Board Liability for Sports Club Debts: Social Security Premiums, Tax and Other Debts

Most sports clubs are organised as associations. When a club cannot pay its debts, whether the chair and board members can be held liable with their own assets is often disputed. This article gives a general overview for social security premium debts, tax debts and other debts. It is general information, does not replace an assessment of your case and predicts no result.

1. The legal position of the board

Under the Turkish Civil Code, the board is the association's executive and representative organ and performs this task in accordance with law and the articles of the association. The task of representation may be given by the board to one of its members or to a third party (Civil Code Art. 85). A legal entity's will is expressed through its organs; organs bind the legal entity by their legal acts and all other acts and are also personally liable for their faults (Art. 50).

2. General rule: the club's debt is the club's

For private-law debts such as athletes' wages, suppliers and rent, the principal debtor is the association as a legal entity. Board members are, as a rule, not personally liable for these debts merely because they are members. Under Civil Code Art. 50/3, however, personal liability may arise for faulty acts (for example using their powers contrary to law and the articles), which depends on proof of harm and fault.

3. Public receivables: social security premiums and tax

There is a special rule for public receivables such as premiums and taxes:

• Social security premiums: if the Institution's premiums and other receivables are not paid on time without justified reason, the senior managers or officials and legal representatives of employers that are legal entities are jointly and severally liable with the employer (Law No. 5510, Art. 88). The Institution's receivables pursued under Law No. 6183 are public receivables.
• Tax and other public receivables: public receivables that cannot be collected, or are found uncollectable, from a legal entity's assets are collected from the personal assets of its legal representatives under Law No. 6183 (repeated Art. 35). Representatives who pay may have recourse against the principal debtor; the liquidation of the legal entity does not remove their liability for periods before liquidation.

4. Is every board member liable?

The key criterion in decisions is whether the member has authority to represent and bind the club:

• The 21st Civil Chamber of the Court of Cassation has held that, for joint and several liability with the employer in sports clubs organised as associations, the person must be a senior manager or official with authority to represent and bind the club, that a board member cannot be held liable merely because of membership, and that representation authority or signing authority in financial matters, such as treasurer, must be investigated (2016/8121, 2017/9019; 2018/6924, 2019/6844).
• In one decision, the 10th Civil Chamber reversed a judgment granting the claim, since the association's articles gave the chair and the accountant joint signing authority in financial matters and a board member who also served as accounting officer was thus authorised to represent and bind for that period (2023/2792, 2023/2526). In another (2013/5912, 2013/10554), reasoning that the board is the club's executive and representative organ and that no decision transferring representation had been shown, the chair and full members who took decisions together were considered authorised.
• The Council of State's 9th Chamber found unlawful a payment order for tax debts issued against a board member clearly lacking authority to represent the principal debtor association (2019/2176, 2021/1017; and the tax court reasoning cited in 2021/5, 2022/3706).

In a specific case, the representation and signing authority in the articles, any board decision on the allocation of signing authority and the period in which the member served are decisive.

5. If a payment order is served on you

• Check the date of service and the debt period; time limits are short.
• Collect the general assembly and board decisions showing your role and dates of service.
• Examine who was given representation and binding authority in the articles and any board decision on signing authority.
• Assess the period of the debt, whether the club had assets to collect from, limitation, restructuring and whether there was a justified reason for non-payment.
• For social security disputes the competent court may be the labour court; for tax and other public receivables, administrative courts may be competent.

6. Preventive points

• Before taking office, review the club's social security, tax and other debts and any restructuring.
• Know exactly who holds representation and signing authority under the articles.
• On leaving office, make sure your departure date is recorded.
• Take and record decisions on paying public debts.

7. Contact

If you would like your documents on a payment order or club debt assessed, you can create an appointment or reach us via the contact page. See also our article on athletes' wage claims.

This article is for general information only, contains no promise of results and is not legal advice. The decisions mentioned are examples only.