Legal regime of sports clubs in Bulgaria

by Boris Kolev[1] and Rumen Nekov[2]

General remarks

The sports clubs are one of the three types of sports organizations in the Bulgarian sports law. Pursuant to art. 10, paragraph 2 of the Law on Physical Education and Sport (“Law on Sports”)[3] sports organizations may be sports federations, sports clubs and national sports organizations. The close reading of the legal provisions leads to the conclusion that the above-mentioned have three juridical features in common:

–   they all are legal entities;

–   they are non-state organizations that, along with the state bodies, manage the system of physical education and sports in Bulgaria;

–   their normative established main role is to carry out training, competition, organizational and administrative activities in one or several kind of sports, as well as develop and popularize physical education and sports.

However, their difference can be found in several aspects, some of which will be mentioned below through comparative method while we represent the differencia specifica of sports clubs.[4]

 

Sports clubs: legal definition and main activities

Art. 11, paragraph 1 of the Law on Sports defines sports clubs as voluntary associations of citizens, registered as non-profit legal persons, which shall develop and popularize the physical education and sport, as well as carry out training and competition activity in one or more kind of sports.

For achieving their objectives, sports clubs shall exercise the following activities:

–   they shall support sports exercises of the citizens and organize them for practicing physical exercises and sports activities;

–   organize schools and courses for training and competition activity;

–   build, maintain, manage and use sports facilities;

–   exercise preparation of sportsmen;

–   perform other activities related to the development and promotion of sport.

Registration

Sports clubs are registered as non-profit associations under the Law on Non-Profit Legal Entities[5]. Sports federations and national sports organizations, on the other hand, are registered under the same law, but in the legal form of non-profit legal entities for conducting socially beneficial activity, respectively as non-profit associations for the public benefit. Furthermore, sports clubs may be members of sports federations and/or national sports organizations, but the opposite is legally impossible.

The systematic interpretation of the norms of art. 11, paragraph 1 of the Law on Sports and art. 19, paragraph 1 of the Law on Non-Profit Legal Entities draws the conclusion that the sports club shall be established by at least three persons united for pursuing non-profit activities. The founders adopt a statute that contains:

–   the name of the association;

–   headquarters;

–   goals and means of their achievement;

–   scope of activity;

–   managing bodies and their powers;

–   rules for representation of the legal entity;

–   rules for membership, etc.

The sports association comes into being as a legal subject as from its registration in the register of non-profit legal persons within the jurisdiction of the district court at the seat of the legal person.

Managing bodies

The supreme body of the sports association is the general assembly. It is composed of all members of the association and is entitled to:

–   amend and supplement the statute;

–   adopt other internal acts;

–   elect and release members of the board of managers;

–   admit and exclude members;

–   adopt the budget of the organization;

–   revoke decisions of the other bodies of the association that contradict the law, the statute or other internal acts stipulating the activity of the association;

–   take different decisions, such as: for participation in other organizations, for transformation and termination of the association, and so on.[6]

The executive body of the association is the board of managers. The latter shall comprise at least three members who are elected for a term of up to five years. The board elects a chairman among its members.

The competences of the managing board are set out in the provisions of art. 31:

–   it shall represent the association before third persons and officials;

–   provide the fulfillment of the decisions of the general assembly;

–   prepare and present before the assembly a draft budget and a report on the activity of the association;

–   dispose with the property of the legal entity, etc.

Professional sports clubs

Professional sports clubs may be registered either as sports associations or as companies limited by shares (sports companies) in accordance with the Law on Commerce[7].

The main difference between the sports associations and sports companies lies in the fact that the second mentioned have the right to conclude a commercial transaction and to distribute profit. On the contrary, the non-profit associations can carry out additional economic activity only if it is related to the scope of their basic activity for which they are registered, and by using the revenue for achieving the goals determined by the statute.

