CROATIA Law and Practice Contributed by: Lovro Badžim, Badžim Law Practice
transparency that aligns well with the use of public funding. Professional clubs have more flexibility. They may remain associations, but they can also be established as, or transformed into, sports joint-stock compa - nies, particularly at the highest competitive levels. The corporate form allows for greater professionali - sation, easier access to investors and sponsors, and more efficient management of significant commercial revenues. In practice, top-tier football clubs are often joint-stock companies, while lower-league and ama - teur clubs remain associations. Sports federations and umbrella bodies – such as national, regional, or local federations and organisa - tions like the Croatian Olympic Committee – must be established exclusively as associations. This is a legal requirement and reflects their non-profit role, public- interest mission, and co-ordinating function within the sports system. The association model supports democratic governance, member participation, and financial transparency. Other legal forms exist but play a marginal role. Insti - tutions may be used for specific purposes, such as sports centres or academies, while commercial com - panies can be set up for ancillary business activities. However, these are not used as the primary legal form for clubs or federations. 4.2 Corporate Governance Codes In Croatia, there is no single, sport-specific corpo - rate governance code laid down by law that applies across the entire sports sector. Instead, governance standards are shaped by a mix of general legislation and internal sports regulation. The Sports Act sets basic requirements on organisation, transparency, supervision, and ethical conduct, while national fed - erations and umbrella bodies regulate governance in more detail through their statutes and internal rules. These often function as de facto governance codes, covering issues such as conflicts of interest, integrity, and accountability. For professional clubs operating as joint-stock com - panies, general corporate governance codes apply in the same way as for other companies, especially if
their shares are listed on a regulated market. In such cases, clubs must report on their compliance with governance standards, and failures can lead to regu - latory action, liability of board members, or, in serious cases, criminal responsibility. Sports associations and federations are not formally subject to these corporate codes, but they remain bound by statutory duties of transparency and good governance, with sanctions ranging from internal disciplinary measures to loss of public funding or official recognition. Croatian sports law also imposes particularly strict “fit and proper” rules for owners, directors, and sen - ior officials. Individuals convicted of certain crimi - nal offences, involved in betting activities, acting as agents, or managing multiple clubs in the same sport are barred from holding office. If such incompatibility arises, the organisation must immediately remove the person concerned. Office-holders are under a general duty to act diligently, lawfully, and in the best interests of the organisation and the integrity of sport, with dis - ciplinary, civil, and even criminal liability for breaches. Finally, while insolvency is not directly sanctioned by statute with sporting penalties, national federations routinely address it through competition rules. In prac - tice – especially in football and basketball – clubs fac - ing bankruptcy or serious financial non-compliance may be punished with points deductions, exclu - sion from competitions, or relegation. This reflects a broader governance approach in Croatian sport, where financial discipline is enforced primarily through sporting regulation rather than general insolvency law. 4.3 Sport Funding Sport in Croatia is financed through a mixed model that combines public funding with private and self- generated income. The backbone of the system remains public money, complemented by sponsor - ship, membership fees, and commercial revenues, especially at the professional level. At the national level, funding for sport is provided from the state budget, primarily from general revenues and, very importantly, from earmarked proceeds of gambling activities, which the government partially redirects to sport. Additional public funding comes from EU funds and special state programmes, such
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