In brief

The Brazilian House of Representatives approved, last Wednesday (07/14/2021), the Proposed Bill No. 5516/2016 (“PB 5516/2019”) authored by senator Rodrigo Pacheco (DEM-MG), which institutes the Soccer Team Companies (“STC”). The Proposed Bill, which had as rapporteur in the House of Representatives, deputy Fred Costa (Patriota-MG), institutes the so-called team-company in Brazil, a model already adopted in other countries, granting soccer teams the ability to be incorporated in the model of a STC, subject to a specific legal regime. And if you’re wondering if you can one day be a shareholder of your “favorite team”, the answer is yes. If PB 5516/2019 is sanctioned, the current soccer teams could become profit organizations, in the model of a Soccer Team Company, including, publicly-held company (i.e., with shares or other securities traded on a stock exchange).

More details

Pursuant to PB 5516/2019, the STC may be incorporated: (i) by transforming the soccer team1 or the original legal entity2 into a STC; (ii) the spin-off of the Franchise’s soccer department and the transfer of its assets related to soccer activity; and (iii) by the initiative of a natural or legal person or investment fund. The main points of PB 5516/2019 can be divided into five themes: (i) governance of the STC; (ii) treatment of the Franchise’s debts prior to the constitution of the STC; (iii) STC’s alternative of financing; (iv) STC’s obligation to promote public policy of an educational nature; and (v) exclusive tax treatment.


The PB 5516/2019 does not turn a blind eye to the fan’s passion, by instituting certain rules that aim to ensure that a soccer team is not under the corporate or management control of another soccer team or of people related to this last soccer team. Article 4th, for example, establishes that the controlling shareholder(s) of a STC may not hold interest, directly or indirectly, in another STC. In the same sense, Article 5th prohibits from participating in the fiscal council, board of directors or board of officers of a STC: (i) member of management, deliberation, supervisory or executive body of another STC; (ii) member of management, deliberation, supervisory or executive body of any Franchise, except the Franchise which originated or constituted the STC itself; (iii) member of the management, deliberation, supervisory or executive body of a management entity3; (iv) professional soccer player with a current sports employment contract; (v) active soccer manager with a contract entered into with a Franchise or STC; and (vi) active soccer referee.

In the same sense, PB 5516/2019 tries to preserve decisions on essential matters under the control of the Franchises. Thus, article 2nd, paragraph 4th, institutes the Franchise’s veto right (regardless of the percentage of their participation in STC’s capital stock) in relation to the following matters: (i) change of the corporate name; (ii) modification of the identifying signs of the professional soccer team, including symbol, coat of arms, brand, nickname, anthem and colors; and (iii) moving the head office to another Municipality.

With regard to the level of corporate governance at the STC, PB 5516/2019 does not show any minor concern. Article 5th, for example, establishes the mandatory existence of both a permanent board of directors and a permanent fiscal council in this type of company. Paragraph 3rd of the same article provides that the member of the board of directors who is cumulatively associated and integrates any management, deliberation or supervisory body, elected or not, of the Franchise while he is a shareholder of the respective STC may not receive any remuneration for his duties held at the STC. Paragraph 4th, in its turn, prohibits the participation as officer or member of the fiscal council of the STC of any employee or member of any management, deliberation or supervisory body, elected or not, of the Franchise while the latter is a shareholder of the respective STC. And paragraph 5th establishes the exclusive dedication regime for STC officers, subject to the criteria established in the bylaws (if any).

Treatment of Franchises’ debts

The PB 5516/2019 seems to adopt a balanced position with regard to the succession of debts of the Franchise, when the incorporation occurs through the spin-off of the Franchise’s soccer department and transfer of its assets related to soccer activity. On the one hand, it removed STC’s responsibility for the Franchise’s obligations before or after the date of its incorporation (except those related to the specific activities of its corporate purpose and which have been transferred toSTC4). On the other hand, it attributed to STC the obligation to allocate 20% of current monthly revenues to the Franchise to pay their debts. Additionally, article 10 establishes as revenues to be transferred by STC to the Franchise for payments to creditors “(…) 50% of dividends, interest on shareholders’ equity (juros sobre capital próprio) or other remuneration received from it, as a shareholder5″As long as the STC complies with these payments, any way of constraining its assets or revenues, in relation to obligations prior to the incorporation of the STC is prohibited.

Article 13 establishes the right of Franchises that constitute STC to negotiate the payment of their obligations: (i) directly to their creditors; (ii) by the collective of creditors, through the Centralized Execution Regime (as explained below); and (iii) through judicial or extrajudicial receivership, pursuant to Law No. 11,101/05 (Bankruptcy Law).

