A sponsor licence is not transferable between legal entities. This means that if a business undergoes a significant change of circumstances, such as a change of ownership, merger, takeover, de-merger or other corporate restructuring, the existing sponsor licence cannot simply be transferred to another organisation. This is because a sponsor licence is granted to a specific legal entity rather than to a business, trading name or brand.
The action that you need to take will depend on the nature of the change and whether the licensed sponsor remains the same legal entity after the transaction. For example, if there has been a change in direct ownership, the new owner will need to apply for a new sponsor licence if it does not already hold one and wishes to continue sponsoring workers. In some partial takeover or de-merger cases, the original sponsor may keep its sponsor licence, but the Home Office may reduce its Certificate of Sponsorship (CoS) allocation to zero. In that case, it cannot assign new CoS unless it later gets an increased allocation.
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What do sponsors need to do in mergers, takeovers and similar changes?
The action you need to take depends on the nature of the change and whether the licensed sponsor remains the same legal entity after the transaction. In most cases, the sponsor must report the change through the Sponsorship Management System (SMS) within 20 working days as part of its sponsor licence compliance duties. Depending on the circumstances, the Home Office may require supporting documents and further information about the change.
In this article, we are discussing four main types of business change:
- Change of direct ownership
- Complete takeover or merger where all sponsored workers move to a new organisation
- Partial takeover or de-merger where only some sponsored workers transfer
- Ownership changes higher up the corporate group
Please note this is not a comprehensive list. If your business is undergoing a different type of change, contact our immigration lawyers by calling 020 3744 2797 or completing our enquiry form.
Change of direct ownership
If there is a change in direct ownership of an organisation, for example, if it is sold as a going concern or where a share sale transfers the controlling number of shares to a new owner, the sponsor must report the change to the Home Office through the SMS within 20 working days.
Where a change of direct ownership occurs, the sponsor licence will be revoked or, where all sponsored workers are moved onto another sponsor’s licence, made dormant. The new owner must apply for a new sponsor licence if it does not already hold one and wishes to continue sponsoring those workers.
Here are some examples:
Example 1: The overall owner of a business remains the same, but the immediate direct owner of the licensed sponsor changes. Because there is a new direct owner, the original sponsor licence will be revoked or made dormant. The new direct owner must apply for a new sponsor licence if it wishes to continue sponsoring workers. Workers who transfer under TUPE (Transfer of Undertakings (Protection of Employment) Regulations) or similar protection do not need to make a new immigration application, provided the conditions described below are met.
Example 2: A business is sold. TUPE does not apply. The sponsored workers can still transfer to the new sponsor’s licence, provided the new sponsor holds a valid licence in the relevant route, confirms it accepts responsibility for those workers, and their duties remain unchanged.
Complete takeover or merger where all sponsored workers move to a new organisation
If a licensed sponsor is taken over or merged into a new organisation and all sponsored workers move to that new organisation, both the old sponsor and the new sponsor have specific duties to meet.
The old sponsor must:
- Report the change via the SMS within 20 working days
- Confirm which workers are transferring to the new sponsor
The new sponsor must:
- Report the change via the SMS within 20 working days
- Confirm that it accepts responsibility for the transferred workers from the date they move
Here are some examples:
Example 1: Company A takes over Company B, which holds a sponsor licence. Company A already holds a valid Skilled Worker sponsor licence. Company B’s sponsored workers transfer to Company A under TUPE. Company A reports the change within 20 working days and confirms responsibility for the transferred workers. Company B’s licence is made dormant.
Example 2: Company A takes over Company B, but Company A does not hold a sponsor licence. Company B reports the change via the SMS. Company A must apply for a new sponsor licence within 20 working days of the workers moving. If the application is granted, Company A takes on responsibility for all transferred workers. If the application is refused, those workers’ permission will be cancelled unless they can already be sponsored under an existing relevant licence.
Partial takeover or de-merger where only some sponsored workers transfer
In a partial takeover or de-merger, some sponsored workers move to a new organisation while others remain with the existing sponsor. The rules differ depending on whether the existing sponsor retains any sponsored workers after the change.
Where the existing sponsor still has sponsored workers after the change:
- The existing sponsor keeps its licence but must report the change via the SMS within 20 working days
- The Home Office may reduce the CoS allocation of the existing sponsor to reflect the reduced workforce
- The new sponsor must apply for a licence or confirm it already holds a valid one in the relevant route and must also report the change within 20 working days
Where the existing sponsor no longer has any sponsored workers after the change:
- The existing sponsor must report the change and its licence will normally be made dormant or surrendered
- The new sponsor must hold or apply for a valid licence and confirm it accepts responsibility for the transferred workers
Example: Company B is partially taken over. Some of its sponsored workers transfer to Company C under TUPE. Company C already holds a valid Skilled Worker sponsor licence. Both Company B and Company C report the change within 20 working days. Company B retains its licence for its remaining sponsored workers. Company C confirms it accepts responsibility for the transferred workers from the date they move.
Ownership changes higher up the corporate group
Not every change of ownership in a corporate group affects the sponsor licence. Where the change happens one or more steps above the licensed sponsor in the corporate structure, and the licensed sponsor itself remains the same legal entity, no new sponsor licence is normally required.
Example: Company A is the direct owner of Company B, which holds a sponsor licence. Company A is then acquired by Company D. Company B itself does not change. It remains the same legal entity and the same direct employer of its sponsored workers. Company B keeps its existing sponsor licence. It must, however, still report the change via the SMS within 20 working days as a change to its organisation.
What happens to sponsored workers?
What happens to sponsored workers in a merger, takeover or similar business change depends on whether they move to a new sponsor and whether the new sponsor holds the right licence.
When sponsored workers transfer under TUPE or similar statutory protection, they do not need to make a new immigration application. The new sponsor does not need to assign a new CoS, provided all of the following conditions are met, such as:
- The new sponsor has a valid sponsor licence in the relevant route
- The new sponsor confirms it accepts responsibility for the worker
- The worker’s duties remain unchanged
The new sponsor takes on full responsibility as the transferred workers’ sponsor from the date they move. It must meet all associated sponsor duties from that date.
If the new sponsor does not hold the correct licence, it must apply for a new sponsor licence or apply to extend the scope of its existing licence within 20 working days of the workers moving. If it does not make a valid application within that time, or if the application is refused, the transferred workers’ immigration permission will be cancelled. The exception is workers who can already be sponsored under the new sponsor’s existing licence.
