Find Lawyers in Essen, Germany for Regulatory Practice

Practice Area Overview

The term Regulatory Practice refers to an area of law comprising the sovereign supervision and control of certain activities or businesses deemed to carry risks on an individual or systemic level that warrant entry restrictions, compliance requirements and an ongoing monitoring. Examples for such activities and businesses are for instance capital markets participants, credit and financial services institutions, insurance undertakings and investment funds and their management and distribution. 

Regulatory supervision is usually realised by banning the unlicensed practice of such activities or businesses. While conducting the activity or business is prohibited in general (usually coupled with criminal sanctions), permission is granted for persons and entities obtaining a license or registration. To obtain a license or registration, the entity has to meet applicable requirements that can involve competence and general fitness tests, compliance and governance requirements, risk mitigation through capital or professional liability insurance requirements. The person or entity is therefore basically subject to an entry test. Licensed entities usually have to comply with ongoing reporting obligations and inspection rights of the competent supervisory authority.

Regulatory supervision entails an observation and correction function. The observation function serves to recognise individual infringements or disruptions in the relevant market. The competent authority can then use its intervention powers to correct these disruptions, e.g. issuing orders towards the regulated entity or even revoking its license or liquidating it and in extreme cases initiating criminal prosecution.

Since the financial crisis, the fastest growing field of regulatory law is the regulation of financial markets on both the national and the European level, here driven by the goal to create a unified European capital market. Regulation aims at the protection of individual investors as well as protecting the entire market from destabilising behaviour. The comprehensive net of regulation covers the regulation of banks and financial service providers, financial markets as well as investment fund managers.

Regulatory legal services may include:

- Advice on the applicable regulation for the client’s business and whether it is regulated in the first place. The management of investor funds can for instance be a financial service under the German Banking Act and the German Securities Trading Act and management of an investment fund can be collective portfolio management under the German Capital Investment Act.
- Advice on the most suitable regulation, German and international, for the client’s business and on how to obtain any required license or registration. 
- Advice on ongoing compliance and regulator interaction. 
- Advice on compliance with regulatory provisions establishing requirements for the products and services a client offers, for instance advising a fund manager on structuring a new investment fund pursuant to the applicable product regulation.

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