Sponsor Licence Following a Share Sale: Employer Guide

Sponsor Licence Following a Share Sale: At a Glance

A share sale can affect a UK sponsor licence even where the target company remains the same legal entity, continues employing the same workforce and carries on trading without interruption.

The Home Office applies separate rules to changes in the ownership of licensed sponsors. Where a transaction constitutes a relevant change in direct ownership under C4.5, including the transfer of a controlling number of shares to a new owner, the existing sponsor licence will be revoked or, where sponsored workers have transferred under the relevant arrangements, made dormant.

Where the company remains the employer and intends to continue sponsoring workers, a new sponsor licence application may be required within 20 working days of the ownership change. Different considerations can apply where ownership changes higher up a corporate group but the licensed company’s immediate ownership and employment arrangements remain unchanged.

For buyers, the key questions are whether the acquisition affects the target’s licence, whether a replacement application will be required and whether sponsored workers can continue under the existing immigration arrangements. For sellers and target management, the priorities are accurate disclosure, maintaining compliance through completion and ensuring that the required Home Office reporting and licensing steps are carried out on time.

Immigration due diligence should also review the target’s wider workforce compliance position, including the right to work regime in force from 1 October 2026 where relevant to worker, subcontractor or other covered engagement arrangements.

This guide explains how a share sale can affect a sponsor licence, when direct or indirect ownership changes require different treatment, the Home Office reporting obligations, the position of sponsored workers and the steps buyers should take before and after completion.

 

Section A: What Happens to a Sponsor Licence Following a Share Sale?

 

In a conventional share sale, the buyer acquires shares in the target company. The target usually remains the same legal entity and continues to hold its contracts, assets, liabilities and employment relationships.

Sponsor licence continuity is assessed separately. The Home Office looks at changes in ownership and control as well as the identity of the licensed organisation, so a company can remain legally unchanged while its sponsorship position changes.

 

1. Does a Sponsor Licence Transfer to the Buyer in a Share Sale?

 

No. A sponsor licence is granted to a specific organisation following an assessment of its eligibility, suitability and ability to comply with sponsor duties.

It cannot be assigned to another company through a share purchase agreement or treated as a commercial asset transferred with the transaction.

In a share acquisition, however, the licensed company itself may remain in existence. The key issue is therefore whether the ownership change affects that company’s continuing authorisation under the sponsor licensing regime.

The parties should identify the licensed entity and its ownership before and after completion before deciding whether the existing licence can continue.

 

2. When Can a Share Sale Trigger a New Sponsor Licence Requirement?

 

A share sale can trigger a new sponsor licence requirement where it amounts to a relevant change in direct ownership under the Home Office rules.

This can arise where a controlling number of shares in the licensed company is transferred to a new owner. In those circumstances, the existing licence will be revoked or, where sponsored workers have transferred under the relevant arrangements, made dormant.

Where the target remains the employer and intends to continue sponsoring workers, the required replacement licence application must be made within 20 working days of the ownership change.

The continued use of the same trading name, company number, premises or employment contracts does not remove that requirement.

 

3. How Do Direct and Indirect Ownership Changes Differ?

 

The Home Office distinguishes changes in the direct ownership of the licensed company from some changes occurring higher in the corporate structure.

A direct change can arise where shares in the sponsor itself are transferred to a new controlling owner. An indirect change may arise where shares in a parent or ultimate holding company are acquired while the licensed company’s immediate shareholder remains unchanged.

Those transactions can produce different sponsor licence outcomes. A replacement licence may be required following a relevant direct ownership change, while an indirect acquisition may not produce the same result where the sponsor’s immediate ownership and operating arrangements remain unchanged.

The analysis should therefore be based on the actual pre- and post-completion ownership structure, including any change of ownership affecting the licensed entity.

 

4. What Happens to Sponsored Workers After a Share Sale?

 

In a straightforward share sale, sponsored workers ordinarily remain employed by the same target company because the legal employer does not change.

Their immigration position still depends on the target maintaining appropriate sponsorship authority after the ownership change. Where the applicable Home Office continuity provisions are satisfied, existing sponsored workers may be able to continue without making new immigration applications solely because the shares have changed hands.

