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LCQ1: Liquor licensing system

     Following is a question by the Hon Tommy Cheung and a reply by the Secretary for Food and Health, Dr Ko Wing-man, in the Legislative Council today (July 8):


     Under the existing legislation, liquor licences may be issued only to natural persons but not body corporates or companies.  I have often received complaints from members of the bar industry that such a requirement is detrimental to the business environment.  Since liquor licensees are required to personally monitor and manage the licensed premises, those operators who own a number of liquor-selling premises have no alternative but to have the liquor licences of those premises held by their employees.  When such employees apply privately to the Liquor Licensing Board for revocation of the liquor licences, or when there are staff changes (such as staff departure), those premises are forced to close down and the operators suffer economic losses as a result.  In this connection, will the Government inform this Council:

(1) whether it has compiled statistics on the number of cases in each of the past three years in which, soon after applications by the liquor licensees for revocation of liquor licences had been approved, the operators of the premises concerned applied afresh for liquor licences; if it has, of the numbers of such cases; if not, whether it will compile such statistics;

(2) whether it will consider requiring that when applying for revocation of liquor licences, liquor licensees must submit documents proving that the operators of the premises concerned agree to such revocations; if it will, of the details of such measures and the implementation timetable; if not, the reasons for that; and

(3) as the authorities indicated in early 2012 that they intended to implement a reserve licensee mechanism to minimise disruption to businesses of liquor-licensed premises by having a reserve licensee to take over the role of the original licensee at any given time during the licence period should circumstances so warrant, of the current work progress and the implementation timetable for such proposal?



     As in other cosmopolitan cities in the world, liquor business is an important adjunct to the food, leisure, tourism and entertainment industries in Hong Kong. However, the operation of bars amid residential areas will arouse public concern on crime, environmental nuisance and potential fire risk brought about by the proliferation of bars. Therefore, in considering liquor licence applications, the Liquor Licensing Board (LLB) has to strike a reasonable balance between facilitating legitimate commercial activities and safeguarding the interests of the neighbouring community. On the other hand, there are calls from the trade to reduce the regulatory burden and nurture a business-friendly environment. As such, the Government conducted a public consultation from July to September 2011 to gauge the views of the community on issues related to the liquor licensing system.  According to the outcome of the consultation, the community generally preferred keeping the prevailing requirement that liquor licences should only be issued to natural persons, as this would place clear legal responsibilities on licensees.

     The Dutiable Commodities (Liquor) Regulations (Cap. 109B) (DCLR) stipulate that a liquor licence should only be issued to a "fit and proper person". The legislative intent of this provision is for a natural person instead of a company to hold a liquor licence.  As regulatory work relies heavily on licensees' fulfilment of their legal and administrative responsibilities which are clearly laid down, it is a condition for licensing that licensees must personally supervise the operation of the premises. The Government considers the requirement necessary and appropriate as it is commonly known that licensed premises, if not properly managed, can be a breeding ground of crimes or a source of public nuisance. If a body corporate becomes a licensee, it is doubtful whether the body corporate, and its directors or partners, can be held liable for breaches of the licensing conditions in terms of an individual.  The complex composition of some bodies corporate may also exacerbate the difficulties in criminal prosecutions.  This will hinder the effective enforcement and maintenance of law and order on licensed premises, and is clearly not in the interest of the public.

     Under Regulation 24 of the DCLR, in the case of illness or temporary absence of the licensee, the secretary to the LLB may authorise any person to manage the licensed premises for a period not exceeding three months and during that period such person shall be deemed to be the licensee of the premises.  This is to ensure that the licensee is present on the premises to supervise the operation.

     My reply to the various parts of the question is as follows:  

(1) The LLB revoked 14, 27 and 15 liquor licences in 2012, 2013 and 2014 respectively.  The Government does not maintain any statistics in relation to fresh applications for liquor licences by employees of the licensed premises after the original liquor licences were privately cancelled.  Having regard to the views put forward in the question, we will consider maintaining such statistics for assessment purposes in the future.  

(2) The role of a liquor licensee is usually assumed by an employee of the business operator. If the employee holding the licence resigns, the business will have to apply for a licence transfer or a new licence.  This has understandably imposed both financial and administrative burdens on the trade. To address this issue, some members of the food trade have requested the Government to review the "natural person" requirement and consider allowing a body corporate or a partnership to hold a liquor licence.

     As I mentioned above, liquor licensees must be natural persons.  The purpose of maintaining this requirement is to make it clear that licensees have the obligation to personally supervise the premises.  We consider that a non-discriminatory approach should be adopted in regulating liquor-selling premises regardless of their scale of business, so that every licensee and operator of liquor-selling premises is well aware of the legal responsibilities involved and that all premises are properly managed. This will help to effectively ensure public safety, combat and prevent crimes and minimise public nuisance caused by the premises.

     As it is up to the operator to decide who will be the licensee, how to ensure that the licensee's application for cancellation of a liquor licence is made with the operator's knowledge and consent is a matter of private contract between themselves.  We are of the view that it is inappropriate to make it a statutory requirement for a licensee to submit documents proving the consent of the operator of the premises concerned when he applies for cancellation of a liquor licence.

(3) We have reported to the Legislative Council Panel on Food Safety and Environmental Hygiene that we intended to implement a reserve licensee mechanism to minimise disruption to business by identifying at an early stage a suitable person to take over the role of the original licensee at any given time during the licence period should circumstances so warrant.  We have hitherto indicated that amendments to the DCLR might be required for the purpose.

     Upon further study, it is found that this proposal could be implemented via administrative procedures.  The LLB has agreed to put in place a reserve licensee mechanism under which a person would be authorised in accordance with the administrative procedures and section 24 of the DCLR to manage the licensed premises concerned when the holder of the liquor licence is temporarily absent.

     When implementing this trade facilitation measure, we will adhere to the principles that there should be a clear delineation of responsibility between the licensee and the reserve licensee at any one time during the licence period, and that a simplified procedure should be in place to facilitate the taking over of the licence by the reserve licensee in a matter of days to minimise the impact of the resignation of the licensee on the business.  

     The Food and Environmental Hygiene Department is discussing with the Police the arrangement and additional manpower required for the implementation of the plan. The Government will seek additional resources through the established procedures and announce the implementation date of the mechanism in due course.

     Thank you, President.

Ends/Wednesday, July 8, 2015
Issued at HKT 18:29


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