THE LEGAL SIGNIFICANCE OF TRANSNATIONAL CORPORATE STRUCTURES FOR THE LICENSING OF ECONOMIC ACTIVITY

Abstract

The article examines when the corporate structure of a transnational corporation (TNC) becomes legally relevant under the law governing the licensing of economic activity. Although a TNC operates as an economically integrated group, its members retain separate legal personality. The licence and the rights and duties arising from it therefore belong to the business entity authorised to carry on the regulated activity, not to the group as a whole. Neither membership of a TNC nor control by a parent company is, without more, sufficient to alter the parties to the licensing relationship. The study combines doctrinal analysis of Ukrainian licensing legislation with an examination of the law governing corporate groups and EU competition law. It distinguishes between a licensee’s legitimate use of another group member’s assets or services and the transfer to that member of operations constituting the substance of the licensed activity. In the former case, the licensee remains the entity carrying on the activity, provided that it retains the organisational capacity required by the licensing conditions and uses those resources on an appropriate legal basis. Where the operations themselves are transferred, the entity that actually performs them must be identified and may be required to obtain its own licence. The article also considers the use of a controlled licensee as a corporate ‘shield’. This risk arises where, by virtue of separate legal personality, the duties imposed by the licence fall on one company while another group member determines that company’s conduct or performs the regulated operations. This separation of control from regulatory responsibility may impede the identification of the decision-maker and facilitate the concealment of abuse. Decisions taken by a parent company may be evidentially relevant in establishing the circumstances of a breach. They neither confer the status of licensee on the parent company nor, without more, provide a basis for its liability. The approach adopted by the Court of Justice of the European Union in Akzo Nobel is examined by way of comparison. Because that approach rests on the competition-law concept of a single undertaking, its extension to licensing relationships would require an express legal basis. The territorial application of Ukrainian licensing law depends on where the operations constituting the regulated activity are performed and on the applicable sectoral legislation. The transnational character of the group is not an independent basis for applying Ukrainian licensing law. The proposed distinction allows the group’s organisation to be taken into account while preserving the principle that the rights and duties arising from the licence attach to the individual licensee