Thinking of buying a business with an immigration sponsor licence?

When considering a business purchase, it is often presumed that any immigration sponsor licence will remain with the business and will be available to the new owners.

Immigration law is not that simple unfortunately, and immigration licence holders and new business owners must navigate complex requirements to ensure compliance and continuity. Here we have outlined the key considerations that business purchasers and sponsor licence holders should keep in mind during such transactions.

Basic Principles

One of the fundamental principles to remember is that a sponsor licence is not transferrable. In the event of a change in direct ownership, a new licence application must be prepared and submitted to the Home Office, unless the buyer already holds a licence.

Most transactions, including changes in direct ownership (such as share sales or asset sales), mergers, takeovers, and de-mergers, need to be reported to the Home Office within 20 working days of completion.

Additionally, if Sponsored Workers are transferring from the seller, the termination of sponsorship must be reported by the seller within 10 working days of the transfer.

Questions to Consider

When assessing the impact of a corporate transaction on a sponsor licence, several critical questions should be addressed:

• Does the business involved in the transaction hold a sponsor licence?
•  Is there a direct change of ownership, or is the change occurring one or more levels above the sponsor licence holding entity? If the change of ownership is not directly above the licence holding company, then a new licence will not be required, but the transaction will still need to be reported to the Home Office.
• If multiple group entities are covered by the sponsor licence, which entities within the group are sponsoring migrant workers, and how will the licences be structured post-completion?
• Will any Skilled Workers be transferred to a new entity, or will they remain within an entity that has a new owner?
• Does TUPE (Transfer of Undertakings Protection of Employment) apply or not?
• When preparing for the sale of a business, you may want to review your licence to ensure there have been no inadvertent licence breaches. You will also need to consider whether any previous business restructures, including internal changes to the share ownership, have taken place, and to check that the required reports and any necessary changes to the licence were made at the time.

Evidence Required to Support Reports

Both the seller and the buyer must provide specific evidence to support their reports to the Home Office. This includes a certified copy of the executed SPA, an affidavit signed by a senior executive, or a letter from a practising solicitor or notary confirming the details of the sale/purchase.

Additionally, evidence of TUPE transfers or similar provisions, including full details of all Skilled Workers transferring, should be provided.

TUPE Considerations

TUPE will apply in an asset sale but not in a share sale. Provided the transferring Skilled Workers have TUPE or similar protection, the new sponsors do not need to assign a new Certificate of Sponsorship (CoS) to them, and the Skilled Workers do not need to apply for new visas.

However, the new owner must have or be applying for a new licence, take responsibility for complying with all sponsor duties, and ensure there is no change to the Skilled Worker’s role or duties.

By keeping these key considerations in mind, immigration sponsor licence holders can navigate corporate transactions with greater confidence and compliance.