There are certain legislative requirements that need to be consider when deciding on whether to purchase, and what structure to use for the purchase of, a pharmacy business.
Who is eligible?
In brief summary, the legislation provides that a person must not carry on a pharmacy business unless:
- the premises on which the pharmacy business is carried on are the subject of a current approval of the Pharmacy Council; and
- all holders of a financial interest in the pharmacy business are registered in the Register of Pharmacies.
What is a financial interest?
A “financial interest” means a direct or indirect monetary or financial interest and includes:
- a proprietary interest, including a proprietary interest as a sole proprietor, partner, director, member or shareholder, or trustee or beneficiary; and
- an interest, whether proprietary or otherwise, in a pharmacy business that a person has because the person is a trustee or beneficiary of a trust, being a trust the trustees of which, in their capacity as the trustees of that trust, carry on or have a financial interest in the business.
Specialist Legal Advice
Matters that an experienced Solicitor would consider when providing you advice on the purchasing entity include:
- Whether its constitution, if the purchaser will be a company, complies with the financial interest requirements.
- Structure of the purchasing entity. While the legislative requirements may mean that you are unable to utilise a preferred structure for the purchasing entity of the pharmacy business, by establishing a service entity some asset protection and tax minimisation strategies can still be utilised in your business.
- Appropriateness of establishing a service entity. Whether the establishment of a service entity is appropriate for a particular purchase will need to be considered with your Solicitor prior to the execution of the sale of business contract to allow for the correct assignment of lease and sale of tangible assets under the contract. Your solicitor will also need to prepare an appropriate Service Agreement to facilitate the arrangement upon completion.