A sponsor licence does not automatically move with a business when ownership changes.
That single point can have significant consequences in a merger, acquisition or corporate restructuring.
A company may continue trading under exactly the same name. The employees may remain at the same desks. Their salaries, managers and jobs may be unchanged. From an operational perspective, Monday morning may look no different from Friday afternoon.
Yet a change in the company’s direct ownership can mean that the existing sponsor licence can no longer continue in its present form.
The Home Office sponsor guidance is explicit: a sponsor licence is not transferable.
Where there is a change in direct ownership, including a sale of the business as a going concern or a share sale transferring the controlling number of shares to a new owner, the existing licence will normally be revoked or, where sponsored workers have moved onto another sponsor’s licence, made dormant. A new sponsor licence may then be required.
There are also reporting and application deadlines.
Changes involving mergers, takeovers, de-mergers and similar transactions generally need to be reported within 20 working days. Where workers transfer to an organisation that does not already hold the necessary sponsor licence, a valid sponsor licence application may also need to be made within 20 working days of the transfer.
That makes sponsor licensing something to consider before completion, not something for HR to discover afterwards.
The first rule: a sponsor licence belongs to the licensed organisation
A sponsor licence is granted to a particular organisation following a Home Office assessment of that organisation.
The Home Office considers matters including who owns and controls it, whether it is genuinely operating, who manages sponsorship and whether it is capable of complying with its duties.
The licence therefore does not behave like an ordinary business asset.
It cannot simply be included in an asset purchase agreement and transferred to the buyer.
Nor can the parties decide between themselves that the buyer will inherit it because employees are transferring.
The commercial transaction and the sponsorship position have to be considered separately.
That distinction is particularly important in corporate transactions because the word “business” can mean different things.
A buyer may acquire shares in a company.
It may acquire only the assets and activities of a business.
Two companies may merge.
One division may be carved out.
Employees may transfer under TUPE.
A company may remain exactly the same legal employer but acquire a new direct shareholder.
Those structures do not necessarily produce the same sponsorship outcome.
“I would never treat the sponsor licence as an item on the asset list. The question is not whether the commercial deal says the business transfers. We need to identify the licensed entity, who directly owns it before and after completion, where the sponsored workers will be employed and which organisation will carry sponsorship responsibility afterwards.”
Abdul Jabbar, Principal Immigration Adviser
Why direct ownership matters
One of the more easily missed parts of the current sponsor guidance concerns direct ownership.
Suppose Company A holds a Skilled Worker sponsor licence.
Its shares are owned entirely by Holding Company B.
The wider group decides to restructure. Company A remains Company A. It continues employing the same people and carrying on exactly the same business.
But ownership of Company A is transferred from Holding Company B to another group company, Holding Company H.
The ultimate parent remains the same.
Commercially, the restructuring may feel entirely internal.
For sponsor licensing purposes, however, Company A now has a new direct owner.
The current Home Office guidance gives effectively this example and states that Company A must apply for a new sponsor licence, even though the ultimate owner remains unchanged and TUPE does not apply because there has been no change of employer.
That is a good illustration of why immigration due diligence should examine the actual ownership chain rather than rely on a general statement that “the group is not changing”.
What about a normal share sale?
A share acquisition deserves particular attention.
In a conventional share sale, the employing company remains the same legal entity.
If Buyer Ltd acquires the shares in Target Ltd, Target Ltd still employs its workers after completion.
There may therefore be no TUPE transfer of employment simply because the shares changed hands.
It can be tempting to conclude that nothing needs to happen to the sponsor licence because the employer has not changed.
That conclusion may be wrong.
If the transaction results in a change in Target Ltd’s direct ownership, such as the controlling number of shares being transferred to a new owner, the sponsor guidance says the existing sponsor licence will normally be revoked or made dormant and a new licence is required if sponsorship is to continue.
