By Leonardo Neri

Law No. 14,193/21 institutes the Football Corporation (SAF) and establishes the constitution, governance, control and transparency, forms of financing activities involving Brazilian football, treatment of the liability of sports companies and certain tax rules.

It should be noted that the new law amends and complements Law No. 9,615/98 (Pelé Law) and provisions of the Civil Code. In this context, interest in football is also found in other legal provisions, such as Law No. 13,155/15 (Profut) and Law No. 11,38/06 (Sports Incentive Law – LIE).

The issue here, however, is to address the main points of this law, its innovations, in a clear and easy-to-understand way. SAF is the company whose main activity is the training of men's and women's football teams in professional competitions, in accordance with the specific rules of the new law.

SAF is a sports company, whose corporate purpose may include the following activities:

The Football Corporation may be established:

(a) for the transformation of the football club into SAF;

(b) by splitting the club's football department and transferring its assets related to football activities;

(c) by the initiative of a natural or legal person or investment fund. In the first two cases, the SAF will necessarily succeed the football club in its relations with the management entities, as well as in contractual relations, of any nature, with professional football athletes. Thus, the SAF will have the right to participate in championships, cups or tournaments replacing the original club or legal person, under the same conditions as at the time of the succession, with the management entities being responsible for the appropriate replacement without any sporting prejudice.

Furthermore, in relation to the training of a professional football player, it is worth remembering that:

(i) the rights and duties arising from relationships, of any nature, established with the club and football administration entities (federations, confederations or league), including rights to participate in professional competitions, as well as employment contracts, image use contracts or any other contracts linked to football activities will be mandatorily transferred to SAF;

(ii) the club and the Sociedade Anônima do Futebol must contract, on the date of its incorporation, the use and payment of remuneration arising from the exploitation by the SAF of intellectual property rights owned by the club;

(iii) the assets and rights will be transferred to SAF definitively or on a fixed term basis, as established in the contract;

(iv) the transfer of rights and assets to SAF is independent of authorization or consent from creditors or interested parties, including those of a public nature, unless otherwise provided for in a contract or other legal transaction;

(v) if the sports facilities, such as stadium, arena and training center, are not transferred to the SAF, the original club or legal entity and the SAF must enter into, on the date of its incorporation, a contract establishing the conditions for use of the facilities;

(vi) the original club or legal entity may not participate, directly or indirectly, in professional football competitions, with participation being the prerogative of the SAF constituted by it; and

(vii) the SAF will mandatorily issue class A ordinary shares for subscription exclusively by the club that established it.

The SAF will not be liable for the obligations of its founders, prior or subsequent to the date of incorporation, except for certain activities for social purposes, with payments to creditors being limited to the prescribed forms:

• through the distribution of 20% of the current monthly income of SAF according to the plan approved by the creditors;
• allocating 50% of dividends, interest on shares or other remuneration received as a shareholder. Furthermore, clubs may, with the consent of creditors, pay their debts directly to their creditors under centralized enforcement regimes established by law. If elected, the club will have six years to pay its creditors, with the option of extending the period for a further four years.

The SAF may issue bonds called “Fut Debentures”. This reward will be an interest rate equal to or higher than the annual yield of the savings account, allowing the determination of variable rewards cumulatively linked to these activities or assets of the SAF with a minimum term of two years related thereto.

The SAF law offers benefits in the tax regime, as the SAF is subject to the Special Football Tax (TEF).

The TEF includes the following taxes and contributions when collected monthly in a single study document:

I – Corporate Income Tax (IRPJ);
II – Contribution to Social Integration and Wealth Generation Programs for Public Servants (Contribution to PIS/Pasep);
III – Social Contribution on Net Profit (CSLL);
IV – Contribution to the Social Security Fund (Cofins); and
V – Third Party Contributions. During the first five calendar years of incorporation, the SAF will pay the aforementioned taxes monthly at a rate of 5% of the monthly income received. From the beginning of the 6th calendar year of the SAF's foundation, the TEF will be charged % of the monthly revenue.

Pre-SAF club tax obligations not included in federal tax programs
refinancing (such as PROFUT) may be subject to transactions proposed in the
terms of certain statutes.

Regardless of the specificities of each club, being a member of SAF is extremely valuable. The new legal form is a good opportunity to create a secure, stable and robust corporate structure for conducting the club's football activities, bringing together the best of the national sport with best practices presented around the world.