As featured in the May edition of QHA Magazine
An important step in the pub transaction process is the applications with the Office of Liquor and Gaming Regulation (OLGR) for the transfer of a liquor licence and grant of a new gaming machine licence.
In recent times, there has been a substantial increase in the time taken to process applications for transferring liquor and gaming licences linked to pubs. Liquor licence transfers now typically take between two to three months, while applications involving both a liquor licence and a new gaming machine licence can take between 3four to five months.
This process is not simply a “box-ticking” exercise, as the overarching test that is applied is whether the Commissioner is satisfied that the proposed licensee is a “fit and proper” person. Where the proposed licensee is a company or trust, this includes the directors, shareholders and beneficiaries.
As a result, the OLGR has more recently permitted proposed licensees to apply for an “interim authority” for the liquor licence and “special authorisation” for the gaming machine licence (together referred to as Interim Authorisations) to allow the proposed licensee to sell liquor and conduct gaming prior to the finalising the transfer of liquor licence and new gaming machine licence.
In the past, the OLGR only permitted Interim Authorisations in emergency situations to allow pubs to continue trading and retain their goodwill while the transfer of liquor and new gaming machine applications were being finalised. These emergency situations included:
- Where a receiver or administrator had been appointed to a company licensee and wished to continue to trade the business; or
- Death of an individual licensee; or
- Where a landlord or mortgagee retakes possession of business premises where the tenant has defaulted or abandoned the business premises, and the landlord wishes to continue to trade and preserve the business.
Now, the OLGR will approve Interim Authorisations in circumstances where the proposed licensee is in possession of the pub. This approval process typically takes between one to two business days.
Interim Authorisations are issued for a period of up to three months but can be extended when the proposed licensee still has liquor and gaming licence applications in progress. However, Interim Authorisations are not indefinite and cannot be used as a substitute for a permanent transfer. There are also some risks associated with proposed licensees obtaining Interim Authorisations, including:
- The purchaser may face challenges after settlement in finalising the transfer of the liquor licence or a new gaming licence (e.g. due to probity issues), potentially resulting in ownership of a pub or hotel business that cannot be legally operated; or
- Securing external financing for the purchase may prove difficult, as banks and third-party lenders may not provide funds when liquor and gaming licences are not held in the name of the purchaser and therefore reducing the assets the financier has security over.
Nevertheless, Interim Authorisations are a usual tool to complete the settlement of a pub transaction in a timely manner where there are delays with the transfer of liquor licence and new gaming machine licence.
Should you have any queries or require any further information in relation to the liquor and gaming application process, please contact me on (07) 3224 0230.