The Home Office provides an example of a sponsor company transferring the controlling number of its shares to a private individual. The company continues trading and nothing else changes, but because its direct ownership changes it must report the transaction and apply for a new sponsor licence within 20 working days. The sponsored workers can then be moved to the new licence without making change of employment applications, provided the relevant sponsorship requirements are met.
That is an important distinction between employment continuity and sponsor licence continuity.
The employer can remain the same.
The sponsor licence may still need to change.
What if the ownership change is higher up the corporate group?
Not every transaction somewhere in the ownership chain automatically requires a new sponsor licence.
The Home Office distinguishes a change in the sponsor’s direct ownership from a transaction that is one or more levels removed from the sponsor.
Its current guidance gives an example involving a corporate group where Company A is the licensed sponsor and is directly owned by Company B.
The ultimate group sells Company B.
Company B continues to own Company A.
Company A therefore has the same direct owner before and after the transaction.
In that example, the Home Office says Company A must report the change but is likely to be able to continue using its existing sponsor licence, provided there is no relevant change to its operations or its workers’ jobs, terms and conditions.
This is why simply asking whether “the owner has changed” can be too crude.
The ownership chain needs to be mapped properly.
Who directly owns the licensed sponsor before completion?
Who will directly own it afterwards?
Does the employing entity itself change?
Do sponsored workers move?
Do its operations materially change?
Those facts determine the sponsorship analysis.
Asset sales create a different question
An asset purchase commonly involves the buyer acquiring some or all of the activities, assets and goodwill of a business rather than acquiring shares in the existing company.
Employees may move from Seller Ltd to Buyer Ltd as part of that transaction.
Where sponsored workers change employer and their employment transfers under the Transfer of Undertakings (Protection of Employment) Regulations 2006, commonly called TUPE, or similar legal protection, the sponsor guidance contains provisions allowing their sponsorship to move without each worker necessarily making a new immigration application.
But several conditions have to be satisfied.
The new sponsor must hold the appropriate sponsor licence, or make the necessary sponsor licence application within the relevant period, and it must accept full sponsorship responsibility for the transferring workers.
The workers’ duties must also remain unchanged for the specific concession allowing them to transfer without a new application for permission.
Whether TUPE legally applies to a particular transaction is an employment law question. It should not be decided simply from sponsor guidance.
The immigration analysis should follow the properly established employment position.
TUPE does not transfer the sponsor licence
This distinction is particularly important.
TUPE may protect an employee’s employment when a business or service transfers.
It does not itself transfer the sponsor licence.
Suppose Seller Ltd holds a Skilled Worker sponsor licence and employs five sponsored employees.
Buyer Ltd acquires the relevant business and those employees transfer to Buyer Ltd under TUPE.
If Buyer Ltd already has an appropriate Skilled Worker sponsor licence, it can potentially accept sponsorship responsibility for those workers.
If Buyer Ltd does not hold the required licence, it must make a valid sponsor licence application, or apply to extend the scope of an existing licence, within 20 working days of the workers moving to it.
If it fails to make a valid application within that period, or the application is subsequently refused, the transferred workers’ immigration permission can be cancelled, except for any workers who can properly be sponsored under another existing licence held by the buyer.
TUPE protects the employment relationship.
The sponsor regime still requires the new employer to be authorised to sponsor.
They are separate legal frameworks.
Do transferring sponsored workers need new visas?
Not always.
Where a sponsored worker changes employer under TUPE or similar protection, current sponsor guidance says they do not need to make a new application for immigration permission and the new sponsor does not need to assign a new Certificate of Sponsorship, provided:
the new sponsor has a valid licence covering the relevant route,
the new sponsor accepts responsibility for the worker,
and the worker’s duties remain unchanged.
This can make a properly planned transaction considerably simpler.
The worker may move from one sponsoring employer to another without going through a fresh Skilled Worker application simply because the business transferred.
But that concession should not be stretched beyond its terms.
If the worker’s role changes materially as part of the transaction, there may be a separate immigration question.
