Section 52 Statements When Buying or Selling a Business in Victoria

Section 52 can affect whether a signed small-business sale contract remains binding. Vendors need the prescribed disclosure ready before commitment; purchasers need to understand both its limited role and the strict deadline for exercising the statutory avoidance right.

This guide explains how the statutory test works, what the statement must contain, who is responsible for it, and how it fits within the wider sale process. For the full transaction, see our guides to selling a business in Victoria and buying a business in Victoria.

What Is a Section 52 Statement?

Its formal name is the “Statement by a vendor of a small business”. It is prescribed as Form 2 in Schedule 1 of the Regulations (reg 8(2)). The form has six parts: important information for the vendor (Section A), important information for the purchaser (Section B), business information (Section C), the vendor's Business Operating Report with the accountant's statement (Section D), the vendor's declaration (Section E) and the purchaser's acknowledgement of receipt (Section F).

The form itself says its purpose is to notify the purchaser of certain particulars about the trading and financial position of the business. It is a minimum disclosure standard, not a complete picture of the business.

When Is a Section 52 Statement Required?

Section 52(1) applies to a person seeking to sell a small business or an estate agent who obtains the buyer's signature on a binding contract, agreement or document for the sale, or who accepts a deposit. The duty is therefore not confined to sales handled by an agent: a vendor selling privately is equally bound.

“Small business” is defined in section 4(1) of the Act by reference to price. The Act sets a default of $200,000 but allows a higher amount, up to $500,000, to be prescribed. Regulation 8(1) currently prescribes $450,000. “Business” is defined broadly to cover any hotel, boarding-house, storekeeping, manufacturing, professional, service or trading business. The definition also includes any share or interest in or concerning any stock, goodwill or other property or assets included in a transaction relating to a business. That extended limb matters when identifying what the transaction actually transfers, including in the share-sale analysis below.

There is one express exclusion. Under section 52(8), the section does not apply to the sale of a business in connection with which a licence or permit is in force under the Liquor Control Reform Act 1998 (Vic), where the buyer could not lawfully carry on the business without a licence under that Act. Section 52 contains no other express exclusion.

What Counts Toward the $450,000 Threshold?

The definition looks at the total price at which the business's goodwill, plant, equipment and fittings are “sold or offered for sale or authorized to be sold”. Several practical points follow from that wording:

• Listed components only. Stock, debtors, freehold land and other assets are not among the listed components. Where stock is sold separately at valuation, it is generally outside the calculation on the face of the definition.
• Asking and authorised prices count. The test is not confined to the final agreed price. If an offered or authorised price within the threshold later becomes a sale above $450,000—or an authorised price above the threshold later becomes a sale within it—do not assume the final figure alone determines whether section 52 applies. The transaction and each statutory limb need to be assessed; providing Form 2 is the prudent course where there is genuine doubt.
• Apportionment matters. The contract should allocate the price clearly between goodwill, plant, equipment and fittings and other items. An artificial allocation designed to take a sale outside section 52 risks being void under section 52(6).
• Liquor licences. Assess section 52(8) first: it excludes the transaction only where its stated licensing conditions are met. If the transaction is not excluded, Form 2 directs that an amount representing the value of a liquor licence or permit is not included in the threshold price.

The threshold is inclusive: a counted total of exactly $450,000 is within the definition because the prescribed amount must not be exceeded. Two simplified examples show the mechanics:

Where the figures sit close to $450,000, or the price includes earn-outs, deferred amounts or other variable elements, obtain advice before marketing the business. Giving a compliant statement where the position is uncertain is usually far less costly than a disputed avoidance.

GST near the threshold. The Act and Regulations do not expressly state whether the threshold is GST-inclusive or GST-exclusive. The statutory definition turns on the total price of the specified counted components. Where GST affects how a contract expresses a price near $450,000, obtain advice before relying on the threshold rather than assuming either treatment.

What Information Must the Statement Contain?

Section C covers the vendor, any agent, the business name and address, a description of the business, how long the vendor has carried it on and at the present location, whether the premises are owned or leased (and whether owned premises are included in the sale), trading hours, and whether family members or associated persons have worked in the business and been paid.

Section D, the Business Operating Report, must under regulation 8(3):

• show the required information for the current accounting period;
• show the required information for the two previous accounting periods, unless the vendor has not owned the business for that long; and
• be certified by a practising accountant in the prescribed terms.

An accounting period is a financial year or a continuous 12-month period, or a period changed for bookkeeping purposes (reg 8(4)–(5)). The form explains that the current part-year runs from the end of the last full period to the end of the most recent quarter before the statement was signed. If it is signed in the first quarter of a new financial year, or equivalent accounting period, the part-year column does not apply. The report covers gross income, cost of goods sold, gross profit, itemised operating expenses (including rent, wages and superannuation), net profit, the vendor's personal expenses and payments to associated persons, adjusted net profit, net debtors and contingent liabilities such as litigation or tax disputes.

