Transferring a liquor licence on a business sale — Prince Edward Island

The Prince Edward Island Liquor Control Commission grants licences under the Liquor Control Act, and the working rules for licensees sit in the Liquor Control Act Regulations. Those regulations treat a licence as tied to a particular person, a particular operating name and particular premises. That design has direct consequences when a licensed restaurant, bar or lodge is sold, whether the buyer takes the assets or the shares. This guide sets out what the regulations say, what the Commission’s policy manual repeats, and the questions to put to the Commission before a closing date is fixed.

A licence for a person, a name and a place

Section 62(1) of the regulations says a licence granted by the Commission is a licence only to the person named in it, operating under the name specified, and for the premises specified. That is the starting point for any sale. The seller’s licence describes the seller. A buyer who intends to run the same restaurant under a new corporation, or to rename it, is changing at least one of the things the licence is tied to, and the regulations have a procedure for that change rather than leaving it to the parties.

Not transferable unless authorized

Section 64 is short. A licence granted under the Act shall not be transferable, unless authorized by the Commission. The Commission’s Licensee Policy Manual, under the heading “Renovations & Transferability of Ownership”, cites sections 62(1), 63 and 64 as its authority and says a licence shall not be transferable unless approved by the Commission in writing. For a buyer, the practical reading is that the Commission’s written approval is the document that makes a transfer real, and a clause in the sale agreement is not a substitute for it.

Changes in ownership and in the shares

Section 62(2) lists the changes that call for an amended licence: a change in the management or ownership of the licensed premises, including ownership of the shares of a corporate licensee, a change in the name of the person or corporation named, a change in the business, operating or trade name, and alterations to the premises. On an application in the form the Commission requires, with the application fee, the Commission may issue a letter authorizing changes in the original licence to conform. So a share purchase is not outside the regime. The licence stays with the company, but the change in who owns it is one the regulations expect to be brought to the Commission.

The Commission may revoke instead

Section 62(4) is the risk. Where a change in management or ownership of the licensed premises, a change of name, or a change of ownership of the shares of a corporate licensee occurs, or alterations are made to the premises, the Commission may revoke the licence and require a new application for a licence and a hearing on it. The word is “may”, but a buyer should not close on the assumption that it will not. Ask the Commission, before signing, how it intends to treat the deal and what hearing, if any, it expects.

Renovations and permits

Section 63 provides that a licensee shall not make alterations to the licensed premises without the Commission’s prior written approval, and must notify the Commission in writing and file the plans and information it requires. The policy manual pairs renovations with transferability under one heading, which is a reminder to a buyer planning to renovate on takeover to ask about both at once. Separately, section 24 of the Act issues every permit in the name of the applicant and says no permit is transferable, so a permit the seller held does not pass to the buyer.

• Ask the Commission, before signing, what it needs to authorize the transfer or the amended licence and in what order.
• Make the Commission’s written authorization a condition of closing.
• If the deal is a share sale, ask whether the change in share ownership will be handled by amendment letter or by a new application.
• Raise any renovation or rename in the same conversation.
• Check the version of the regulations you are relying on. The consolidation we read is current to June 2024.