the creditors of a partner may seize his share, but they may only collect with the profits that are distributed and with the assets that are awarded to him in the liquidation of the company.
• The SADs are obliged to report suspicious operations to the Financial Information and Analysis Unit (UIAF) of the Central Bank of Uruguay.

In case of doubts, our professionals will be able to advise you on the constitution of SAD and all accounting and legal matters linked to the life of these companies.