The Tier 2 and 5 points-based system sponsorship guidance published in November 2015 introduces Annex 8, "Further Help on Mergers and Takeovers", which is a diagram endeavouring to clarify the various changes in corporate ownership that trigger the need for a new sponsor licence application.

Section 13 of the sponsorship guidance sets out the circumstances in which an application for a new sponsor licence will be required following a change in corporate structure. It states that a new sponsor licence will be required when there is a 'change in ownership'. However, this term has not previously been defined in the guidance, leaving businesses to determine the level of change that will in fact trigger the need to submit a new licence application – and risk significant penalties if they get it wrong.

The introduction of Annex 8 is welcome, particularly because it clarifies that a new licence is required only when the sponsoring entity has a new direct owner. This is illustrated by a flowchart giving examples of various scenarios and setting out what to do if a company is involved with a merger, takeover or similar change.

While Annex 8 does not cover all of the various types of corporate transaction that may be encountered, it is a step in the right direction and provides some transparency in relation to the Home Office guidance.

For further information on this topic please contact Ben Sheldrick at Magrath LLP by telephone (+44 20 7495 3003) or email (ben.sheldrick@magrath.co.uk). The Magrath LLP website can be accessed at www.magrath.co.uk.

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