Does a buyer need its own licence before the sale closes?

A buyer rarely inherits a licence by signing a purchase agreement. The regulator decides who holds the licence, and each regulator decides when the buyer becomes the holder, so the closing date and the date the buyer is licensed can be different days. The question is not only whether the buyer needs its own licence, but whether it will have it on the day it starts operating.

Transfer applications assess the buyer first

In Ontario, the AGCO requires a transfer of a liquor sales licence when there is a prescribed change of ownership, and says a transfer will not be approved, in most instances, if the current licensee has an outstanding monetary penalty or the recipient would not be eligible for a licence. In British Columbia, the current licensee starts the liquor licence transfer, the buyer is then notified to complete its application, and the buyer becomes the deemed licensee once the branch advises the application is administratively complete.

Some regimes make the buyer start fresh

Ontario’s Technical Standards and Safety Authority states that licences are not transferable and the onus to apply for a new licence falls on the new owner. British Columbia’s Passenger Transportation Board sits between the two models: both the transferor and the transferee must apply for the Board’s approval to transfer the licence.

Timing the approval around closing

The regulator’s timeline is not set by the purchase agreement, so a buyer can reach closing without the approval it needs. The AGCO describes an Authorization to Contract Out for an applicant who intends to operate during the transfer process, and BC says an establishment can remain open during a transfer application. Where no such option exists, buyers make approval a closing condition or set a date that allows for review. The licence and permit transfer checklist lists what to gather.

Questions to settle before signing

• Which licences and permits does the business hold, and which body issues each one?
• Does each regulator transfer the existing licence or require the buyer to apply for a new one?
• May the business keep operating while the application is reviewed, and on what terms?
• Does the current licensee have an outstanding penalty that could hold up approval?