The recent decision by the Gambling Commission’s Regulatory Panel to revoke the Operating Licence of Maxtent Limited is a salutary reminder to all Operators that they should seek the Commission’s approval when making any restructure to the ownership of their business.
In the recent case, which is being appealed, the Commission reported that it was not satisfied that it would have granted the Operating Licence to the licensee had the incoming party been a controller of the company when the application for the operating licence was originally made. In particular, the Commission said it was not satisfied about the source of funds used to acquire and support the Company at the time of, and following, the change of corporate control. The Commission also identified concerns relating to the new controller’s suitability, in that it appeared that he had provided conflicting information and had failed to be full and frank in his dealings with the Commission.
The Gambling Commission requires all Operators to submit a Change of Corporate Control application when its shareholding changes. This will always be necessary when an Operator business is sold or where some of the shares in a company are transferred to either an existing shareholder or a new shareholder. Frequently this may arise where parents transfer some or all of their shares in an Operator Company to their children in preparation for retirement or on the death of a family member where shares are left to the next generation in a will. There are also occasions where Directors of a Company may decide, on advice from its accountant to transfer the shares in the Operator Company to a holding company for tax purposes. All of these circumstances will trigger the requirement for an application and if the Commission is not satisfied with an incoming controller it could ultimately revoke the Operating Licence.
A Change of Corporate Control application can take up to 12 weeks to process but it is possible to submit an application before a transfer of shares takes place rather than after the event. This is always recommended where possible with the advantage of getting prior approval of the Commission for any change in ownership. Furthermore if there are any issues that the Commission require resolving, there is more time to deal with it.
At Hough & Bollard we regularly advise Clients in such circumstances and would be happy to assist anyone who finds themselves in such a situation. For further details call 01526341162 or email info@houghandbollard.co.uk