Hare and Hounds Ltd? Can a limited company be granted a justices' licence? And what regulatory changes would be required in order to make such a scheme successful?

A limited company can, in law, hold a justices' licence.

S.3(1) of the Licensing Act 1964 provides that: 'Licensing justices may grant a justices' licence to any such person, not disqualified under this or any other Act for holding a justices' licence, as they may think fit and proper.' A limited company is, in law, a person.

A justices' licence can only be granted to a person, or several persons.

Yet, despite a very large number of licensed premises being owned and operated by limited companies, such licences are not granted.The issue has been mooted for some time.

The 1921 edition of Stones contains the following comment on the corresponding s.9 of the Licensing (Consolidation) Act 1910: 'It has never been expressly decided whether a limited company can hold a licence in its own name.

A licence may apparently be held in the names of the directors of a company or of the secretary or manager on behalf of the company.' Almost exactly the same note appears in the current edition.Paterson's Licensing Acts advises against it.

The argument is that no company is a fit and proper person to hold a licence because the Act imposes duties and responsibilities upon a licensee, and a change in the management of a company can take place without the knowledge of the licensing committee.

With advice like that, it would be a bold licensing committee that acted otherwise.But this argument does not seem logical as a basis for refusing to grant a justices' licence to a company; the practice of only licensing individuals is simply historical.

The system of granting liquor licences goes back to well before the development of the limited liability corporation.

Licences have been granted variously by justices, Customs and Excise and the vice-chancellors of various universities.Liquor licensing has evolved through a series of Acts of Parliament, many of them consolidating the concepts and wording of prior Acts (see the Beerhouse Acts of 1834, 1840, the Licensing Acts of 1872, 1901, 1910, 1952 and 1964).

For example, s.9 of the 1910 Act provides: 'Subject to the provisions of this Act, the licensing justices may at their general annual licensing meeting grant justices' licences to such persons as they in the execution of their powers under this Act and in the exercise of their discretion deem fit and proper.' Compare s.3(1) of the 1964 Act, already quoted.For reasons of history, therefore, the legislation is not drafted in terms that provide specifically for limited companies, eg criminal liability of directors, provision of lists of company officers.

Contrast the provisions in sched 5 to the Licensing Act 1964 for club registration certificates, addressing the fact that the management of a club is vested in a number of people.There is no obstacle to a limited company holding other forms of licence, for instance an operator's licence for heavy goods vehicles.

The legislative history is different in that instance, but the need to attach responsibility to the company and its directors, and to keep track of who is in control, is no less.There are situations in which the practice of not granting a licence to a limited company can create difficulties.-- Grant of a provisional licence.

This can only be granted to a person with an interest in the premises (s.6 of the 1964 Act).

A situation can easily arise in which the only such person is a limited company.

To license an individual is to draw an unrealistic analogy with the grant of a full licence, but if a company is granted a provisional licence, this could open the back door to a company holding a full licence.-- When a licensee dies, his or her personal representatives are treated as holding a protection order (s.10(5) of the 1964 Act).

If the licensee was an employee, this is unsatisfactory, both for the personal representatives and the employer, who may need to seek a further protection order in haste.-- If a licensee who is an employee is dismissed o r suspended or resigns and disappears, how are the premises to trade lawfully in his or her absence? One possibility is to seek the grant of an occasional licence to another licensee of the same employer as a temporary measure.-- If a licensee is transferred to other premises, a transfer and possibly a protection order must be obtained even though there is no change in central management.

The other side of that coin is that even if a total change occurs in the central control, management, ownership, directors or policy of the employer/owner, the licensing justices have no control, are not entitled to know, and may never know.-- The licensee is licensed to retail his or her own alcohol.

Some legal nicety is needed to fit that rule to the circumstances of managed premises.

Commentaries have long spoken of a manager holding the licence 'on behalf' of a limited company, but do we see over the door of the pub: 'Joseph Bloggs on behalf of Allied Breweries Ltd, licensed to retail...'? We do not.In R v Maidstone Corwn Court, ex p.

Harris [1994] The Times, 21 July, the Queen's Bench Division held that a limited company is entitled to apply to licensing judges under s.20(A) of the Licensing Act 1964 to revoke an on-licence because, for the purposes of that section, it is a 'person'.

