Liquor Licensing and changes of directors and shareholders of Licensees

Quite often we are engaged to assist with the purchase of a licensed business which usually occurs by way of a sale by a licensed vendor of its business assets to a purchaser which is accompanied by an application to transfer the liquor licence to the purchaser.

Where the licensee is a corporation, an alternative method exists for effecting the sale of the licensed business, which involves the sale of shares in that corporation to the purchaser and a change of directors of that corporation.  This method does not require an application to transfer the liquor licence (as the liquor licence remains with the licensed corporation) but will require compliance with the Liquor Control Reform Act 1998 (Vic) (Act) which provides as follows:

1. Section 103 (regarding change of directors of a licensed entity):

• If a person ceases to be a director of a body corporate that is a licensee, the licensee must notify the Commission in writing within 14 days after the person so ceases;

• A body corporate that is a licensee must not appoint a person as, or allow a person to become, a director of the body corporate without the approval of the Commission under Section 104 (Penalty: 5 penalty units).

2. Section 103A (which deals with the change of “associates” which includes shareholders) provides:

• A licensee must within 14 days after the occurrence of either of the following events notify the Commission in writing of the event;

• That a person has ceased to be a shareholder; and

• That a person has become its associate. (Penalty: 5 penalty units).

3. Section 104 (regarding the approval of directors) provides, amongst other things:

• A licensee may apply to the Commission for the approval of a person to be a director of the licensee;

• The Commission must give a copy of an application under section 104 to the Chief Commissioner of Police;

 

• The Chief Commissioner of Police may object to the application on the grounds that the person is not a suitable person to be director of the licensee; and

 

• Further provisions regarding the timing of the notification of objections and extension to time.

 

On that basis:

 

4. The resignations of the vendor’s appointed directors of the licensed corporation will need to be notified to the Victorian Commission for Gambling and Liquor Regulation (VCGLR) within 14 days after they have resigned as directors (ie usually within 14 days after settlement of the sale of shares);

 

5. The transfer of shares of the licensed corporation will need to be notified to VCGLR within 14 days after settlement;

 

6. The appointment of the new directors as nominees on behalf of the purchaser  cannot occur without the VCGLR’s approval under section 104 (1) of the Act.   

 

Accordingly, any sale documentation will need to accommodate the notification requirements under sections 103 and 103A and be conditional upon the purchaser’s nominee directors obtaining VCGLR’S approval.

 

We can assist with the sale and purchase of licensed businesses, notifications to VCGLR and applications for approval.