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Amending Egypt’s Sports Law: A step towards stimulating investments - Daily News Egypt

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Amending Egypt’s Sports Law: A step towards stimulating investments

Sports Ministry, parliamentary youth and sports committee looking to amend Sports Law

Egypt’s Minister of Youth and Sports Ashraf Sobhy has told Daily News Egypt that his ministry is aiming to motivate investors in the sports field, and encourage the establishment of sports companies.

Sobhy also said that the Ministry of Youth and Sports aims to amend some provisions of the Sports Law No 71 of 2017, including the clause on sports investment. The ministry is working to motivate investors, attract investments, and encourage clubs and sports bodies to establish companies.

He told Daily News Egypt that the ministry is working to encourage the private sector to invest in the field of sports, through several types of companies, and according to their nature and size.

Sobhy added that the proposals to amend the law include reducing the ministry’s supervisory role in relation to companies, cancelling the penalty clause up to imprisonment, and working to ensure that controls are on the sporting part and not the investment.

The minister explained that, until now, no sports clubs or bodies have established a company, so there is an effort to amend some technical provisions in investment, to encourage clubs and bodies to work as companies.

He said that among the proposals on the investment clause in the Sports Law, there is a project to be undertaken to increase the promotion of investment companies and investment attraction. This comes in addition to stimulating clubs to work for companies to achieve the development of their resources.

“We are studying matters well, and not in a hurry to put the necessary amendments to the clauses, before taking a decision, taking into account all international standards, so that everything is done in the best possible way,” Sobhy said.

Sports investment among top topics in parliament

Mahmoud Hussein, head of the House of Representatives’ youth and sports committee, has said that discussions on amending the Sports Law will remain ongoing until a final formulation is reached.

Once this has been completed, it will be presented to the House of Representatives for its discussion and approval.

He told Daily News Egypt that the law has two tracks, either for the representatives to present it, or for it to be submitted by the government, which is the situation with the current law.

Hussein explained that, in its last session in the presence of Minister of Youth and Sports Ashraf Sobhy, the youth and sports committee discussed amendments to Sports Law No 71 of 2017. This included the item on sports investment, as well as some items related to the Egyptian Olympic Committee.

He added that the committee discussed some amendments to the articles of the law, including adding new items to the exemptions items contained in Article 9.

This relates to the exemption from fees imposed for any of the ministries, bodies, or local administration units, as well as the exemption of popular and public clubs from real estate taxes and value-added tax (VAT).

As for popular clubs and youth centres, the committee discussed how to take advantage of the presidential initiative allocating EGP 500bn to develop Egyptian villages. Part of this would see establishing a youth centre in every deprived Egyptian village and to develop existing youth centres.

The committee also discussed allocating lands of public benefit for sports facilities at special prices, as well as adding items on professional sports. This came in addition to discussing the national project for the talented and the Olympic champion.

Hussein added that discussions also covered: a proposal for a bill establishing the General Authority for Sports and Youth Buildings; and amending the Sports Professions Syndicate Law No 3 for the year 1987, as amended by Law No 63 of 2010.

He concluded by noting that the committee discussed the Ministry of Youth and Sports’ strategy for its preparations for the Olympic Games in Tokyo later this year.

This came in addition to the Ministry of Youth and Sports monitoring and following-up on the maintenance and development of stadiums, in addition to digital governance in clubs and sports federations.

Meanwhile, the ministry is also closely looking into sports tourism, and how to exploit the moderate Egyptian climate and tourist places in the establishment of tournaments and sports camps, and the problem of financial resources for clubs.

Sports clubs have the right to invest

Mohamed Farag Amer, President of Alexandria’s Smouha Club and head of the youth and sports committee at the House of Representatives, has said that sports clubs and bodies have a right to invest.

Amer’s latest remarks follow on from those he made in the wake of the issuance of Sports Law No 71 of 2017, where he noted that it is normal for amendments to happen to the Sports Law.

