In this article, Deepa Chansoliya pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses how to structure a sporting club in India.
India doesn’t have any specific legislation regarding sports law or establishment of sporting club. A club basically means an association dedicated to a particular interest or activity. Also, for starting any proprietary concern, registering the same is not compulsory. In a proprietorship firm, the individual and the firm are one and the same person in the eyes of law and for taxation purpose. Thus, it depends on the nature of business structure where it needs to be registered. Following can be taken into regard which structuring a sports club in India:
Choosing kind of Sport
The first thing which needs to be decided is the sport for which the club is to be made. Three factors may be kept in mind for the same: firstly, what are the famous sports in India; secondly, the demand/popularity of which sport is increasing and lastly, what is the sport for which the popularity can be created. One has to decide on the basis of capital, man power and utilities available or capability to arrange them for what sport, the club is to be made.
Location of the club
Once the sport is decided for which the club is to be made, the location needs to be finalized. The same should be done taking care of the fact that it is easily accessible to people and that, the municipality of that particular area will give the permission to do so. While deciding so, it should be kept in mind that what kind of sport club it would be, how many days it will operate and how feasible it would be for the members to come over there.
Kind of club/Business Structure
Once the idea has taken a proper shape, the structure of the business needs to be decided. It becomes important as on the basis of same, the registration would be required accordingly as different business structures requires different kind of registrations.
- Basically, a club can be of two types: firstly, members club or secondly, proprietary club.
- To show the difference of characteristic between the ‘members’ club’ and ‘proprietary club’ the Supreme Court held that where every member is a shareholder and every shareholder is a member then the same would be called as ‘members’ club’. In the members’ club what is essential that the holding of the property by the agent or trustee must be holding for and on behalf of and not a holding antagonistic to the members of the club. Thus, a proprietary club is one when an individual or a firm or a limited company owns the property while the members are allowed to make use of that property on certain terms.
- Further, in a members’ club there is no question of two sides. ‘Members’ and ‘club’ both are same entity. Thus, in a members’ club, the properties of the club vest in the members.
- The members’ club may be an unincorporated society or may be registered under the Indian Companies Act, or Societies Registration Act. In a proprietary club the owner or the owners, as the case may be, run it for the purposes of gain, while in a members’ club it is not so. The business structure could be a public company, private company, one person company, partnership, limited liability partnership, society etc. governed by the Companies Act, 2013, Partnership Act, 1932 and the Societies Registration Act, 1860. It is pertinent to note that there are different state amendments which are in force for the purpose of Societies Registration Act, 1860 and thus, special care needs to be taken while choosing the business structure as a society.
- The Companies Act, 2013 has introduced the concept of One Person Company. It is basically a private company with one member. Registration as an OPC can be done at a growing stage of the business.
- As per the Companies Act, 2013, a public company should have at least seven members whereas a private company needs to have at least 2 members.
- The Registration of a company under Companies Act, 2013 is obtained by filing an application with the Registrar of Companies. The application should be made to the registrar in whose jurisdiction the registered office of the company is situated.
- A society can be formed by a minimum of seven or more persons. Companies, foreigners can also subscribe to the memorandum of a society, besides Indian nationals. Societies can also be registered or unregistered. However, only registered societies can hold vested properties and/or have a suit filed by or against the society. A copy of the rules and regulations of the society, certified to be a correct copy by not less than three members of the government body has to be filed with the Memorandum of Association with the Registrar of Joint Stock Companies of the State. The proceedings of such a society must conform to the provisions of the Society Registration Act XXI of 1860.
Name of the club and personnel
- Once it is decided that what type of club it is going to be, the name of club should be decided along with the important designations. It should be a hierarchical structure to enable proper function without any confusion about scope of work to be handled by a concerned person. It is important because it needs to given and mentioned in the forms at the time of registration. Even if it is not getting registered, it should be given due importance as it is what form which people will recognize your business. Also, it shouldn’t be similar or identical to some other business of the same nature to avoid any future litigation.
- A logo may also be decided by doing a trademark search for the purpose of getting a logo which can easily help a club in maintaining a unique identity.
Main authorities in India
- The main authorities for sports in India are: (i) Ministry of Youth Affair and Sports(b) Sports Authority of India(iii) Sports Law and Welfare Association of India (d) National Sports Federation. However, different sports have their own affiliation bodies like BCCI, State Cricket, Indian Hockey Federation etc. Therefore, it needs to be seen that whether the sport for which you have decided to open a club, needs any sanction/license from any of its governing bodies or not. Few other sports governing bodies in India are:
- Athletics Federation of India
- Basketball Federation of India
- Board of Control for Cricket in India
- Indian Professional Boxing Association
- National Institute of Sports
- All India Tennis Association
- Indian Boxing Federation
- Badminton Association of India
- Since it’s a sports club, it becomes very important to have experience and right coaches. The same can be as per the contacts available and financial ability. Also, since coach would be a senior member with a lot of experience, few guidelines should be made in order to remove any ambiguity regarding the decision making process that on a particular matter, whose words will have a higher weightage
- With due course of time and financial ability, the club facilities can be increased as and when decided by the heads and agreed upon by the members.
Structure of the organization
- Once all the clearances are done, it needs to be seen that how the club will function. It’s a club where different people are going to meet for a particular objective, the goal of the club and hence, it’s very important to divide the work first and then, the workers according to their eligibility. The structure can vary on the basis of the size of the club and its necessities.
- Once the sport club is in existence, various policies on code of conduct, sexual harassment on workplace, registration policies, membership policies, equal opportunity policies among others needs to be implemented. The selection process of the players and employees should also be taken care of.
- The labour laws in the country should also be complied with. A legal consultant can be hired in order to make sure that all legal requirements are being complied with through the course of running of business.
Bye laws/Constitution of the club
- Further, the club can also make buy laws for itself for better functioning.
Accountability and administrative issues
- Also, the accountability issues should be taken care of while making policies. There should not be discretionary powers to anyone, the decision making process should be transparent alongwith maintain revenue management irregularities. Further, the administrative issues should also be taken care of.
- The biggest concern regarding clubs should be complete check and balance system along with a constitution without any vague language. The sports have taken a very reputed place in the world including our society and it is likely that it will become more popular in upcoming time which means that there is going to be a lot of competition in the sports. Therefore, in order to proper functioning of the club, the constitution and bye laws should be unambiguous, there should be a hierarchy in designations and the decision making process should be transparent.
 Saturday Club Ltd. vs Asstt. Commr., Service Tax Cell (2005) 1 CALLT 575 HC, 2005 (180) ELT 437 Cal
 Section 7 of the Companies Act, 2013
 The Societies Registration Act, 1860 and https://www.indiafilings.com/learn/society-registration-india-2/