Authorisation required? Start with your activities

When is authorisation required for your organisation?

An organisation planning to launch a new activity, service, product, production line or location will soon face the question: do we need authorisation for this? The instinct may be to start preparing an application immediately or to contact the regulator or competent authority. However, that skips an important step. The first question is not which authorisation is required, but: what will the organisation actually do, and how do those activities qualify legally?

Do your homework first

Start with the activities and the business model. What service or product will be offered? To whom? What role will the organisation perform? Where will the activities take place? And what flows of money, goods or materials will arise?

Next, determine how those activities qualify legally. Which laws and regulations apply? Is authorisation required, or is the activity subject to notification, registration or recognition? Are any exceptions or exemptions available?

The logical sequence is:

activities and business model → legal qualification → applicable legal framework and obligations → authorisation, notification or registration → ongoing obligations

This distinction matters. The commercial description of an activity is not necessarily its legal qualification.

Legal qualification determines the route

The question of legal qualification arises across different sectors, and the outcome varies from case to case. Regardless of the sector, the same principle applies: only a careful analysis of the actual activity can establish whether an authorisation requirement, notification or registration requirement, recognition requirement, or a combination of these applies.

Two activities that appear similar at first sight may qualify very differently in law – and therefore lead to different routes.

This diversity makes careful analysis of the actual activity essential. If an organisation characterises an activity too quickly or too broadly, it risks an incorrect legal qualification – and consequently an unsuitable authorisation application, a missed notification or registration, or unnecessary steps.

Only once the activity has been correctly qualified can the applicable legal framework and formal route be determined.

Then approach the authority with a focused analysis

Contact with a regulator or competent authority can be valuable when testing a proposed activity or legal qualification. Depending on the subject matter, this may be the AFM, DNB, NVWA, a municipality, a provincial authority, a regional environmental agency or a water authority. Such a discussion is more effective if the organisation has first conducted its own analysis.

So rather than asking only:

“Which authorisation do we need?”

Ask instead:

“This is what we intend to do. We qualify our activities legally as follows and therefore believe that this authorisation, notification or registration requirement applies. What is your view?”

This allows the authority to assess a substantiated position instead of being asked to answer the qualification question from scratch.

Allow for different procedures and timeframes

Good preparation is also important for planning. Procedures and statutory decision periods vary by legal regime. For example, an application for authorisation as an investment firm is subject to a statutory decision period of 13 weeks. If additional information is required, the actual processing time may be longer. For other permits and authorisations, incomplete information, parallel procedures or additional questions can also cause delays. An organisation that bases its planning solely on the statutory period may therefore face unexpected delays.

Look beyond the application form

An authority will often assess more than the activity itself. Depending on the legal regime, the organisation, its directors or senior decision-makers, procedures, expertise, financial safeguards and technical arrangements may also form part of the assessment. These requirements should therefore be investigated and put in place at an early stage.

This does not mean that activities may commence before the required approval has been obtained. Where authorisation, recognition, registration or prior notification is required, the formal step must first be completed correctly and any applicable waiting period must be observed.

Authorisation is not the end point

Following authorisation or registration, ongoing obligations will usually continue to apply. These may include requirements relating to governance, professional competence, information provision, monitoring, reporting, food safety or the environment.

The applicable obligations follow from the activities, their legal qualification, the relevant legal framework and the conditions attached to the approval granted.

A sound authorisation process therefore considers not only how approval will be obtained, but also how the ensuing obligations will be implemented within the organisation.

Analyse first, then apply

A sound authorisation or approval process begins before the formal application:

1. Map the activities and business model.

2. Determine the legal qualification of the activities.

3. Identify the applicable legal framework.

4. Establish whether authorisation, notification, registration, recognition, an exception or an exemption applies.

5. Identify the conditions for approval and the ongoing obligations.

6. Formulate a substantiated position.

7. Where necessary, test that position with the authority in a focused manner.

8. Only then prepare the formal application or notification.

Sound legal preparation does not guarantee that approval will be granted. It does, however, prevent an organisation from proceeding under the wrong legal regime or submitting the wrong application.

DUFINCO supports organisations across different sectors with the legal qualification of activities, the identification of the applicable legal framework and the preparation of authorisation applications, notifications, registrations and recognition procedures.

Would you like to discuss the legal qualification of your organisation’s activities or its authorisation process? Please contact us at info@dufinco.nl or call +31 (0)6 512 47 217.