Likewise, if they move to an organisation without the necessary sponsor licence and no valid application is made within time, the position becomes significantly more serious.
The 20 working day rule needs to be built into the transaction timetable
Sponsor guidance repeatedly uses a 20 working day period for mergers, acquisitions and similar corporate changes.
The old sponsor must generally report the relevant transaction through the Sponsorship Management System within 20 working days.
Where the acquiring organisation already holds the appropriate licence, it must report that it has taken responsibility for transferring sponsored workers within the same general period.
If the new employer does not hold the necessary licence, it must make a valid sponsor licence application within 20 working days of the workers transferring to it.
That may sound generous when the transaction is still months away.
It can feel very different after completion.
The corporate team moves on to post-completion matters.
HR is dealing with payroll, systems access, benefits and employee communications.
Directors change.
Email accounts disappear.
The old Level 1 User leaves.
Then somebody remembers that several employees are sponsored.
Twenty working days is not a comfortable period in which to first understand the sponsorship implications, gather supporting documents and prepare a new licence application.
The better approach is to know before completion what needs to happen afterwards.
Complete takeovers and mergers
Where an organisation is completely taken over or merged into another organisation and all sponsored workers move to the new organisation, both sides may have responsibilities.
The outgoing sponsor generally needs to report the change within 20 working days and identify the sponsored workers moving to the new organisation.
Where any sponsored workers are not moving, that also needs to be reported.
The outgoing organisation may need to surrender its licence or have it made dormant depending on the circumstances.
The incoming organisation needs to establish whether it already holds the relevant sponsor licence.
If it does, it must report that it is accepting sponsorship responsibility for the transferred workers.
If it does not, it needs to make the appropriate licence application within 20 working days of the transfer.
The Home Office can then provide the new sponsor with limited access to the former sponsor’s SMS records so it can continue reporting relevant worker activity.
This is one reason sponsor records should be included in transaction handover arrangements.
The buyer is not simply acquiring employees.
It is acquiring continuing reporting responsibilities.
Partial acquisitions can be more complicated
A partial business sale can create two sponsorship populations.
Some sponsored workers transfer to the buyer.
Others remain with the seller.
The seller may therefore continue as an active sponsor after the transaction.
The Home Office guidance recognises this.
Where the old sponsor retains sponsored workers, it remains responsible for them and must continue reporting their activity.
It must report the workers who have moved to the new organisation and may need to adjust its Certificate of Sponsorship allocation.
The new sponsor takes responsibility for those who transferred and must comply with its own reporting obligations.
A partial disposal therefore needs a worker-by-worker analysis.
Which legal entity employs each sponsored worker before completion?
Which entity will employ them afterwards?
Which workers transfer?
Which remain?
Which sponsor licence currently covers them?
Which licence will cover them after completion?
A spreadsheet is often more useful here than a lengthy legal narrative.
Each sponsored worker should have a clear before and after position.
What happens if the seller is left with no sponsored workers?
An organisation that sells part of its business may remain in existence but lose all of the workers it was sponsoring.
Current guidance allows the old sponsor to surrender the licence if it no longer needs it.
If the organisation thinks it may sponsor workers again in the future, it can choose to retain the licence. In that situation, the Home Office says its Certificate of Sponsorship allocation will be reduced to zero until future sponsorship needs are established.
The seller should therefore make a conscious decision.
Do we expect to recruit sponsored workers again?
Does the remaining business still qualify for and require the licence?
Or should the licence now be surrendered?
Leaving the position unattended because “all the sponsored staff went with the buyer” is not sponsor management.
What documents will the Home Office want?
Once a merger, takeover or similar change has been reported, the Home Office can request evidence supporting the transaction.
The guidance says this may include documents listed in Appendix A to the sponsor guidance or other documents considered appropriate to the circumstances.
The evidence required will depend on what happened.
That might include corporate documentation showing the ownership change, documents concerning the transfer of the business, organisational information, evidence relating to employees who moved, or material showing the relationship between the old and new entities.
