Legal Forms

Legal Forms in Europe

Obligation for the service provider to take a specific legal form in relation to the E.U. Services Directive

The following is an examination of obligation for the service provider to take a specific legal form regarding the European Union Servicies Directive [1]:

Obligation for the service provider to take a specific legal form: Requirements subject to evaluation

Article 15(2)(b) concerns requirements existing in some Member States which oblige service providers to take a specific legal form if they want to provide certain services. It is clear that requirements to take a specific legal form are serious obstacles for the establishment of service providers from other Member States because such restrictions might oblige them to change their legal form or structure.

For example, Member States will have to identify and evaluate requirements whereby only economic operators taking the form of a legal person are allowed to take up certain activities in their territory, thus excluding natural persons from the market89. Likewise, requirements which prevent service providers from offering their services in the form of a certain legal entity or in the form of partnerships, which are sometimes applied to certain professions, fall in this category and are also subject to the evaluation.

Other examples of cases covered by Article 15(2)(b) are requirements that allow the exercise of a specific activity only to companies with individual ownership or to companies owned exclusively by natural persons or, similarly, requirements which exclude certain categories of companies from the exercise of an activity, for example requirements that operators taking the form of a publicly quoted company may not provide certain services90. Moreover, requirements that reserve certain activities to non-profit-making entities are also subject to the evaluation obligation laid down in this provision91.

Requirements relating to the legal form may in many cases be replaced by less restrictive means and will thus not be justified. For instance, the ECJ92 has stated that the requirement for economic operators to be constituted as legal persons in order to pursue certain activities could not be maintained in so far as the objective of protecting creditors could be attained by less restrictive measures, such as requiring operators to set up a guarantee or take out insurance. Also, the objective of preventing operators from being involved in criminal or fraudulent activities will generally not justify the exclusion of operators with a specific legal form from exercising specific activities93. In the same vein, requirements reserving certain activities to non-profit-making bodies will, in a number of cases, not be justified94.

Resources

Notes

  1. Information on obligation for the service provider to take a specific legal form based on the EU Services Directive Handbook, UK Government

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