Our immigration team often provides specialist assistance to clients involved in corporate transactions, for example undergoing corporate restructuring or ownership change.

In this article we explore the immigration related implications that can arise from corporate transactions and the duties on organisations with sponsorship licences to ensure the validity of their sponsorship licence remains intact, post transaction.

Are sponsorship licences transferable?

The importance of our involvement is attributed to the financial risk and sanctions involved in failing to notify the Home Office of any structure and ownership changes, rendering sponsorship licences suspended or in the most extreme cases, revoked. These decisions not only impact the organisation's ability to secure existing and future licences, but also the migrant workers who are at risk of their visas being prematurely cancelled. As a result, failing to instruct strategic immigration advice in corporate transactions can carry perilous consequences.

An important principle in sponsor licences and the bedrock of our involvement in the corporate transactions is the prohibition in the immigration rules on sponsor licences being transferable. This restriction renders corporate entities unable to transfer their existing sponsor licence to the new entity that will be taking over, nor can it be sold to the acquiring entity. This inability to transfer can present a challenging hurdle if immigration expertise is not engaged within the correct time frame.

Compliance: your duty to report

These considerations must take place before any corporate transactions are completed, as the reporting duties of the ownership structure change must be made within 20 days of any change occurring and must be recorded on the Sponsorship Management System (SMS).

Under such a tight timescale, the requisite evidence of corporate transactions must be prepared and submitted to the Home Office. Failing to do this preparation in advance runs the risk of not having the required evidence in time to submit within the 20 days, subsequently causing further delays for the Home Office’s decision. This can also affect sponsored migrant workers as they can end up being sponsored by a UK entity which no longer exists or does not have a licence to sponsor. Where there is a breach of the immigration rules, it could potentially lead to the sponsored migrant’s visa being prematurely cancelled with the effect of them only having 60 days to remain in the UK. Additionally, building in sufficient time is necessary to ensure the proper considerations have been made to make an informed decision as to whether a new licence application is required, or if a submission to the Home Office to simply notify of the changes is the correct course of action.

Corporate structure change

If your organisation holds a sponsorship licence, it is important to be aware of the different events that fall within the ambit of being unable to transfer the licence. These include:

• Direct change of ownership
• Share sale (part of, or the controlling number of shares i.e. 51% or more)
• Mergers/Takeover (wholly or partly)
• Organisation split to create new organisations (de-mergers)

Depending on the type of ownership or structure change listed above, specialist advice will need to be sought to provide tailored directions on how to overcome this change in ownership in respect of the sponsor licence held, and how to navigate compliance with the reporting and recording duties throughout this.

TUPE

Throughout the corporate change, if Transfer of Undertakings (Protection of Employment) Regulations 2006 (as amended) (‘TUPE’) is engaged, the transfer of all employees, including the overseas workers, will remain on the same terms and conditions. However, as like the previous corporate structure changes listed above, different circumstances can impact the duties of those involved in the transfer, with some circumstances resulting in a simple notification and others resulting in a new sponsor licence application, regardless of if TUPE has been triggered.

Immigration due diligence

To prevent the extreme consequences for the company and migrant workers coming into fruition, our immigration team plays a small but crucial role in the due diligence process. During this investigation, our immigration specialists will be engaged to review the relevant immigration position within the entity. This will allow us to review the type of corporate change and create a tailored action plan on how to ensure the validity of your sponsor licence remains intact, and additionally, review other immigration matters within the company such as right-to-work checks, and ensure compliance with all record keeping is up to date. From undertaking this review, our team will be able to feed into the relevant transaction documents, through building in the relevant warranties and indemnities to protect your position in the transaction.

It is important to stress that failing to reflect an accurate picture can run into difficulties, leaving the acquiring entity under the impression they will be assuming a highly skilled and stable workforce, to finding out their global worker visa holders are unable to continue in their employment, resulting in a skills shortage and subsequently rending the entity unable to perform their activities. Failing to ensure transparency of the immigration position within an entity can lead to the acquiring entity taking on burdensome responsibilities, that they did not consider before the purchase.

Getting help before its too late

Due to the complexities of corporate transactions being focused on the important corporate and financial considerations, the immigration aspect is often overlooked. However, failing to give proper consideration to the immigration position carries both financial and personal risks. At Burness Paull, we want to mitigate those risks from the outset with our team aiming to ensure strategic advice is engaged before it is too late.

Our immigration solicitors have assisted with various unique and challenging sponsor licence applications and corporate assistance, and we have a wealth of experience navigating the compliance requirements. For further information, please contact Grace McGill or Jamie Kerr.

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