Key takeaways
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The sports clubs could convert from civil associations to corporations, or they could decide not to convert but participate in or form a corporation along with other partners.
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Additionally, the DNU indicates that the associations, federations and confederations will have one year from the Decree's entry into force (until 15 August 2025) to amend their by-laws in accordance with the provisions of the System.
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Both the Decree and RG 18/24 have been enacted in a context which the Argentine Football Association (AFA for its initials in Spanish) has judicially challenged the application of the DNU (recently, a federal court of the City of Mercedes in the province of Buenos Aires suspended the application of the DNU). There is also a related case pending resolution before the Supreme Court of Justice (the highest court in Argentina).
In depth
The Decree regulates the DNU that incorporated a new legal structure that organizations wishing to join the regime may adopt.
The requirement foreseen by Sports Act No. 20,655 that only nonprofit civil associations could be members of the System was eliminated.
The Decree also provides, among other things, that a sports organization may not be prevented from joining a confederation, federation, association, league or union on the basis of its corporate type if it is permitted under the relevant regulation.
In line with these changes, the Decree amended Section Nos. 30 and 77 of General Companies Act No. 19,550, to provide the possibility for associations and nonprofit entities to act as shareholders of stock corporations and the possibility to convert civil associations into stock corporations.
The following are the highlights of the Decree and the RG 18/24, which complement the DNU:
- The Decree includes the following regulations:
- It is clarified that, under the terms of Section No. 77, Subsection No. 1 of the last part of Companies Act No. 19,550, "members of civil associations" means those participating in the extraordinary meeting of the association that considers the decision to convert the entity into a stock corporation or that resolves to become a shareholder of the stock corporation.
- Section No. 19 ter is incorporated, reinforcing the provisions of the Decree regarding the prohibition of sports associations, federations and confederations to prevent or deprive a sports organization of any right based on its legal form if it is admitted by Act No. 20,655 and its amendments.
- Section Nos. 20 bis and 21 of Decree No. 2,656 that regulated Act No. 20,655 were replaced, establishing that the appointment of the board of directors, chair and term in office of said authorities to corporations and legal entities that have adopted such company type as a result of conversion or restructuring of their legal structures will be governed by Companies Act No. 19,550.
- The Decree became effective on 15 August 2024, and, as from that date, sports associations, federations and confederations will have one year to amend their by-laws and adapt them to the terms provided by the DNU and the Decree.
- RG 18/24 includes the following regulations:
- Section No. 345 bis is incorporated into Annex A of General Resolution No. 15/2024, which details the requirements to register the conversion of a civil association into a corporation, including, among others, a transcript of the extraordinary meeting of the association from which such approval arises by a majority of no less than two thirds of the associates participating in the act; the by-laws of the corporation; details of the associates who became shareholders and the list of associates who resigned their by-laws as such, the transformation financial statements, the amount of capital, etc.
- It is clarified that the authorization for civil associations and nonprofit entities to participate in stock corporations includes the entitlement to acquire free of charge or for a consideration shares in existing stock corporations or those to be set up, whether these are corporations with multiple shareholders or sole shareholder corporations.
Click here to read the Spanish version.
