Hedge funds and Private Equity - PES

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Article 49
Within the framework of the provisions set out below, restrictions on freedom to provide
services within the Community shall be prohibited in respect of nationals of Member
States who are established in a State of the Community other than that of the person for
whom the services are intended.
The Council may, acting by a qualified majority on a proposal from the Commission,
extend the provisions of the Chapter to nationals of a third country who provide services
and who are established within the Community.
The principle of freedom of establishment enables an economic operator (whether a person or
a company) to carry on an economic activity in a stable and continuous way in one or more
Member States. The principle of the freedom to provide services enables an economic operator
providing services in one Member State to offer services on a temporary basis in another
Member State, without having to be established.
The principles of freedom of establishment and free movement of services have been clarified
and developed over the years through the case law of the European Court of Justice. In addition,
important developments and progress in the field of services have been brought about
through specific legislation in fields such as financial services, telecommunications, broadcasting,
the recognition of professional qualifications and the services directive.
These provisions have direct effect. This means, in practice, that Member States must modify
national laws that restrict freedom of establishment, or the freedom to provide services, and are
therefore incompatible with these principles. This includes not only discriminatory national rules,
but also any national rules which are universally applicable to domestic and foreign operators
but which hinder or render less attractive the exercise of these “fundamental freedoms”, in particular
if they result in delays or additional costs. In these cases, Member States may only maintain
such restrictions in specific circumstances where these are justified by overriding reasons of
general interest, for instance on grounds of public policy, public security or public health; and
where they are proportionate.
The Financial Services Action Plan 1999-2005 (FSAP) has laid the foundations of a financial
market in the EU.
3.2 The Treaty
Free movement of capital, Articles 56-60 of EU Treaty
The treaty articles on free movement of capital intend to create the basis for regulations, assuring
integrated, open, transparent, competitive and efficient European financial markets and services.
Article 56
1. Within the framework of the provisions set out in this Chapter, all restrictions on the
movement of capital between Member States and between Member States and third
countries shall be prohibited.
2. Within the framework of the provisions set out in this Chapter, all restrictions on
payments between Member States and between Member States and third countries shall
be prohibited.