In brief
As outlined in our recent Valuer Update, a recent Ministerial Determination stated that tenants that are foreign listed companies are outside the Retail Leases Act 2003 (Vic) (Act). However, for market rent reviews prior to 12 August 2016, you need to enquire further whether such a listed tenant was on a Stock Exchange that was a member of the World Federation of Exchanges (WFE).
What you need to know
- If you are conducting a market rent review for a period prior to 12 August 2016, the lease may not be governed by the Act.
- If a tenant is a foreign listed company, further research may be required to determine if the tenant was listed on a foreign stock exchange that is/was a member of the WFE.
- If the Stock Exchange is/was not a member of the WFE, then a further investigation may be needed to ascertain whether the Act applies to the lease in question.
Background
Prior to 12 August 2016, a lease would not be governed by the Act where the tenant was a foreign company listed on a foreign Stock Exchange that was not a member of the WFE. On 12 August 2016, there was a Ministerial Determination which provided that the Act applied to a lease, where the tenant, or its subsidiary, was listed on a foreign Stock Exchange, regardless of whether the stock exchange was a member of the WFE.
The difficulty that emerges is that if you are conducting a market rent review for a period prior to 12 August 2016, further enquiries need to be made where the tenant is a foreign listed company. We were recently asked to advise on such a situation where the tenant was listed on the Frankfurt Stock Exchange, which was a member of the WFE. However, the tenant only became listed on the Frankfurt Stock Exchange in December 2015, and the market review was for a date prior to December 2015. Through further research, we ascertained that the tenant had been listed on the Johannesburg Stock Exchange prior to December 2015, which was a member of the WFE from 1963.
Conclusion
In undertaking and market rent review for a period prior to 12 August 2016, where the tenant is a foreign listed company, further research is often required to ascertain as to whether the tenant was listed on a foreign stock exchange that is a member of the WFE.
Naturally, the additional research is only required if the lease would otherwise be governed by the Act. The answer is not always easy and often requires detailed research as to when stock exchanges became members of, or when they left the membership of the WFE. If in doubt, please do not hesitate to contact us for expert legal advice.
