Ⅰ. INTRODUCTION
In Turkey, sports clubs and sports joint stock companies have been a subject of debate for many years due to poor management, which has led them into heavy debt burdens, and the inability to hold managers accountable under a robust liability regime. The arbitrary accumulation of large debts that clubs are unable to repay, coupled with the inability of key actors in the sports industry to continue their activities as a result of these debts, has led to a consensus that sports club managers should be held accountable for such debts under certain conditions. In essence, the provisions stipulated in Article 553 of the Turkish Commercial Code numbered 6102 ("TCC") and its subsequent clauses, which regulate the liability of executives in joint stock companies, are applicable to sports joint stock companies as well. However, Law No. 7405 on Sports Clubs and Sports Federations ("SCSF") introduces a provision that extends to sports clubs in addition to sports joint stock companies, thereby intensifying the conditions of liability.
Ⅱ. LIABILITY REGIME REGULATED IN THE SCSF
Article 20/13-c.1 of the SCSF expressly provides that "the executive and board members of sports clubs and sports joint stock companies, as well as their executives, shall be jointly and severally liable for damages incurred against the club, company shareholders, and creditors in the event of intentional or negligent violation of obligations arising from legislation, regulations, and articles of association." In the rationale of Article 20 of the SCSF, it is emphasized that the legal liability of board members and executives is regulated in a manner similar to the provisions found in the TCC.
In order for the individuals specified in Article 553 of the TCC and Article 20/13 of the SCSF to be held liable, their actions must contain elements of unlawfulness, there must be damage resulting from these actions, a causal link must exist between the actions and the damage, and the actions must have been carried out due to the individuals' faulty conduct. All these conditions must be met simultaneously.
Ⅲ. PERSONS SUBJECT TO LEGAL LIABILITY
Article 20/13 of the SCSF enumerates the individuals subject to legal liability as the presidents, board members, and managers of sports clubs and sports joint-stock companies..
Ⅳ. JOINT AND SEVERAL LIABILITY
Article 20/13 of the SCSF stipulates that the members of the board of directors and executives of sports clubs and sports joint stock companies are jointly and severally liable for the damages they cause. The most significant difference between Article 553/1 of the TCC and Article 20/13 of the SCSF lies in the principle of joint and several liability. The TCC adopts the principle of differentiated solidarity to determine the liability of managers. This system holds the members of the board of directors liable in external relations according to their degree of fault. In contrast, Article 20/13 of the SCSF imposes joint and several liability on the members of the board of directors and managers for the damages they cause, without specifying the type of liability. In this case, it should be assumed that the liability in the SCSF is full solidarity. Under full solidarity, the members of the board of directors are liable for the entire damage in external relations, regardless of the degree of fault.
As mentioned earlier, in this scenario, board members and executives under the SCSF are jointly and severally liable in external relations against the injured party, irrespective of the degrees of fault.
Ⅴ. STRICT LIABILITY AND EXPANSION OF LIABILITY
The second and third paragraphs of Article 20/13 of the SCSF introduce significant provisions that expand the liability of board members and executives. In cases of violation of these paragraphs, it is stated that intent or negligence will not be required, and the liability will persist unless it is proven that the necessary diligence to prevent the damage was exercised. This stands out as a provision that imposes objective liability on executives, going beyond the traditional fault-based liability. In other words, regardless of whether these individuals are at fault, they must demonstrate that they took the necessary measures to prevent the damage.
The 4th, 5th, 8th, and 9th paragraphs of the same article specify certain unlawful actions that further clarify the liability of managers:
- Article 20/4: Causing harm to Sports JSC in the transfer of rights and receivables,
- Article 20/5: Causing harm to Sports JSC in borrowing transactions on behalf of the company,
- Article 20/8: Causing harm to the company due to conflicts of interest,
- Article 20/9: Causing harm to the company as a result of unlawfulness in payments and collections made on behalf of or for the account of Sports JSC.
These provisions make the liability of board members and managers more concrete, linking it to specific unlawful acts in the context of transfers of rights and receivables, borrowing transactions, conflicts of interest, and payment/collection processes. The board members and managers are held liable for the damage arising from these actions without the need to establish fault, which imposes a strict duty on them to perform their responsibilities diligently. The broad scope of this liability aims to protect the rights of both the company and its shareholders and creditors.
Ⅵ. EXEMPTION FROM STRICT LIABILITY
Board members and executives can only be exempt from liability if they prove that they took necessary care to prevent the occurrence of the damage. In our opinion, the required care for board members and executives should be understood as objective care. Accordingly, a board member or executive must exert effort with the diligence of a prudent manager to prevent the occurrence of harm and prove this.
In this context, the failure of board members and executives to demonstrate the necessary care is presumed as an indication that they did not take the required care along with the occurrence of damage. Board members or executives must prove that they took necessary care to prevent the occurrence of harm in order to be exempt from liability.
Ⅶ. CRIMINAL LIABILITY OF BOARD MEMBERS AND EXECUTIVES
In addition to legal liability for board members and executives under SCSF criminal liability is also addressed. Prohibited conduct, as envisaged in the provisions of Article 20/4: causing harm to the joint-stock company in the transfer of rights and receivables, Article 20/5: causing harm to the sports joint-stock company in borrowing transactions on behalf of the company, and Article 20/8: causing harm to the company due to conflicts of interest, is subject to both legal and criminal sanctions within the SCSF. Consequently, board members and executives who fail to comply with the restrictions and prohibitions related to the transfer of rights and receivables and borrowing as set forth in Article 20 of the SCSF may face imprisonment from one to three years.
Ⅷ. CONCLUSION
The high levels of debt held by sports clubs and sports joint stock companies due to poor management practices pose a serious threat to both the sustainability of the clubs and the overall sports economy of the country. In this context, the liability regime introduced by the SCSF significantly increases the financial responsibility of managers, requiring them to perform their duties with greater care and diligence. By imposing joint and several liability on the managers of sports joint stock companies and clubs, along with the application of strict liability principles, the SCSF aims to prevent arbitrary or negligent actions by managers. In doing so, it seeks to discipline the borrowing capacities of clubs and promote a healthier functioning of the sports economy.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
