Your liquor license can be cancelled for changing owners or investors without notifying the SLA. There is widespread unawareness in the hospitality industry of a State Liquor Authority requirement about changes in a business’s owners or investors.
Under the law, businesses with an SLA license are required to notify and obtain approval from the SLA for any change in the business’s owners or investors, no matter how small.
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PESETSKY & BOOKMAN, P.C. ATTORNEYS AT LAW 325 BROADWAY, SUITE 501 NEW YORK, N.Y. 10007 WARREN B. PESETSKY (212) 513-1988 ROBERT S. BOOKMAN (212) 385-0564 (fax) Partners PandBLegal.com MAX BOOKMAN Associate MARC E. FLEISCHMAN Of counsel Writer's Email: firstname.lastname@example.org Advisory to Alliance Members: August 3, 2016 YOUR LIQUOR LICENSE CAN BE CANCELLED FOR CHANGING OWNERS OR INVESTORS WITHOUT NOTIFYING SLA There is widespread unawareness in the hospitality industry of a State Liquor Authority requirement about changes in a business's owners or investors. Under the law, businesses with an SLA license are required to notify and obtain approval from the SLA for any change in the business's owners or investors, no matter how small. This requirement applies regardless of the size of ownership percentage or number of management responsibilities. Changes in minority owners, small investors, and corporate officers all require notifying the SLA and obtaining approval before the change takes place. Here are some examples of situations that many licensees believe are minor, but do require prior SLA approval: • Taking on a new investor who has no management responsibilities whatsoever, • Buying out an investor who had a very small interest in the business, • Selling a minority interest in the business to a new LLC member, • Transferring shares of the company, • Changing LLC managers. The SLA considers all these situations to be "corporate changes." In order properly notify the SLA of a corporate change, licensees are required to file a corporate change application with the SLA and wait for approval. Industry members are often surprised to learn that the SLA takes very seriously the failure to file a corporate change application and obtain approval. Even in situations when the failure to obtain approval was a good faith mistake, the SLA has still sought to cancel the license, and in other situations has sought five-figure monetary penalties. Raising awareness among Alliance members is critical. Members should take this requirement seriously, and obtain SLA approval of even the smallest changes in owners or investors. If you have already changed your owners or investors without SLA approval, you should seek professional advice immediately.