The employer should nevertheless review the sponsored workforce before completion, particularly workers with pending applications, approaching visa expiry dates or planned changes to their roles or employment arrangements.

Any subsequent transfer of employees to another group company should be assessed separately, as that can create additional business transfer and sponsorship requirements.

 

5. How Does a Share Sale Differ From an Asset Sale?

 

The legal mechanism of the acquisition determines which sponsorship rules need to be applied.

In a share sale, the target company ordinarily remains the employer and the principal sponsor licence issue is the effect of the ownership change. In an asset sale, employees may move to a different legal employer, potentially engaging the Home Office business transfer provisions and TUPE.

Issue	Share sale	Asset sale
What is acquired?	Shares in the target company	Specified assets or business operations
Legal identity of target	Ordinarily unchanged	Seller and buyer remain separate legal entities
Existing employer	Ordinarily remains the target company	May change where employees transfer
Sponsor licence	Ownership-change rules must be assessed	Business transfer and sponsorship rules must be assessed
Sponsored workers	May remain employed by the same company	May transfer to another employer
TUPE	Not ordinarily triggered by a straightforward share sale alone	May apply to a qualifying business transfer

 

The transaction should therefore be analysed by its legal effect, particularly where a share acquisition will be followed by a transfer of employees, assets or operations within the buyer’s group.

 

 

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Section B: Does a Sponsor Licence Remain Valid After a Share Sale?

 

A sponsor licence does not necessarily remain valid simply because the sponsoring company continues to exist following a share sale.

Under the Home Office sponsorship framework, where the transaction constitutes a relevant change in direct ownership under C4.5, the existing sponsor licence will be revoked or, where sponsored workers have transferred under the relevant arrangements, made dormant. Where the company remains the employer and wishes to continue sponsoring its workers, it must make the required new sponsor licence application within 20 working days of the change.

The legal position depends on the nature of the transaction and the rules applicable to the particular ownership change.

In particular, the Home Office distinguishes between direct changes to the ownership of a licensed organisation and certain indirect changes occurring higher up a corporate group.

This makes it important to distinguish between the company’s continued corporate existence and its continuing eligibility to hold a sponsor licence.

 

1. The company’s legal identity after a share sale

 

Under UK company law, a company has a legal personality separate from its shareholders.

Where its shares are sold, the company does not ordinarily cease to exist or become a different legal entity.

Its company registration number remains unchanged, and it generally continues to hold its existing assets, contracts and liabilities.

Its employees also ordinarily remain employed by the same company, without any automatic transfer of employment to the acquiring shareholder.

For commercial purposes, this continuity is one of the distinguishing features of a share acquisition.

However, sponsor licensing is a separate regulatory matter.

The Home Office can attach consequences to changes in the ownership of a sponsoring company even where the company remains legally unchanged.

As a result, employers should not assume that the continued existence of the same company registration number, PAYE reference or employment contracts is sufficient to preserve sponsor licence validity.

 

2. How changes in ownership affect sponsorship

 

The Home Office requires licensed sponsors to report specified changes to their organisational circumstances, including relevant changes of ownership.

Where the transaction constitutes a relevant change in direct ownership under C4.5, the existing sponsor licence will be revoked or, where sponsored workers have transferred under the relevant arrangements, made dormant.

Where the company remains the employer and wishes to continue sponsoring its workers, it must make the required new sponsor licence application within 20 working days of the change.

A direct change of ownership can arise where the controlling number of shares in the licensed company is transferred to a new owner.

By contrast, an indirect change may arise where a buyer acquires a parent company or another entity higher up the corporate structure without changing the immediate ownership of the licensed sponsor.

The Home Office’s published examples recognise that these situations can have different consequences.

Where the licensed organisation’s direct ownership, operations and workers’ employment arrangements remain unchanged, an indirect acquisition may not necessarily require a replacement licence.

However, the sponsor must still establish whether any reporting or other compliance requirements arise from the transaction.

The appropriate treatment must be determined by reference to the applicable Home Office guidance and the actual transaction structure.

