February 2009 Failure to understand how to properly change ownership of a licensed establishment could result in costly fines, suspension or even revocation. Promptly reporting the change to the local authority and the Iowa Alcoholic Beverages Division will save you time and money. Two scenarios exist for the change of ownership. Sole proprietorships must get a completely new license and cannot operate under the old license for any period of time. However, partnerships and corporations may be eligible to do an ownership update and keep the existing license. I. Sole Proprietors The local authority and the Division require proof of the change of ownership. In the case of sole proprietorships, the previous licensee must cancel the existing license. Subsequently, the new owner must apply for a license through the Division’s website. If there is a period of time between the new owner taking over and the new license being issued, the business can continue to operate, but cannot sell alcohol. Selling alcohol under another person’s license is considered bootlegging and may result in suspension or revocation. Violations may also disqualify the new owner from holding a license. Even if the name of the establishment is to remain the same, a new license with a different number and effective date is required. A clean history is one benefit of obtaining a new license. Also, the original license holder may be entitled to a refund for any unused quarters of the license. II. Corporations & Partnerships In the case of corporations and partnerships, an ownership update will suffice. Proof of the change of ownership must be submitted to the local authority. Corporations should submit signed copies of the transfer of shares or signed copies of the minutes of meetings reflecting the resignation and election of officers and directors. For a partnership, an ownership update is required whether it is losing or gaining partners. New partners must complete the ownership and conviction questions on an ownership update. The update provides the local authority and the Division with the information necessary to determine if the individuals are qualified to hold a license. Partnerships must submit a notarized affidavit from the exiting partner or dissolution of the partnership, along with an amended trade name document. III. Conclusion Any change of ownership, including partial changes, must be reported to and approved by the local authority and the Iowa Alcoholic Beverages Division. The change must be communicated when the transfer of ownership occurs. Do not wait for renewal time, as that could result in administrative sanctions or possibly the ineligibility to hold an Iowa liquor license. Combined attention to detail and compliance with the law will help ensure a smooth and legal transition of ownership. In the event that you are still uncertain, it is always safest to call the Division with questions.