The transaction documents and the SMS report should tell the same story.
If the sponsor says there has been no change in direct ownership but Companies House records suggest otherwise, the position will require explanation.
If the buyer says sponsored workers transferred on a particular date, the employment and payroll records should support that.
Immigration reporting should not be prepared in isolation from the legal transaction documents.
Sponsor due diligence should happen before completion
For an acquisition involving sponsored workers, immigration due diligence should answer more than:
Does the target have a sponsor licence?
That is only the first question.
A useful review should establish:
What sponsor routes does the target hold?
What is the licence rating?
How many sponsored workers are there?
When does each worker’s immigration permission expire?
Are there any pending visa applications?
Are there Certificates of Sponsorship already assigned to people who have not yet started?
Has the target had a Home Office compliance visit?
Has the licence ever been suspended or downgraded?
Are there known reporting failures?
Do salaries currently match the Certificates of Sponsorship?
Do actual job duties match the sponsored roles?
Are right to work records complete?
Are Key Personnel likely to remain after completion?
Does the transaction change direct ownership?
Will the employing entity change?
Will TUPE or similar protection apply?
Does the buyer already hold the relevant sponsor licence?
If not, when must it apply?
This is not unnecessary transaction detail.
The answers determine whether the buyer can continue employing a workforce it may regard as commercially important.
“Sponsor due diligence should tell the buyer what it is actually inheriting. A licence showing as A-rated on the public register does not tell you whether salaries have been reported correctly, whether the sponsored roles still match the jobs or whether a transaction will require a fresh licence. Those are questions to resolve before completion where possible.”
Abdul Jabbar, Principal Immigration Adviser
Check the sponsored workers, not just the licence
A transaction can expose historic sponsor compliance issues.
Imagine a buyer acquires a business with ten sponsored workers.
During due diligence it discovers that three employees have moved permanently to different work locations but the changes were never reported.
Another worker’s salary was reduced eight months ago.
One Level 1 User left the company but is still listed on the licence.
The target still holds an A-rated licence.
That does not make the underlying problems disappear.
The parties need to understand who is responsible for reporting or correcting them and whether the issues affect the transaction, the sponsor licence application or the ability of the buyer to accept sponsorship responsibility.
This is particularly important where the buyer itself needs to make a fresh sponsor licence application.
The Home Office will assess the new applicant’s suitability.
A rushed application filed without understanding inherited workforce issues is not a good starting point.
Key Personnel need their own transaction plan
Corporate transactions often change the people managing the business.
The Authorising Officer may leave.
The Head of HR may transfer to another group company.
The only Level 1 User may lose access to their email account immediately after completion.
That can create a sponsorship problem at exactly the moment when reports need to be made.
The deal timetable should therefore identify:
who will control the SMS before completion,
who will report the transaction,
who will manage the licence afterwards,
whether a new Authorising Officer or Level 1 User is required,
and whether access needs to be preserved temporarily for post-completion reporting.
Current guidance allows the Level 1 User at the new sponsor organisation to report certain merger or takeover changes where the original Level 1 User is no longer available.
That is useful, but it should not replace proper planning.
What about workers who are not transferring?
If a sponsored worker does not move to the new organisation as part of a complete takeover or relevant transfer, the existing sponsor must report that position.
Their sponsorship may end.
The worker’s immigration position can then be affected because their permission was connected to employment with that sponsor.
The parties should therefore identify non-transferring sponsored workers before completion.
That includes people who:
are being made redundant,
are remaining with part of the seller’s business,
have resigned during the transaction,
or will move into a role that cannot continue under their existing sponsorship.
They should not disappear from the deal spreadsheet simply because they are not transferring.
Their sponsorship still needs to be dealt with.
Corporate restructures within the same group still need analysis
Internal reorganisations are often treated as low risk because no external buyer is involved.
For sponsor licensing, that can be misleading.