 

3. When an existing sponsor licence may be affected

 

A share transaction is particularly likely to require detailed sponsor licensing analysis where it involves:

 

• The acquisition of all shares in a licensed sponsoring company.
• The acquisition of a controlling number of shares in the sponsoring company.
• A change in the company’s ultimate parent or controlling ownership structure.
• A corporate reorganisation involving changes in ownership between group companies.
• A transaction accompanied by changes to the sponsoring organisation’s operations or employment arrangements.

 

The precise consequences cannot be determined from these descriptions alone.

The parties must identify whether the transaction constitutes a relevant direct or indirect change of ownership, what reporting obligations arise and whether the organisation is required to make a fresh licence application.

Where a new licence is required, the business should not assume that the application will be approved simply because it previously held a licence.

The Home Office may reassess the organisation’s eligibility and suitability, including its compliance systems and the individuals responsible for sponsorship.

Any outstanding compliance concerns, reporting failures or previous enforcement action may therefore become relevant to the application.

 

4. Share sales that do not result in a relevant change of ownership

 

Not every movement in a company’s shareholding necessarily results in the same sponsor licensing outcome.

A minority share acquisition does not, by itself, establish a relevant direct ownership change. The transaction should be assessed to determine whether it nevertheless amounts to a change in direct ownership, transfer of the controlling number of shares or another takeover arrangement falling within C4.

Voting rights, shareholder agreements and other contractual arrangements may be relevant factual context, but should not be treated as an independent Home Office test.

Where the position is uncertain, the sponsoring organisation should establish the regulatory consequences before completion, allowing sufficient time to address any resulting reporting or licensing requirements.

 

 

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Section C: When Does a Share Sale Require a New Sponsor Licence?

 

Whether a company needs to apply for a new sponsor licence following a share sale depends on the nature of the ownership change and how the transaction falls within the Home Office’s sponsor licensing rules.

The central distinction is between a direct change in the ownership of the licensed organisation and an indirect change occurring higher up the corporate structure.

Under C4.5, where a controlling number of shares in a licensed organisation is transferred to a new owner, the existing sponsor licence will be revoked or, where sponsored workers have transferred under the relevant arrangements, made dormant. Where the company remains the employer and wishes to continue sponsoring its workers, it must make the required new sponsor licence application within 20 working days of the change.

By contrast, a transaction involving shares in a parent company does not necessarily have the same consequences where the licensed organisation’s immediate ownership and operating arrangements remain unchanged.

The assessment must consider the actual legal structure of the transaction, rather than simply whether the buyer regards the acquisition as a takeover, merger or corporate investment.

Employers should also distinguish between the requirement to report an ownership change and the requirement to apply for a new licence. These are separate regulatory obligations, and one does not automatically satisfy the other.

 

1. Acquisition of 100% of the shares in a licensed company

 

Where a buyer acquires all the shares in a company holding a sponsor licence, the transaction will ordinarily involve a direct change of ownership of the licensed organisation.

Although the target company remains the same legal entity, its ownership passes to the acquiring shareholder.

Under C4.5, this type of transaction will result in the existing sponsor licence being revoked or, where sponsored workers have transferred under the relevant arrangements, made dormant.

Where the target company remains the employer and wishes to continue sponsoring its workers, it must make the required new sponsor licence application within 20 working days of the change.

For example, Company A holds a Skilled Worker sponsor licence and employs 25 sponsored workers. Company B acquires 100% of Company A’s shares.

Following completion, Company A continues trading under its existing name and employing the same workers. Its company registration number and employment contracts remain unchanged.

However, the acquisition has resulted in a direct change of ownership of the licensed company.

Company A must therefore address the sponsor licensing consequences of that ownership change, including the applicable Home Office reporting and replacement licence application requirements.

The fact that the company remains operationally unchanged does not preserve the existing sponsor licence automatically.

The buyer should identify these requirements before completion and ensure that the company is prepared to make any necessary application within the prescribed period.

 

2. Acquisition of a controlling shareholding

 

A share sale does not necessarily involve the acquisition of all the shares in a company.

A buyer may instead acquire a controlling shareholding while the existing shareholders retain minority interests.

