Since the introduction of the Points Based System (PBS) in 2008, the UK’s immigration rules have tightened up considerably. Post PBS  it generally takes longer and can be more difficult to get a working visa and in general the rules continue to become more, rather than less, complex.

Another consequence of PBS is that discretion and flexibility have generally been eliminated from the UK’s immigration system. An application will fail if it does not meet the strict requirements of the rules, regardless of the importance of the application or the candidate. There are limited rights of appeal - it is essential to get it right first time.

UK based companies that employ or wish to employ non-European nationals are likely to do so under Tier 2 of the PBS. Tier 2 is the route for workers carrying out a skilled role who are paid over and above a minimum set salary level. In order to sponsor a migrant under Tier 2 a company will first need to apply for a sponsor licence and as a sponsor will be required to comply with a number of specific sponsor management duties and rules.

Sponsor Licences in the context of Share and Asset Sales

Many sponsor companies who employ sponsored migrant workers are already aware that, if they sell all or part of their business by way of an asset sale the purchasing company is required to apply for a sponsor licence within 20 working days of completion and “adopt” the migrants’ visas in order to maintain their Tier 2 status.

However sponsors may not realise that the same requirements apply to share sales. Paragraph 13.5 of the sponsor guidance states:

If there is a change in ownership of your organisation or business, for example if it is sold as a going concern or a share sale results in the controlling number of shares being transferred to a new owner, your sponsor licence will be revoked. The new owners must then apply for a new sponsor licence, unless they already have one, if they wish to continue employing any migrants that you were sponsoring.”

UK Visas & Immigration (UKVI) have confirmed that this rule applies to the sale of shares in not only the sponsor, but also to the sale of shares in the sponsor’s parent company or even an ultimate parent company. This also applies where the sale has no direct impact on the sponsor’s licence or the personnel managing it.

What should you do?

Where the shares in a sponsor company are being transferred, the purchasing company will need to apply for a new sponsor licence within 20 working days of completion and, when it is granted, apply to adopt any existing Tier 2 visas. We advise that the purchaser prepares the new sponsor licence and supporting documentation at the same time as other pre-completion documentation. The new licence can then submitted directly following completion.

If a parent company or another shareholder’s shares are being sold, we advise you to notify UKVI of this proposed change to the sponsor’s share structure on the sponsor management system in advance of completion and ask UKVI for guidance. UKVI will confirm whether a new licence is required. We consider that they will require a new licence to be awarded in most cases. Any such application must then be submitted within 20 working days of completion and, when it is granted, the purchasing company must apply to adopt any existing Tier 2 visas.

Note that, under new rules introduced on 6 April 2015, more extensive background information about a sponsor must be submitted when a sponsor licence application is made. Furthermore, whilst UKVI can visit and audit a sponsor at any time, they are more likely to do so when a new sponsor licence application is submitted or if they are concerned that a sponsor has not complied with the licence rules. It is therefore important that sponsors ensure that they are compliant with their sponsorship duties (particularly around record keeping and reporting) at this time.

Consequences of not complying

If a company does not apply for a new sponsor licence in accordance with paragraph 13.5, the existing licence, and the visas of any Tier 2 sponsored migrants, will be curtailed. The affected sponsored migrants will have 60 days to find new sponsorship (during which time they cannot work) or they and any dependants will be required to leave the UK and will not be able to return to the UK under Tier 2 for a 12 month “cooling off” period.

In the event that a company does not hold a valid sponsor licence they will not have legal permission to employ the sponsored Tier 2 migrants. UKVI can levy a fine of £20,000 for each illegal worker employed. If the company is considered to have knowingly employed a migrant worker then the fine can be unlimited and, in extreme circumstances, the directors of the company could be imprisoned.