Licensing expert Debbie Bollard has advised independent operators in partnerships with family members to ensure their partner agreements are up to date, in order to avoid unexpected licensing lapses in the event of loss.
Debbie Bollard has advised independent operators trading in partnerships with spouses or family members to reacquaint themselves with partnership law in the event of one partner passing away, in order to prevent unexpected lapses in licensing agreements.
With licences granted by the Gambling Commission ceasing when one member of a partnership dies, the Hough and Bollard director warned operators that in the absence of agreed partnership terms, the 130-year-old Partnership Act may force their hand.
“Partnerships are regulated by the Partnership Act 1890, which defines a partnership as a relation that subsists between persons carrying on a business in common with a view of profit,” said Bollard.
“Often the terms under which a partnership will operate are formalised in a partnership deed but in the absence of a formal agreement the Partnership Act takes precedent. Partnership deeds usually deal with how the business operates, division of profits and, to ensure the survival of the business, may include what will happen in the event that a partner dies, is made bankrupt or wants to leave the partnership.”
And this, warns Bollard, is where the waters get murky. She explains: “There are cases where a business partnership exists within a family, between siblings, spouses, and/or their children and there is no formal partnership agreement, so the legal relations are entirely governed by the Partnership Act 1890.”
With Section 33 of the Partnership Act providing that a partnership will be dissolved on the death or bankruptcy of a partner, any Operating Licence held by the partnership will automatically lapse under section 114 of the Gambling Act, the same applies to Premises Licences, according to section 194.
Bollard cites this as a key complication in meeting the obligations of both business and regulatory rules; and it’s one that families and partnership colleagues need to address. “Operating Licence Condition 15.2.1 requires an operator to report Key Events including a person ceasing to hold a key position or qualifying position for a small scale operator and which will include the death of a partner who is named on the Operating Licence.”
“This will then put the Gambling Commission on notice that the partnership may longer exist, and documentary evidence will have to be submitted to prove the continuing existence of the partnership; unfortunately the Commission does not have the statutory authority to permit a business to continue trading if a partnership has dissolved.”
All of which leads such businesses into the realms of bureaucracy over bereavement. And, as Bollard recognises, report making may not be at the forefront of operators’ minds as they grieve a family member.
Whilst quick to note that the Commission do view such circumstances sympathetically, and local authority applications to reinstate lapsed premises licences can be made within six months, Bollard advised those in familial partnerships to look ahead.
“I would strongly recommend that any licensed operator trading as a partnership draw up or review their existing partnership deed to ensure there are provisions in place to deal with the loss of a partner.”
“If a decision is made to incorporate as a limited company, then an application for a new Operating Licence will have to be submitted as it is not possible to transfer an Operating Licence from a partnership to a limited company; although any existing premises licences can be transferred.”