Where the transaction results in the transfer of a controlling number of shares to a new owner, it may fall within the Home Office’s direct change-of-ownership provisions.

The sponsor licensing consequences can therefore be similar to those arising from an acquisition of the entire issued share capital.

For example, Company A is owned by three shareholders. Company B acquires a controlling shareholding in Company A, while the remaining shares continue to be held by the original shareholders.

Company A remains the same legal entity and continues employing its sponsored workers.

However, the transaction has changed the direct controlling ownership of the licensed organisation.

Company A must assess the change against the Home Office’s sponsor guidance and comply with any resulting reporting and licensing requirements.

A minority or partial share acquisition does not, by itself, establish whether C4.5 applies. The parties should assess whether the transaction amounts to a change in direct ownership, transfer of the controlling number of shares or another takeover arrangement falling within C4. Voting or contractual rights may be relevant factual context but do not constitute a standalone Home Office test.

 

3. Indirect changes of ownership involving a parent company

 

An indirect change of ownership occurs where the ownership of a company higher up the corporate structure changes, without necessarily changing the immediate shareholders of the licensed sponsor.

This distinction can be particularly important in multinational acquisitions and group restructurings.

For example, Company A is a UK subsidiary holding a sponsor licence. Company A is wholly owned by Company B, which is itself owned by Company C.

An external buyer acquires the shares in Company C.

Following completion, Company A remains directly owned by Company B. Its immediate shareholding, legal identity and employment arrangements remain unchanged, although the ultimate ownership of the corporate group has changed.

The Home Office’s published change-of-ownership examples recognise that an acquisition of this nature can be treated differently from a direct transfer of controlling shares in the licensed company.

An indirect acquisition does not therefore automatically require the UK subsidiary to obtain a replacement sponsor licence.

However, the parties should not assume that all indirect changes are exempt from sponsor licensing requirements.

The transaction must be examined to establish whether the licensed organisation’s direct ownership, corporate structure or operating arrangements have changed in a manner relevant to the Home Office rules.

The company should also consider whether the transaction creates a reportable organisational change or results in changes to its key personnel, business activities or sponsorship arrangements.

Where a complex acquisition involves several intermediate holding companies, the buyer should prepare accurate ownership structure charts showing the position before and after completion.

These documents can assist in identifying the actual nature of the ownership change and explaining the transaction to the Home Office where necessary.

 

4. Minority share sales and investments

 

A minority share sale does not necessarily require a licensed organisation to apply for a new sponsor licence.

For example, an investor may acquire a relatively small proportion of the shares in a company without obtaining control over its management or operations.

Where the transaction does not involve a relevant change of ownership under the Home Office rules, the existing sponsor licence may continue.

A minority share acquisition does not, by itself, establish a relevant direct ownership change. The parties should assess whether the transaction amounts to a change in direct ownership, transfer of the controlling number of shares or another takeover arrangement falling within C4. Voting rights and shareholder agreements may be relevant factual context but are not a standalone Home Office test.

The sponsor should also identify any separate changes arising from the investment that require notification, such as changes to its key personnel or organisational details.

Where the transaction involves a series of share acquisitions, the cumulative effect of those acquisitions should be considered rather than assessing each transaction in isolation without regard to the resulting ownership position.

 

5. Where the acquiring company already holds a sponsor licence

 

A buyer may already hold a UK sponsor licence when it acquires another company that employs sponsored workers.

However, the existence of the buyer’s licence does not automatically resolve the sponsor licensing requirements affecting the target company.

Sponsor licences are granted to specific organisations, subject to the Home Office’s rules on eligible sponsoring entities and approved organisational arrangements.

Where the buyer and target remain separate legal entities, the buyer’s existing licence does not necessarily authorise sponsorship by the target company.

For example, Company B holds a Skilled Worker sponsor licence and acquires 100% of the shares in Company A, which also holds a sponsor licence.

Following completion, Company A continues as a separate legal entity and remains the employer of its sponsored workers.

The parties cannot assume that Company B’s existing sponsor licence automatically replaces Company A’s licence or authorises all of Company A’s continuing sponsorship activities.

