On 12 August 2016, a new Ministerial Determination declared that companies whose securities are listed on a stock exchange outside Australia, or the subsidiaries of such companies, are not covered by the Retail Leases Act 2003 (Vic) (Act).
What you need to know
If a tenant company is a listed company overseas, or a subsidiary of such a company, the lease will not be governed by the Act.
Up until the Ministerial Determination, the previous position was that a listed company, or a subsidiary of a listed company, could be excluded from the operation of the Act, if the company was listed on a stock exchange that was a member of the World Federation of Exchanges. Apparently, a number of companies are listed on stock exchanges but many of those stock exchanges are not members, or no longer members of the World Federation of Exchanges. For example, the New York Stock Exchange is no longer a member of the World Federation of Exchanges.
When undertaking a market rent review, or assisting a party in a lease negotiation, it is important to ascertain whether the tenant is a company listed on a stock exchange overseas, or a subsidiary of such a company. We have recently been required to advise as to whether a lease is governed by the Act in circumstances where the tenant is a subsidiary of a company listed on the New York Stock Exchange. The difficulty is that the parent company is listed on the New York Stock Exchange, which ceased some years ago to be a member of the World Federation of Exchanges.
Whether a lease is or is not governed by the Act can have a significant impact on a market rent review. Accordingly, we recommend that you seek advice as to whether the lease is governed by the Act, if any question is raised as to whether the tenant is listed on a foreign stock exchange, or as a subsidiary of such a company.