In Section E the vendor declares whether circumstances arising since the last full period have affected gross profit, identifies anything adversely affecting or likely to affect the business, and confirms the information is accurate and complete.

When Must It Be Given?

The statement must be given before the buyer, or someone acting for the buyer, signs any contract, agreement or document that is legally binding or intended to be legally binding in respect of the sale, or before a deposit is accepted. It can be given to the buyer, a person signing for the buyer, or a person paying the deposit for the buyer, and a written acknowledgement of receipt must be obtained (s 52(1); Form 2, Section F).

That timing catches more than the formal sale contract. Heads of agreement or offers that are intended to bind, and refundable holding deposits, can trigger the obligation. If an estate agent or auctioneer—or an employee or person acting for either—makes any promise about obtaining a loan to fund some or all of the purchase price, the separate statement required by section 51 must also be given.

Who Prepares and Signs It?

Section 52(2) requires the statement to be signed by the vendor. In practice, the vendor's accountant usually prepares the Business Operating Report, the vendor completes the business information and declaration, and the vendor's lawyer checks the statement against the contract.

The accountant must be a “practising accountant” as defined in regulation 5: a registered company auditor, a member of CPA Australia or Chartered Accountants Australia and New Zealand, a member or fellow of the Institute of Public Accountants or the Association of Taxation and Management Accountants, or a fellow of the National Tax & Accountants' Association. The accountant certifies that the figures are in accordance with the vendor's books of account. That is a comparison with the books, not an audit, and it does not verify that the books themselves are complete or that the business is worth the asking price.

Consumer Affairs Victoria says an estate agent is not responsible for preparing the statement but should ensure one is provided where appropriate. Under the Act, though, an agent who obtains the buyer's signature or accepts a deposit is directly subject to section 52(1), and may commit an offence under section 52(7) if no compliant statement is given.

What Happens If It Is Not Provided or Is Defective?

1. Non-compliance trigger: no statement was given, it was not in Form 2, it omitted prescribed particulars or it stated prescribed particulars inaccurately. On its face, section 52(3) contains no materiality threshold.
2. Written notice: the purchaser gives notice avoiding the contract to the vendor or estate agent.
3. Three-month limit: the notice must be given within three months after the purchaser first signed a contract, agreement or document for the sale.
4. Before possession: notice must also be given before the purchaser takes possession of the business. Both timing conditions apply.
5. Repayment: under section 52(4), the vendor is liable to repay any money paid by the purchaser under the contract, while the estate agent is liable to repay the part paid by the purchaser to the agent. The purchaser may recover the money as a civil debt summarily in the Magistrates' Court or in any court of competent jurisdiction.
6. No contracting out: section 52(6) makes an arrangement void to the extent it avoids or evades the section.

Under section 52(5), an agent who repays money may recover from the vendor the amount the vendor received, unless the vendor proves the failure occurred without the vendor's knowledge, connivance or consent. In civil proceedings, the person asserting that the statement was duly given bears the onus of proving it.

Offence. A vendor or estate agent who fails to give a statement in the prescribed form containing the prescribed particulars commits an offence carrying a maximum penalty of 10 penalty units (s 52(7)). The dollar value of a penalty unit is indexed each financial year.

Later information. A statement does not automatically become non-compliant merely because another quarter ends after it is signed. Form 2 measures part-year figures to the most recent quarter before the vendor signs, subject to the first-quarter exception. Updating and re-signing is prudent where later information means a prescribed particular or the Section E declaration is no longer accurate or complete.

Other remedies. Section 52 sits alongside, and does not displace, other protections. Inaccurate figures may also give rise to claims for breach of contractual warranties, misrepresentation, or misleading or deceptive conduct under section 18 of the Australian Consumer Law. Those claims have their own elements, remedies and limitation periods, and remain relevant after the section 52 avoidance window has closed or possession has been taken.

Buyer Perspective: What to Check

The prescribed form itself warns that it does not replace due diligence. It recommends that buyers obtain at least the balance sheet and profit and loss statements for the last two periods, the most recent ATO tax assessment, and the BAS lodged since the end of the last financial year. It also suggests considering a trial period, an independent stocktake and warranties in the contract about assets, stock and accounts.

Avoidance under section 52(3) must occur before possession. A buyer concerned about Form 2 should obtain advice before taking possession. Early-access, trial-operation or management arrangements can create factual questions about possession and should be structured carefully; not every trial arrangement necessarily amounts to possession.

Questions buyers should ask

• Check the statement was received, signed and acknowledged before you signed or paid.
• Reconcile the figures with tax returns, BAS and bank statements, not just the vendor's books.
• Test the adjusted net profit: which personal expenses and family wages were added back, and why.
• Compare the rent shown with the lease, and confirm the lease can be assigned on acceptable terms.
• Ask for the previous owner's Section 52 statement if the vendor has owned the business only briefly.
• Diary the three-month and possession deadlines if any defect emerges.

