Does a share purchase avoid transferring a company’s licences?

A share purchase changes who owns the company, not which company holds the licences, and that is why buyers expect to skip the transfer process. The expectation holds for some licences and fails for others. Some regulators license the company and also watch who stands behind it, and they write their rules to reach directors and shareholders as well.

Why a share purchase usually avoids a transfer

A licence is issued to a named licensee at a particular location. The AGCO says its liquor sales licences are issued to individuals, business partnerships or corporations for a specific location, and that the licensee is responsible for the licence’s operation. When shares change hands, the licensee, the location and the licence stay as they were, so there is no new licensee for the regulator to approve.

When the share change counts as a transfer

The same AGCO guide lists prescribed changes in ownership that require a transfer. They include an individual becoming or ceasing to be an officer or director of a corporate licensee, a person acquiring enough shares in the licensee, or in a corporation that effectively controls it, to reach a holding the AGCO specifies, and someone other than the licensee becoming entitled to profits from liquor sales. A share purchase can trigger the first two directly.

Other provinces and other licences

Each regulator writes its own rule. British Columbia’s liquor branch says that when a business changes ownership the liquor licence must be transferred through its portal, and its page does not say whether a change of shareholders alone counts, so that question goes to the regulator. Licences issued by other bodies follow their own regimes.

What to do before signing

List every licence and permit the business holds, find each regulator’s rule on a change of owners, directors or control, and write any approval into the closing conditions. Can I transfer my liquor licence? looks at the liquor case in more detail.