If Company A remains directly owned by Company B before and after an internal restructuring, and only an entity higher in the ownership chain changes, a new sponsor licence may not be required, although the change may still need to be reported.
If Company A moves from direct ownership by Company B to direct ownership by Company H, it may need a new licence even if both B and H are owned by exactly the same ultimate parent.
The Home Office examples deliberately draw this distinction.
The relevant question is therefore not:
“Is this only an internal restructure?”
It is:
“What precisely changes in relation to the licensed sponsor?”
Do not leave sponsorship to the post-completion checklist
Some sponsor licence actions cannot sensibly be completed before the transaction takes effect because the reporting duty follows the change.
That does not mean the analysis should wait.
Before completion, the parties should know:
whether a new licence will be required,
who will submit it,
what documents will support it,
which workers are transferring,
whether TUPE or similar protection applies,
whether duties remain unchanged,
which SMS reports will be needed,
who will make those reports,
and what happens to the old licence.
Then the post-completion work becomes execution rather than discovery.
That distinction is valuable when deadlines are running.
A practical transaction example
Consider the following.
Company A holds a Skilled Worker sponsor licence and employs six sponsored software professionals.
Company B agrees to buy the whole business of Company A through an asset purchase.
The employees transfer to Company B under TUPE.
Company B does not currently have a sponsor licence.
The six employees will continue performing the same jobs.
From a sponsorship perspective, Company B cannot simply rely on Company A’s licence.
Company A must report the relevant transaction and sponsored worker transfer.
Company B must make a valid sponsor licence application within 20 working days of the workers transferring to it.
If Company B obtains the appropriate licence and accepts full sponsorship responsibility, the workers do not ordinarily need new Skilled Worker applications simply because of the TUPE transfer, provided the applicable conditions are satisfied.
If Company B fails to apply within the required period, or its application is refused, the workers’ immigration permission may be cancelled.
Now change one fact.
Company B already holds a Skilled Worker sponsor licence.
It does not need a completely new licence simply to accept the transferred workers, assuming its existing licence appropriately covers them.
But it still needs to report the transaction and accept full sponsorship responsibility.
The immigration work has not disappeared.
It has changed.
A share sale example
Now suppose Company A itself is sold.
It continues to employ the same six people.
There is no employee transfer.
A new corporate buyer acquires the controlling shares.
It might appear that sponsorship should continue untouched because Company A remains the employer.
The sponsor guidance reaches a different conclusion.
The change in direct ownership means Company A must report the transaction and make a new sponsor licence application within 20 working days if it wishes to continue sponsoring.
The workers can potentially be moved onto the new licence without making change of employment immigration applications because their employer and employment remain unchanged.
This is perhaps the most important scenario for corporate teams to understand.
No change of employer does not necessarily mean no change of sponsor licence.
What happens if the new sponsor licence application is refused?
The consequences can be significant.
Where workers have transferred under TUPE or similar protection to a new organisation and that organisation was required to obtain a sponsor licence, failure to submit a valid application within 20 working days, or refusal of that application, can lead to those workers’ immigration permission being cancelled.
The application therefore deserves proper preparation.
A corporate transaction is not a reason for the Home Office to lower the normal sponsor licence eligibility and suitability standards.
The incoming sponsor still has to qualify.
If due diligence identifies concerns that could make the application difficult, those issues should be considered before completion where the commercial timetable allows.
Ten questions before completing a transaction involving a sponsor
Before completion, the parties should be able to answer the following:
- Which legal entity currently holds the sponsor licence?
- Who directly owns that entity now?
- Who will directly own it after completion?
- Will any sponsored worker change employer?
- If workers transfer, does TUPE or similar protection apply?
- Does the incoming employer already hold the appropriate sponsor licence?
- If not, when must its new licence application be submitted?
- Are any sponsored workers changing duties, salary or work location as part of the transaction?
- Who will make the required SMS reports within 20 working days?
