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Starting point of the decision
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Under the Trade Regulation Act (Gewerbeordnung), permission to operate a security-guarding business requires the personal reliability of the business operator. If this requirement is lacking, the competent authority may revoke a permit that has already been granted. In an order dated 28 April 2020, the Higher Administrative Court of North Rhine-Westphalia addressed the question of whether a criminal conviction for assault justifies the assumption of lacking reliability and can therefore support the revocation of the security-guarding permit (source: urteile.news, article on the order of the OVG North Rhine-Westphalia, case no. 4 B 1604/19).
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Legal framework of the security-guarding industry
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Permit requirement and reliability
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Operating a security-guarding business is subject to a permit requirement. The administrative permit is granted subject to the condition that the business operator continuously meets the statutory requirements. Central to this is the prognostic assessment of whether, in light of the person’s overall profile, they provide a guarantee of proper, legally compliant operation of the security-guarding business.
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Revocation as a consequence of subsequent facts
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If, after the permit is granted, circumstances arise that speak against the required reliability, revocation may be considered. Decisive is an assessment oriented toward risk prevention that takes into account the misconduct and its indicative value for future business operations.
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Key statements of the OVG NRW order (28 April 2020)
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Criminal conviction as a significant prognostic factor
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According to the decision presented in the report, the OVG North Rhine-Westphalia classified a criminal conviction for assault as a weighty circumstance that can be of particular relevance in the field of commercial security services. The court linked this to the fact that security activities are typically associated with conflict situations, the enforcement of requirements, and the protection of third-party legal interests, and that there is therefore an increased expectation of self-control and law-abiding conduct.
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Balancing within the reliability assessment
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The focus is not “sanctioning” through trade law, but an assessment directed toward the future. According to the reporting, the criminal conviction relied upon by the court was regarded as a sustainable basis for substantiating doubts as to the required reliability and for not suspending enforcement of the revocation decision. Decisive, therefore, was the prognostic assessment of suitability for commercial practice, not a renewed criminal-law evaluation.
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Interim legal protection and balancing of interests
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The order was issued in connection with provisional legal protection. At this stage of the proceedings, the court regularly examines whether the administrative decision is likely lawful and how the conflicting interests are to be weighed. According to the source, the OVG gave greater weight to the public interest in reliable security-guarding activity than to the private interest in continuing the business operation until a decision is made in the main proceedings.
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Significance for corporate practice and management responsibility
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Trade-law reliability as a compliance-relevant factor
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The decision illustrates that reliability requirements in the security-guarding industry are closely linked to the individual conduct of the permit holder. Criminal convictions can—depending on their type and context—have a lasting effect on the authority’s prognostic assessment and thus impact the continuation of business operations.
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Effects on the structure and management of a business operation
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To the extent that an operation is based on a person-specific permit, revocation can significantly affect the company’s organization. This particularly concerns questions of the allocation of responsibility, the continuation of ongoing contracts, and the legally secure design of management and ownership structures in a business field dependent on licensing.
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Classification and note on the reporting basis
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The above content is based on the publication at urteile.news regarding the order of the Higher Administrative Court of North Rhine-Westphalia of 28 April 2020 (case no. 4 B 1604/19). No further facts are asserted beyond the facts of the case and the state of the decision as reproduced there. Insofar as proceedings in other constellations have not yet been finally concluded, the presumption of innocence applies regardless of this.
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Transition
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In regulated fields of activity, companies, investors, and shareholders are often confronted with the interface between personal reliability, corporate office, and corporate-law structure. Anyone needing clarification in this regard will find at MTR Legal the appropriate contact person for legal advice in corporate law.
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