Corporate Transactions, Restructures And Insolvencies

• Published date: 30 August 2023
• Law Firm: TLT Solicitors
• Author: Ms Joanne Hennessy and Megan Anderson

Understandably the focus of corporate transactions, restructures and insolvencies tends to be big ticket issues such as finance, tax and assets.

Immigration considerations are often overlooked, potentially resulting in hidden risks and headaches for those involved. In this article, we look at the implications of such scenarios in two key compliance areas: sponsor licences and the prevention of illegal working.

What is a sponsor licence?

In brief, a sponsor licence allows a business operating in the UK to employ migrant workers for certain prescribed jobs. There are currently over 78,000 sponsor licences registered with the Home Office and the numbers are continuing to increase post Brexit and as we recover from the pandemic. Accordingly, even if organisations have so far avoided a sponsor licence under the points-based system, the chances of stumbling into this world through acquiring a licensed business or team of sponsored workers are now significantly increased.

Sponsor licences, although sought after by businesses, come with a vast number of compliance duties, including specific time-sensitive duties triggered by certain corporate events. It's extremely important to be aware of the duties triggered, and the timescales for compliance. If you are buying a business which holds a sponsor licence and a key asset of that business is its staff (some of whom may be sponsored migrants), and all the expertise and skills they bring, read on - as failing to comply with the relevant duties triggered by a corporate transaction could mean the difference between retaining those staff and losing them.

How do corporate transactions, restructures and insolvencies impact a sponsor licence?

This will depend on the specific circumstances; however, the starting point should always be that sponsor licences are non-transferable. Therefore, if the business affected by changes holds a sponsor licence, specialist immigration advice should be sought at the outset due to the time sensitive compliance duties that will arise. What steps should be taken will depend on whether:

• there is a change in direct or controlling ownership through the sale of shares
• the business is sold as a going concern and staff transfer under TUPE
• the business is partly or wholly taken over by another organisation
• the business is splitting to form a new organisation
• the business enters insolvency.

Such situations will generally trigger a duty to report the organisational change to UK Visas and Immigration (UKVI) within 20 working days. Further, any potential impact on...