Material interest holders

What is a material interest

A material interest under the Pharmacy Business Ownership Act 2024 (PBO Act) is distinct from an ownership interest.

A person will hold a material interest in a pharmacy business if they are:

• a shareholder of an owner of the pharmacy business

  For example, the pharmacy business is owned by Smith Pty Ltd. Jane Smith is a shareholder of Smith Pty Ltd. Jane Smith holds a material interest in the business.

• a beneficiary of a trust, where the owner or a shareholder of an owner of the pharmacy business is a trustee of the trust

Examples:

Owner as trustee of the trust

The pharmacy business is owned by the David Brown as trustee for the Brown Family Trust. John Brown is a beneficiary in the trust. John Brown holds a material interest in the business.

Shareholder of an owner as trustee of the trust

The pharmacy business is owned by Brown Pty Ltd.  David Brown is the sole director and shareholder of Brown Pty Ltd.  David Brown holds the shareholding on trust as trustee for Brown Family Trust.  John Brown is a beneficiary of the trust.  John Brown holds a material interest in the business.

• not an owner but have another interest in the business that entitles them to receive consideration that varies according to the profits or takings of the business.

For example, the business is owned by Tim Jones. Sarah McDonald gives Tim Jones $500,000 to establish the business, and Tim agrees to repay Sarah at a rate of 5% of the pharmacy’s profits. Sarah McDonald holds a material interest in the business.

Who can hold a material interest

A person can only hold a material interest in a pharmacy business if they are:

• a practising pharmacist
• a close adult relative of a practising pharmacist who holds an interest in that particular pharmacy business.

For example, Bill Taylor owns the Brisbane Local Pharmacy. His wife, Penny Taylor, can hold a material interest in the Brisbane Local Pharmacy but cannot hold a material interest in another pharmacy that her husband does not have an interest in.

A material interest holder must be a natural person – they cannot be a corporation.

A close adult relative means the practising pharmacist’s spouse or their child who is an adult. An adult means an individual who is 18 years or more. A child who is under the age of 18, and other extended family members such as parents of the practising pharmacist, cannot hold a material interest in a pharmacy business.

Under section 28 of the PBO Act, the Council may only grant an application for a pharmacy business licence if satisfied that each person who the Council is aware holds a material interest in the pharmacy business is a person who is permitted to hold a material interest under section 16.

The penalty for holding a material interest where not permitted under the PBO Act is 200 penalty units.

How many pharmacies can a person own or hold an interest in

A person must not own or hold an interest in more than the following number of pharmacies at the same time:

• five pharmacies – if the person is a practising pharmacist, a corporation whose directors and shareholders are all practising pharmacists, or a corporation:
  • whose directors and shareholders are a combination of practising pharmacists and close adult relatives of practising pharmacists, and
  • in which a majority of shares, and all voting shares, are held by practising pharmacists
• six pharmacies if the person is:
  • a friendly society that, on 29 April 2005, carried on a pharmacy business in Queensland or another State
  • a friendly society that is an amalgamation of two or more friendly societies, where both friendly societies carried on businesses in Queensland or another State on 29 April 2005, or
  • the Mater Misericordiae Ltd.

An interest is defined to mean:

• an interest as an owner of the business, or
• a material interest in the business.

Trusts

The beneficiary of a discretionary or unit trust will have a material interest in a pharmacy business where:

• the trustee of that trust (corporation or a natural person) is the owner of the pharmacy business; or
• the trustee of that trust (natural person) is a shareholder of the owner of the pharmacy business.

If the trust specifies a ‘class’ of beneficiaries, all persons who are members of the class will be material interest holders when the trust assets include a pharmacy business. The Council’s application process requires them to declare their interests, and each material interest holder must be either a practising pharmacist or the close adult relative of a practising pharmacist who holds an interest in that particular pharmacy business.

This means that the Council cannot grant licences for pharmacy businesses where the ownership structure involves discretionary trusts with classes of beneficiaries that include persons who are not practising pharmacists or their close adult relatives (please note the information about transitional arrangements for existing pharmacy businesses provided below).

For example, the Brown Family Trust Deed names one beneficiary (who is a practising pharmacist) but defines other discretionary beneficiaries in a way that includes the parents and grandparents of the practising pharmacist and corporations where the practising pharmacist or their spouse are directors or shareholders. The trust deed will need to be amended to define the beneficiaries in a way that does not include anyone who is not a practising pharmacist or close adult relative, at any time when the trust assets include a pharmacy business.

Transitional provisions for existing owners of existing pharmacy businesses

An existing pharmacy business means a pharmacy business being carried on under the Pharmacy Business Ownership Act 2001 on 31 October 2025, immediately before the full commencement of the PBO Act.

Non-compliant beneficiaries of discretionary trusts – transitional provision

Section 218 of the PBO Act gives existing pharmacy owners additional time to amend discretionary trust deeds to remove non-compliant beneficiaries (beneficiaries who are not practising pharmacists or their close adult relatives) from discretionary trusts. The time given is up to two years from the full commencement of the PBO Act.

This means that by 1 November 2027, owners will need to ensure that their beneficiaries meet PBO Act requirements.

It should be noted that this does not mean that these businesses have two years to make an application for a licence. Most businesses are required to apply for a pharmacy business licence by 2 November 2026 (and if they fail to do that, the section 218 two-year grace period for non-compliant beneficiaries will no longer apply).

Section 218 means that a licence can be granted to an applicant for a licence where they are an existing owner, despite them having non-compliant trust beneficiaries. However, they must amend the trust deed to come into compliance by 1 November 2027.

If your ownership structure includes a discretionary trust, you should carefully consider the provisions of the PBO Act, including the transitional provisions, and seek legal advice if needed.

Corporate shareholders or corporate beneficiaries - transitional provision

Under section 217 of the PBO Act, the corporate shareholders or beneficiaries of certain (‘deemed eligible’) corporate owners of existing pharmacy businesses are taken to be compliant with the PBO Act’s material interest holder requirements for two years from the commencement of the PBO Act. This means that those corporate shareholders or beneficiaries can hold material interests for up to two years from 1 November 2025, even though they are not practising pharmacists or their close adult relatives.

By 1 November 2027, the owners of those pharmacies will need to ensure that their shareholders and beneficiaries meet the PBO Act requirements.

If your ownership structure includes a ‘deemed eligible’ corporate owner and corporate shareholders or corporate beneficiaries, you should carefully consider the provisions of the PBO Act, including the transitional provisions, and seek legal advice if needed.

Non-practising pharmacists with a material interest - transitional provision

A practising pharmacist is a person who is registered under the Health Practitioner Regulation National Law to practise in the pharmacy profession with general registration.

A pharmacist with non-practising registration will be permitted to continue to hold a material interest in an existing pharmacy business for two years from 1 November 2025. After that date, they will no longer be able to holder the interest unless they have changed to general registration.

Turnover rent clauses in leases

A turnover rent clause refers to a clause in a lease that provides that the rent payable will vary depending on the turnover or the profits of the business.

Under section 13 of the PBO Act, a person will hold a material interest in a pharmacy business if they have an interest in the business that entitles them to receive consideration that varies according to the profits or takings of the business. A turnover rent clause may fall within the definition of a material interest.  If so, the landlord would commit an offence under section 16 of the PBO Act unless they are a pharmacist or close adult relative of a pharmacist.