In brief

The Brazilian House of Representatives approved last 14 July 2021, Proposed Bill No. 5516/2016 ("PB 5516/2019") authored by senator Rodrigo Pacheco (DEM-MG), which institutes the Soccer Team Companies (STCs). PB 5516/2019, which had as rapporteur in the House of Representatives deputy Fred Costa (Patriota-MG), institutes the so-called team-company in Brazil, which is a model already adopted in other countries and which grants soccer teams the ability to be incorporated in the model of an STC, subject to a specific legal regime. So 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 an STC, including that of a publicly-held company (i.e., with shares or other securities traded on a stock exchange).

Key takeaways

The incorporation of franchises in the model of an 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 be under professional management and have serving senior corporate governance and compliance standards. The text approved in the Brazilian House of Representatives is now with Brazilian President Jair Messias Bolsonaro, who is expected to give his approval within the next few weeks. Trench Rossi Watanabe Advogados will continue to closely monitor related developments and be available to provide supporter investors, franchises and other interested parties with specialized advice in this area.

In depth

Pursuant to PB 5516/2019, the STC may be incorporated by: (i) transforming the soccer team1 or the original legal entity2 into an 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 financing alternative; (iv) STC's obligation to promote public policy of an educational nature; and (v) exclusive tax treatment.


PB 5516/2019 does not turn a blind eye to the fan's passion; it institutes 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 the latter. Article 4, for example, establishes that the controlling shareholder(s) of an STC may not hold interest, directly or indirectly, in another STC. In the same sense, Article 5 prohibits the following from participating in the fiscal council, board of directors or board of officers of an STC: (i) a member of the management, deliberation, supervisory or executive body of another STC; (ii) a member of the management, deliberation, supervisory or executive body of any Franchise, except the Franchise that originated or constituted the STC itself; (iii) a member of the management, deliberation, supervisory or executive body of a management entity3; (iv) a professional soccer player with a current sports employment contract; (v) an active soccer manager with a contract entered into with a Franchise or an STC; and (vi) an 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 2, paragraph 4 institutes the Franchise's veto right (regardless of the percentage of their participation in the 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.

PB 5516/2019's legislator is also concerned about the level of corporate governance at the STC, . Article 5, for example, establishes the mandatory existence of both a permanent board of directors and a permanent fiscal council in this type of company. Paragraph 3 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 4, 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. Moreover, paragraph 5 establishes the exclusive dedication regime for STC officers, subject to the criteria established in the bylaws (if any).

Treatment of Franchises' debts

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 its soccer activity. On the one hand, it removed the 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 that have been transferred to the STC4). On the other hand, it attributed to the 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 the 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 shareholder."5 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 an 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 six 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 four 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% as previously mandated). Once the term of the Centralized Execution Regime ends, the STC will bear subsidiary liability for the civil and labor obligations of the Franchise existing before the mentioned STC's incorporation.

STC's financing alternative 

Article 27 of PB 5516/2019 provides that the STC may issue any bond or security pursuant to the Brazilian Corporate Law or pursuant to a 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 savings account's remuneration (remuneração de caderneta de poupança), being authorized to stipulate variable remuneration linked to the activities of the STC. The fut-debentures must be registered with entities authorized by the Central Bank and cannot be repurchased by the 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% 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.


PB 5516/2019 provides that the STC shall establish an Educational and Social Development Program (ESP) to, in agreement with a public educational institution, promote the development of education through soccer, and vice versa. The project's concern for the engagement of students in their classes is worth emphasizing, especially in view of the content of Article 28, paragraph 2, which authorizes only students regularly enrolled in the partner institution and who maintain the level of attendance to regular classes and the standard of achievement defined in the agreement. Moreover, paragraph 3 of the same article provides that the ESP must also offer female students enrolled in public schools opportunities for participation, seeking to allow them to have access to the sport.


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

Click here to read the alert in Portuguese.