This required some interpretive gymnastics in order to explain why 'person' means something different in this section from elsewhere in the Act.

The headline on the report: 'Company can apply to licensing justices' highlights the anomaly.The objection to licensing a limited company is that the management or control of it can change without the licensing justices having any recourse.

That argument ought, in fact, to deter justices from licensing any premises owned or operated by a limited company because it is true even if the local manager for the company is the licensee.Of course, where there is an individual at the premises who holds the licence, he or she can incontrovertibly be identified as the person responsible for ensuring that the licensing law is complied with and the premises well run.

The buck clearly stops there.

But this may be unrealistic if he or she is subject to the directions of an employer.

It may direct criminal responsibility where it should not be targeted.

Given that it is a corporation and its controlling personnel who will have the power to institute and maintain a system designed to ensure compliance with the law, it is they who should be at least as liable to prosecution as the person at the scene.The function of the licensing law is to ensure adequate control by the justices over the running of licensed premises.

The sanctions are criminal liability and the revocation of the licence.

Justices rely upon the police to obtain information both at the time of the first grant of a licence and by way of periodic checks thereafter.

The justices will also visit the premises periodically.

Corporate operators of licensed premises will usually be willing to liaise with justices, but that rests on the indirect sanction against the individual licensee.If anything, control has been diminished by the replacement of the annual licence with the three-year licence, possibly also increasing the risk of non-renewal through oversight.

There are two possible solutions.-- Reform of the licensing law, providing expressly for the licensing of companies and for criminal liability to attach to directors etc, with an appropriate statutory defence of due diligence, and a procedure for the supply of information on the control of the company, its ma naging personnel and any changes that occur.

It might also be appropriate to depart from the concept of a periodic licence in favour of an indefinite licence subject to revocation for good cause.-- A scheme to persuade licensing justices to license a suitable limited company.

Such a scheme would have to contain an assurance for justices that it would be proper, safe, and indeed preferable to grant the licence in the name of the company - in other words to satisfy them that the company was a fit and proper person to hold the licence, and the best person to do so.

Initially, cautiously, the company would be joint licensee with an individual.S.4 of the 1964 Act gives the licensing justices a wide power to impose conditions 'governing the tenure of the licence and any other matters as they think proper in the interests of the public', but only when granting a new on-licence other than wine-only.

That prevents the licensing justices from whittling down the scope of a licence, but gives them control when a new licence is created.

Conditions can be tailored to the special circumstances of the licence.That power could be used in the case of such a new grant to impose conditions on the company.

Otherwise, if the company came onto the licence on a transfer, it could be required to give an undertaking.

The conditions or undertaking could be as follows:-- to give notice to the police and the clerk to the licensing justices of any change of registered office and officers;-- to disclose any criminal convictions imposed on any officer of the company;-- to give notice promptly for an application for the transfer of the licence in the event of the individual licensee ceasing to manage the premises;-- to give notice if the company goes into any form of receivership or if a winding-up petition was served upon it.The objective of this scheme would be to enable direct and enforceable control over the actual operator of the premises, and to direct the sanctions for breach at the responsible party.

This would recognise the true responsibility of the company rather than through a nominee.The company would jeopardise the continuation of the licence if its management fell into the hands of persons who were not themselves fit and proper persons to hold a licence.

It would be incumbent upon the company, and prudent in any event, to ensure that it did not happen.

Such a scheme would give the licensing justices a right to prompt information about the control of the company, information which at present they may only find out later than they would wish, or conceivably not at all.In due course, if such a licensing scheme succeeded, it might be considered logical and proper to grant a licence solely to a limited company.

Once such a company licence was granted, an additional undertaking or condition would be appropriate in place of that relating to a transfer upon the departure of the individual licensee: to notify the clerk to the licensing justices and the police of the details of the manager/s of the premises as soon as he or she was appointed, and to give details of any subsequent change.The advantages to the licensing justices of company licences would be: better information on the control and management of the operator of the premises; more direct control over the actual operator, the body with the ability to ensure proper operational standards; direct criminal liability upon the company; more logical if the company's alcohol is being retailed; and more appropriate in the case of a provisional grant.For the company there are also advant ages: no need to have an individual accept sole potential criminal liability where this distorts reality; fewer court applications; lower risk of becoming temporarily unlicensed in a local management crisis.

It might be worth trying!