Pursuant to art. 159, paragraph 1 of the Law on Commerce, a company limited by shares may be founded by one or more natural or legal persons. If the founders are more than one person, there should have to be a constituent meeting attended by all the persons subscribing for shares. The tasks of this meeting are the following:

–   to take a decision for the incorporation of the company;

–   to adopt the statute;

–   to establish the amount of the incorporation costs; and

–   to elect a supervisory board, respectively a board of directors.

The minimum value of the capital of the company is BGN 50,000 (€ 25, 000). An absolute requirement for the registration of the company in the commercial register is the full amount of the capital stock to be subscribed, as well as every shareholder to have had paid the part of the value of each stock stipulated by the statute, but not less than 25 percent of the nominal or issued value of each stock stipulated by the statute.

Professional sports clubs must also meet the following additional requirements:

–   their name should explicitly indicate that they are a “professional sports club”;

–   to have stipulated through contracts the rights and obligations of the professional athletes according to their status;

–   one natural person or legal entity should not hold the majority shares or the control of two or more professional sports clubs participating in one competition or championship;

–   sports companies shall issue only personal shares.

Managing bodies of sports companies

The bodies of the company are the general meeting of the shareholders and the board of directors (one-tier system) or the supervisory board and the managing board (two-tier system).

The general meeting comprises the voting shareholders and its competences include such juridical actions as:

–   amendment of the statute;

–   election and release of members of the board of directors, or of the supervisory board, as the case may be;

–   resolving on an increase or reduction of the capital stock;

–   taking decisions for distribution of the profit, and so on.

The members of the board of directors, the supervisory board and managing board shall be elected for not more than a five-year term of office, unless a shorter term is provided for in the statute. The number of members of the managing board shall be three to nine persons and it shall be determined by the statute. The members of the supervisory board (from three to seven persons) shall be appointed by the general meeting of shareholders. The company is represented collectively by the members of the board of directors or of the managing board, as the case may be.

 

Specific rights of sports clubs

 By virtue of their membership with the relevant sports federation, sports clubs acquire the following rights:

–   to participate in the state championships and international competitions;

–   to organize amateur and professional teams;

–   to receive state aid; and

–   to use sports facilities, which are in state or municipality ownership, following a procedure established by the law.

Further, the sports clubs are authorized to exercise the following activities:

 –   to propose the relevant sports federations the granting, termination and withdrawal of the competition rights of the athletes;

–   to carry out transfers of sportsmen;

–   to hold the advertisement rights, rights of TV and radio broadcasting of sports events, organized by them, under terms and conditions specified by the relevant sports federation; and

–   to render sports services, which are defined as paid services associated with the specific sports activity, such as training services, lease of sports facilities, and so forth.

 


[1] Bulgarian sports lawyer, General Manager of the legal consultancy company Decaleges, member of the Advisory Board of the International Sports Law Journal issued by the International Sports Law Centre of the ASSER Institute in The Hague. He is co-author of the monograph “Sports Law In Bulgaria” in the International Encyclopaedia of Laws published by Kluwer Law International and also an author and co-author of numerous publications on sports law issues. Recently, he defended a PhD thesis on the administrative law aspects of Bulgarian sports law at the University of Plovdiv, Bulgaria.

[2] Author of several publications related to sports law in Bulgaria and co-administrator of professional legal website, named ChallengingTheLaw.Com. This joint article is a result of the joint work of the authors on the theoretical and practical issues set in the Bulgarian sports legislation.

[3] Law on Physical Education and Sport of 9 July 1996 in the State Gazette issue no. 58 of 9 July 1996.

[4] For more information about sports organizations see B. Kolev and T. Simov, “Sports Law in Bulgaria”, in: International Encyclopaedia of Laws: Sports Law, edited by R. Blanpain, M. Colucci & F. Hendrickx. (Kluwer Law International, The Netherlands 2011), p. 32-36.

[5] Law on Non-Profit Legal Entities of 1 January 2001 in the State Gazette issue no. 81 of 6 October 2000.

[6] All powers are enumerated in art. 25 of the Law on Non-Profit Legal Entities.

[7] Law on Commerce of 1 July 1991 in the State Gazette issue no. 48 of 18 June 1991.