Applying for liquor licences operated or transferred to corporate entities

Many liquor licences in Western Australia are applied for and subsequently operated by or transferred to corporate entities.  As part of the application process, the directors and shareholders are required to submit formal documentation to the Department of Racing, Gaming and Liquor (Department).  The Department requires the formal documentation to assist to assess and determine whether persons nominated to hold positions of authority within companies are fit and proper to be involved in the licensed businesses.

A person in a ‘position of authority’ is defined within the Liquor Control Act (Act) as being someone that:

1. is a director of a body corporate;
   
   
2. exercises or exerts, or is in a position to exercise or exert, control or substantial influence over a body corporate in the conduct of its affairs;
   
   
3. manages, or is to manage, the business of a body corporate to be conducted under a licence;
   
   
4. occupies a position, in relation to a body corporate, prescribed by the regulations to be a position of authority; or
   
   
5. a shareholder in a body corporate.

Ongoing obligations are also imposed.  For example, there is an ongoing obligation to obtain approvals from the Department prior to any new directors being appointed by a licensee company.  Section 102 of the Liquor Control Act states that any person who assumes a position of authority in a body corporate that holds a liquor licence without the approval of the Department commits an offence and is liable to be fined $10,000.  This means that any incoming director of a company that holds a liquor licence will be personally liable for being appointed without the approval of the Department.

The section also states that the licensee company can also be held liable for appointing a director without the prior approval of the Department with the same penalty provision as the individual.  Clearly, a breach can become a costly exercise.

Each individual incoming shareholder of a proprietary company must be approved prior to shares being issued.  In addition, previously approved shareholders are obliged to notify the Department within 14 days if their shareholding increases or decreases.  Issuing shares in a proprietary company which holds a liquor licence to an unapproved person can expose both the shareholder and company to be liable to a fine up to $10,000.

Should you wish to know more about the obligations of licensee companies under the Liquor Control Act please do not hesitate to contact: