Article 70 Net equity rule - Club Licensing

70.01

The licence applicant must report in its annual financial statements or interim financial statements (whichever close as at the 31 December preceding the deadline for submission of the application to the licensor and preceding the deadline for submission of the list of licensing decisions to UEFA) a net equity position which:

1. is positive; or

2. has improved by 10% or more since the previous 31 December.

70.02

Net equity means the residual interest in the assets of the entity after deducting all its liabilities as set out in its annual financial statements or interim financial statements as applicable. If a licence applicant’s assets exceed its liabilities, then the licence applicant has a net asset position, i.e. positive equity. If a licence applicant’s liabilities exceed its assets, then the licence applicant has a net liability position, i.e. negative equity.

70.03

For the purpose of compliance with this criterion, net equity can include subordinated loans that, for at least the following 12 months:

1. are subordinated to all other existing and future liabilities;

2. bear no interest or do not require the payment of interest; and

3. are not secured by any of the licence applicant’s assets or in respect of which the right to enforce the security has been waived.

70.04

If a licence applicant does not comply with Paragraph 70.01 as at the 31 December preceding the deadline for submission of the list of licensing decisions to UEFA, the licence applicant can submit a new audited balance sheet dated 31 March at the latest in order to demonstrate that one of the conditions in Paragraph 70.01(a) or (b) has since been fulfilled. In such case, the revised equity level at the new audited balance sheet date will be used for the purposes of determining whether the licence applicant’s equity position has improved under Paragraph 70.01(b) in the subsequent licence season.

70.05

The licensor’s assessment must be in accordance with Annex I.

70.06

Exceptionally, a licence applicant can request an alternative assessment date if:

1. it has an annual accounting reference date of 31 May, in which case it may prepare interim financial statements for a six-month period ending 30 November and use such interim financial statements for the purposes of the net equity rule; or

2. it has an annual accounting reference date of 30 November, in which case its annual financial statements for the reporting period ending 30 November may be used for the purposes of the net equity rule.

In such exceptional cases (a) or (b), all references to 31 December in the net equity rule should be understood as 30 November.