Types of organizations in esports

Since an organisation is ultimately the result of societal needs and shares collective goals that are linked to both its internal and external environment, such organisations can take many different forms.

There are a variety of legal types of organisations (although we will only be looking at those used for esports), however, since sport in South Africa is governed by the Sports and Recreation Act of 1988 (as amended), the types of organisations that may be used are regulated by South African law. Such organisations may be:

• companies, being associations incorporated in terms of the Companies Act,
• national federations made up of associations,
• provincial federations made up of associations,and
• clubs made up of associations or individuals.

Essentially, any organisation that does not have a constitution or founding documents in line with the South African Companies Act is either run as a partnership (if ownership is jointly claimed by more than one person, or as a sole-trader (if ownership is claimed by a single person). It is the constitution (or founding documents) that ultimately defines the organisation and spells out the nature of such organisation.

It is important to note that the owners of a partnership and the owner of a sole-trader are personally liable for all debts.

Organisations that are of a profit making venture 

These include:

• Sole-traders,
• Partnerships, and
• Companies that are of a profit making venture.

The above listed bodies are excluded from applying for the benefits that are listed below.

Organisations that are non profit organisations

These include:

• Non profit companies,
• Clubs, and
• Associations.

All of the above qualify for all the benefits as listed below.

Benefits of a properly Constituted organisation

The benefits that accrue to sole-traders and partnerships are indeed limited. Not only are the owners liable to be taxed in their own hands for all sponsorships and winnings, and are liable in their own right, but none of the benefits which accrue to properly constituted organisations can be accessed by sole-traders and partnerships.

The benefits which may be accessed by properly constituted organisations are:

• Local government funding,
• Provincial Government funding
• National government funding
• Funding from the National Lottery Trust Fund
• Participation in the S A Sports Awards
• Participation in Regional Sports Councils
• Participation in the Provincial Sports Councils
• Participation in Mind Sports South Africa
• Limited liability for the members and office-bearers (depending on the Constitution)

So when starting your clan, carefully consider all the options.
Also read:

• Professional esports athletes must register for tax.
• Sponsorships of athletes.
• Prize Money 
• What is a MGO?