The Centralized Execution Regime is the one through which the Franchise will concentrate in a centralizing court the executions of all its debts, as well as all its revenues. It will be up to the centralizing court to define the form of payment of creditors, subject to the provisions of Section V of PB 5516/2019 and regulations to be issued by the Brazilian Judiciary Branch.

Payment of creditors, through the Centralized Execution Regime, must take place within an initial period of 6 years. After this period, if the Franchise proves the payment of at least 60% of the original debt, the extension of the Centralized Execution Regime for another 4 years will be allowed, during which the percentage applied to the monthly revenues to be transferred from the STC to the Franchise will be 15% (and not 20% anymore).

Once the term of the Centralized Execution Regime ends, STC will respond in a subsidiary way for the civil and labor obligations of the Franchise prior to its execution.

STC’s alternative of financing

Article 27 of the PB 5516/2019 provides that STC may issue any bond or security pursuant to the Brazilian Corporate Law or pursuant to regulation to be issued by the Brazilian Securities and Exchange Commission. Additionally, PB 5516/2019 creates the fut-debentures, which may be issued by STC and must have (i) a minimum maturity of two years and (ii) a minimum remuneration equal to the one checked on savings account, being allowed to stipulate variable remuneration linked to the activities of STC. The fut-debentures must be registered with entities authorized by the Central Bank and cannot be repurchased by STC.

Individual investors residing in Brazil will be exempt from income tax on due to the interest received in connection to the fut-debentures investment; and companies and investment funds in the country or abroad will pay 15% of income tax, except if they are in a nation with low taxation or fiscal paradise. In this case, income will be taxed at 25%. Additionally, the proceeds raised through this security must be used in the development of activities or the payment of expenses, expenses or debts related to the typical activities of the STC provided for in PB 5516/2019, as well as in its bylaws.


The PB 5516/2019 provides that the STC shall establish the Educational and Social Development Program (“ESP”), to, in agreement with a public educational institution, promote measures in favor of the development of education, through soccer and vice versa. On the subject, it is worth emphasizing the project’s concern with the engagement of students in its classes, in view of the content of article 28, paragraph 2nd, that only allows students regularly enrolled in the partner institution to participate in the agreement and who maintain the level of attendance to regular classes and the standard of achievement defined in the program. It is also worth mentioning that paragraph 3rd of the same article, which provides that the ESP must also offer opportunities for participation to female students enrolled in public schools, seeking to carry out them to have access to the sport.


The PB 5516/2019 creates the Soccer Specific Taxation Regime (“STR”), establishing a single rate of 5% including IRPJ (corporate income tax), PIS/Pasep, Cofins (social contributions over revenues), CSLL (social contribution on net profits) and INSS (social security contributions). This rate may be used for five years and will apply to the monthly income, including those from prizes and fan partner programs and except for those relating to the assignment of the players’ sporting rights. From the 6th year onwards, the rate will be reduced to 4%, but the income from the players’ sporting rights will be included in the calculation basis.

The incorporation of franchises in the model of the STC, governed primarily by the terms of PB 5516/2019 and, alternatively, by the Corporations Law and the Pelé Law, will allow soccer franchises to have a professional management, serving senior corporate governance and compliance standards. The text approved in the Brazilian House of Representatives goes to the sanction of the Brazilian President, Jair Messias Bolsonaro, which is expected to take place within the next few weeks. Trench Rossi Watanabe Advogados will continue to closely monitor the processing of the Proposed Bill no. 5516/2019, being available to supporter investors, franchises and other interested parties to provide them with specialized advice in this area.

[1] Soccer team is defined in PB 5516/2019 as a civil association, governed by Brazilian Law No. 10,406, of January 10, 2002 (Brazilian Civil Code), dedicated to the promotion and practice of soccer.

[2] Original legal entity is defined in PB 5516/2019 as a business company dedicated to the promotion and practice of soccer. In this E-Alert, the original soccer team or legal entity will be referred to simply as “Franchise”.

[3] Management entity is defined in PB 5516/2019 as a confederation, federation or league, as provided for in Brazilian Law No. 9,615, of March 24, 1998 (“Pelé Law”), which manages, directs, regulates or organizes professional soccer competition.

[4] Pursuant to art. 2, paragraph 2 of PB 5516/2019, “the rights and duties arising from relationships, of any nature, established with the franchise, original legal entity and administration entities, including rights to participate in professional competitions, as well as employment contracts, use of image or any other contracts linked to the activity of soccer, must be transferred to the soccer team company.” (emphasis ours).

[5] Despite the technical inaccuracy of the article, due to the history of PB 5516/2019, it is believed that the legislator wanted to impose on the FCC the mandatory distribution of at least 50% of the net income, while the Club has debts prior to the constitution of the FCC.

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