Have your accountant review the trading figures independently. Our business due diligence guide covers the wider legal, financial and operational checks.

Seller Perspective: Preparation and Risk Management

Seller preparation checklist

• Engage your accountant early, before the business is listed or offered.
• Use the current prescribed Form 2 in Schedule 1 to the Estate Agents (General, Accounts and Audit) Regulations 2018 and complete every applicable item.
• Make sure add-backs and payments to associated persons are disclosed in the correct items.
• Disclose contingent liabilities, adverse circumstances and changes since the last full period.
• Reassess and, where prudent, update and re-sign the statement if later information makes prescribed particulars or the Section E declaration inaccurate or incomplete.
• Give it before any binding document is signed or any deposit is taken, and keep the signed acknowledgement.
• Make sure your warranties and disclosure in the contract are consistent with the statement.

The business sale agreement should be drafted with the statement in mind, so the warranties and the disclosed figures do not contradict each other.

Section 52 vs Section 32 — Do Not Confuse Them

The two statements are often confused because both are vendor disclosure documents, but they come from different Acts and do different jobs:

One does not replace the other. A Section 32 statement says nothing about trading, and a Section 52 statement says nothing about title.

Business Sales Involving Premises, Leases or Freehold

Freehold land. If the vendor owns the premises and they are included in the sale, Section C of the form records that, and Section B notes that a Section 32 statement will be given for the land. Land is not one of the components counted toward the $450,000 threshold.

Retail lease assignment. Where the sale includes an assignment of a retail premises lease and the premises will continue to be used for an ongoing business, the tenant must give the landlord and the proposed assignee a disclosure statement under section 61(5A) of the Retail Leases Act 2003 (Vic). That is a separate document and only one part of the statutory assignment and landlord-consent process. Among the relevant requirements, a correct section 61(5A) statement also matters to the seller: section 62 can release the assigning tenant and its guarantors from ongoing lease liability if the statement is not false, misleading or materially incomplete. Whether the Act applies to the premises is a threshold question, covered in our article on when the Retail Leases Act applies.

Asset Sales and Share Sales

Section 52 applies naturally to an asset sale because the section 4(1) definition measures the goodwill, plant, equipment and fittings sold, offered or authorised to be sold. Its broader definition of “business” also includes a share or interest in or concerning stock, goodwill or other property or assets included in a transaction relating to a business. On the better construction, that extended limb concerns a direct share or interest in business property; it does not convert a conventional sale of shares in the company that owns the business into a sale of the company's business assets. Accordingly, a conventional company share sale is outside section 52: the company retains its goodwill, plant, equipment and fittings while the purchaser acquires shares in the company.

That conclusion is a construction of the statutory language, not a reported appellate holding on the point. A hybrid transaction in which shares are transferred together with goodwill, a direct interest in business property or other business assets transferred separately requires analysis of everything sold, offered or authorised to be sold. Our share sale vs asset sale guide explains the broader differences between the two structures.

If the business is franchised, the separate disclosure obligations under the Franchising Code of Conduct in Schedule 1 to the Competition and Consumer (Industry Codes—Franchising) Regulations 2024 (Cth) do not replace Victorian section 52 disclosure where section 52 otherwise applies.

Common Section 52 Mistakes

• Using an old or altered form: use the current prescribed Form 2 in Schedule 1, not an informal financial summary.
• Missing accounting periods: include the current period to the most recent quarter and the two previous periods, subject to the first-quarter and shorter-ownership qualifications.
• No accountant certification: the operating figures require certification by a practising accountant under regulation 8(3)(c).
• Giving it after commitment: delivery after a binding or intended-to-be-binding document is signed, or after a deposit is accepted, is too late.
• Misstating the threshold: count goodwill, plant, equipment and fittings; do not add stock or land, and do not ignore the offered or authorised price.
• Confusing Sections 52 and 32: business disclosure does not replace land disclosure.
• Creating inconsistencies: reconcile the statement, sale agreement, information memorandum and accountant's records before they are issued.

Frequently Asked Questions

Primary Sources

This article has been checked against the current authorised Estate Agents Act 1980 (Vic) and the current in-force Estate Agents (General, Accounts and Audit) Regulations 2018as at 5 October 2026.

• Estate Agents Act 1980 (Vic) — ss 4(1) (definitions of “business” and “small business”), 51 and 52 (current in-force version).
• Estate Agents (General, Accounts and Audit) Regulations 2018 (Vic) — regs 5 (“practising accountant”) and 8, and Schedule 1, Form 2.
• Consumer Affairs Victoria — Section 52 statement by a vendor of a small business (guidance and current Word version of the form).
• Sale of Land Act 1962 (Vic) — s 32 (vendor statement for land).
• Retail Leases Act 2003 (Vic) — ss 61(5A) and 62 (assignment disclosure statement).
• Competition and Consumer (Industry Codes—Franchising) Regulations 2024 (Cth) — Schedule 1 (Franchising Code of Conduct).