- Is there anything in the target’s existing sponsor compliance history that the buyer needs to understand?
If those questions have not been answered, the immigration part of the transaction is probably not ready.
Frequently asked questions
Does a sponsor licence transfer to a buyer when a company is sold?
No.
A sponsor licence is not transferable.
What happens next depends on the structure of the transaction, including whether there has been a change in direct ownership and whether sponsored workers change employer.
Does a share sale affect a sponsor licence?
It can.
Where a share sale transfers the controlling number of shares so that the sponsor has a new direct owner, the existing sponsor licence will normally be revoked or made dormant and a new licence may be required.
This can apply even though the employing company itself remains unchanged.
If the ultimate parent company stays the same, do we need a new sponsor licence?
Possibly.
If the licensed company acquires a new direct owner as part of an internal group restructuring, a new licence may be required even where the ultimate parent remains the same.
If the ownership change is further up the chain and the sponsor retains the same direct owner, the current Home Office guidance indicates that a new licence may not be required, although the change still needs to be considered and reported where appropriate.
Does TUPE transfer a sponsor licence?
No.
TUPE may protect the employment relationship, but the new employer still needs the appropriate Home Office sponsor authorisation.
Do sponsored workers need new Skilled Worker visas after a TUPE transfer?
Not necessarily.
Where the conditions in the sponsor guidance are satisfied, including the new sponsor holding the relevant licence and accepting responsibility, and the worker’s duties remaining unchanged, the worker does not normally need a new immigration application simply because of the TUPE transfer.
How long do we have to report a merger or takeover?
Relevant mergers, takeovers, changes of ownership and similar transactions generally need to be reported to the Home Office within 20 working days of the change.
How long does a buyer have to apply for a sponsor licence?
Where sponsored workers transfer to a new employer under TUPE or similar protection and the new employer does not already hold the required sponsor licence, it must generally make a valid application within 20 working days of the workers moving to it.
What happens if the new employer does not apply in time?
The immigration permission of transferred sponsored workers can be cancelled if the new employer fails to make a valid application within the required period.
Can an existing sponsor licence be used for workers acquired with another business?
Potentially, yes.
If the acquiring organisation already holds the relevant sponsor licence, it can accept sponsorship responsibility for qualifying transferring workers. It still needs to follow the relevant reporting process.
Should sponsor licence issues be dealt with before or after completion?
The formal reporting may take place after the transaction, but the analysis should normally happen before completion.
The parties should know whether a new licence is required, which workers are transferring, who will make the reports and what the relevant deadlines will be.
Immigration due diligence should follow the transaction, not sit beside it
Sponsor licensing can become awkward in corporate transactions because it uses concepts that do not always align neatly with the commercial shorthand.
A business may be “the same business” commercially while having a new direct owner for sponsor licensing purposes.
An employee may transfer automatically under employment law while their new employer still needs Home Office authorisation to sponsor them.
A group restructure may involve no external sale and still trigger a new sponsor licence requirement.
That is why the sponsorship analysis should start with the structure.
Identify the licensed legal entity.
Map the ownership before and after completion.
Identify every sponsored worker.
Establish who will employ them after the transaction.
Then apply the sponsor rules to those facts.
The process is much more reliable than asking after completion whether the old sponsor licence can somehow be moved across.
It cannot.
What can be managed is the transition.
And where sponsored workers are important to the business being bought, sold or reorganised, that transition deserves to be considered with the rest of the transaction rather than after it.
Next in the Employing International Talent series: Sponsor Licences for Start-ups and Small Businesses
Planning a transaction involving a licensed sponsor?
If your business is buying, selling or restructuring an organisation that employs sponsored workers, you can request a Free Case Assessment.
Tell us which entity currently holds the sponsor licence, the proposed ownership or employer change, the number of sponsored workers involved and the expected completion date.
We can then consider the sponsorship implications and whether Knightsbridge Immigration can assist.
Free Case Assessment