He also said that such amendments are very acceptable, according to the vision of the House of Representatives. He told Daily News Egypt that the Sports Law was approved unanimously.

Amer stated that no issues appeared as a result of the law’s application. However, sports investment must be opened wide in a way that does not harm the clubs or the club’s structure, and so long as risks are removed.

He pointed out that it is the right of any club to invest in all sporting activities and all its resources, because it is the only way to ensure clubs have an income. However, it is not logical for investors or private sector companies to have a controlling share in the clubs.

Amer noted that this was due to the companies then having the ability to control the fate of the clubs they manage according to their own interests, rather than that of the clubs.

In Chapter 8 of Sports Law No 71 of 2017,  titled “Investment in the Sports Field”, it stipulates that companies that are established to practice sports services of all kinds must take the form of joint-stock companies. These companies may offer their shares for subscription in accordance with the provisions of the Capital Market Law, and its shares may also be listed on the stock exchange.

The clubs addressed by the provisions of this law and with the approval of the central administrative authority may establish branches for them in the form of joint-stock companies in which the club and its investor members participate. The previous provisions do not apply to companies subject to the supervision of the Ministry of Tourism and Antiquities.

It is also not permissible to combine the membership of the board of directors of any sports body and the membership of the board of directors of companies established in accordance with the provisions of this law. As part of this, any members are banned from working for them for a fee or with remuneration.

Members of the board of directors of the authority may not work for the company before at least two years have passed since the end of their membership in the board of directors of the body.

It is not permissible for any sports services company to conduct its business except after obtaining a licence from the competent administrative authority.

The competent minister shall issue a decision regulating the conditions and procedures for granting licences to practice sports services and other organisational matters. The minister may also suspend the issuance of licences in the event of the violation of the terms of their licensing, upon the request of the central administrative authority.

Meanwhile, it is also the competent minister who shall determine the fees for granting licences, not exceeding 1% of the company’s capital, and he may set a minimum and a maximum limit for the prices of services provided by the licenced companies.

The competent minister may issue a reasoned decision to cancel the licence issued to the company or suspend it in whole or in part for a period or for periods not exceeding three years.

This will take place in the event that the company commits any violation of the provisions of this law or the continents issued for its implementation. This decision, which should take place according to the usual procedures, should not prejudice the enforcement of the penalties stipulated in this law.

Turning sports clubs into companies

Amr El-Sonbaty, President of Cairo’s Heliopolis Club and a member of the House of Representatives’ youth and sports committee, believes that it is time to amend the Sports Law.

He noted that there are proposed amendments from Parliament and others from the Ministry of Youth and Sports.

Although the current law has stirred up stagnant waters in terms of investment in the field of sports, shortcomings have appeared with the application, which urges modification.

He told Daily News Egypt that, with regard to the amendment to the investment clause, establishing companies is not an issue for bodies and clubs. This is because the matter is based on joint-stock companies, which is easy for individuals, but for sports facilities it is difficult to reconcile the law designated for individuals with a public sports body.

El-Sonbaty added that it is necessary to coordinate with the government through Law 159 of the establishment of companies. This would look into an appropriate formula for clubs to facilitate the matter of establishing companies for clubs and bodies.

Nearly four years have passed since the issuance of the law, and no investment company has yet been established belonging to the clubs or sports bodies.

He added that for individuals or companies wishing to establish clubs, there are two problems. The first of these is the high cost of land and the value of construction, which highlights the need for facilities and reductions in the prices of the lands for sports investments.

El-Sonbaty added that the second problem relates to when real estate developers establish clubs within their projects, as they are required to pay 1% of the capital. This takes place in order for them to obtain a licence to establish a sports club.

This is a large consideration for the value of their investments, which makes them forced not to establish their own social clubs that are not involved in professional sports.

El-Sonbaty stated that with regard to not granting the owning share to investors with private clubs, the percentage must be left to the General Assembly. He believes that there is no sports investment in Egypt, as there are many obstacles in terms of the availability of land for projects, as well as the law.

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