The appropriate arrangements depend on the Home Office’s treatment of the ownership change, the identity of the sponsoring employer and whether the workers are remaining with the target company or transferring to another licensed organisation.

Where sponsored workers are subsequently transferred into Company B, the transaction may create separate business transfer and sponsorship requirements.

The buyer should therefore distinguish between acquiring the shares in a licensed company and transferring the company’s sponsored workforce to another employer.

These are separate events and may require separate immigration compliance assessments.

 

6. Intragroup share transfers and corporate restructurings

 

Corporate groups frequently reorganise their ownership structures without selling the underlying business to an external purchaser.

Examples include transferring shares between subsidiaries, introducing a new holding company or consolidating several group entities beneath a common parent.

These transactions may be undertaken for tax, financing, governance or operational reasons.

However, an internal group restructuring is not automatically exempt from the Home Office’s sponsor licensing rules.

The relevant question is whether the transaction changes the direct ownership of the licensed organisation or otherwise falls within the Home Office’s change-of-ownership provisions.

For example, Company A holds a sponsor licence and is directly owned by Company B.

As part of a group restructuring, the shares in Company A are transferred from Company B to Company C, another company within the same corporate group.

Although the ultimate controlling shareholder may remain unchanged, the direct shareholder of the licensed organisation has changed.

The group should therefore assess whether the transfer constitutes a relevant direct change of ownership under the Home Office rules.

By contrast, a restructuring that changes ownership higher up the group without altering the licensed organisation’s direct ownership may have different consequences.

The commercial description of a transaction as an internal reorganisation does not determine its immigration treatment.

Where the group also intends to transfer employees, combine business operations or dissolve existing entities, those additional changes must be assessed separately.

A restructuring can involve multiple stages, each potentially creating its own reporting or licensing requirements.

Immigration advice should therefore be incorporated into the restructuring plan before the relevant corporate steps are implemented.

 

7. When must a new sponsor licence application be made?

 

Where a share sale triggers a requirement to obtain a replacement sponsor licence, the organisation must comply with the application procedure and deadline specified in the Home Office’s sponsor guidance.

The guidance provides a 20-working-day period for relevant changes of ownership requiring a new licence application.

The organisation must also comply with the applicable reporting obligations arising from the transaction.

These requirements should be treated separately.

Submitting a report of the ownership change does not automatically constitute an application for a replacement licence. Equally, preparing or submitting a licence application does not necessarily discharge the obligation to report the relevant organisational change.

The parties should establish the date on which the ownership change takes effect and identify the corresponding reporting and application deadlines.

In a conventional share purchase, this will ordinarily be the completion date, when the relevant shares are transferred to the buyer.

However, transactions involving staged completion, conditional transfers or more complex ownership arrangements may require closer analysis to establish when the relevant change occurs.

Where a new licence application is necessary, the business should prepare the required information and supporting documents as early as possible.

This may involve reviewing its sponsor compliance systems, confirming the suitability of proposed key personnel, preparing corporate documentation and establishing the position of existing sponsored workers.

The organisation should not assume that it can always obtain a replacement licence before completion, particularly where the relevant application procedure depends on a completed change of ownership.

Nor should it assume that submitting an application guarantees approval.

The Home Office may examine the organisation’s eligibility, suitability and compliance arrangements before deciding whether to grant a new licence.

Where the application is refused, or the organisation fails to comply with the applicable requirements, the consequences may affect its ability to continue sponsoring existing workers.

For these reasons, the licensing timetable should form part of the wider transaction plan rather than being treated as an administrative task after completion.

 

8. Share sale sponsor licence decision matrix

 

The following matrix summarises common share acquisition scenarios and the principal sponsor licensing questions employers should consider.

 

Transaction scenario	Potential sponsor licence consequence	Employer action
Acquisition of 100% of shares in the licensed company	Ordinarily a direct change of ownership; existing licence normally revoked or made dormant where applicable	Assess replacement licence requirements, reporting obligations and sponsored worker continuity
Acquisition of a controlling shareholding in the licensed company	May trigger the direct change-of-ownership provisions	Review ownership and control arrangements; establish reporting and application requirements
Acquisition of a minority shareholding without a relevant change of control	May not require a replacement licence	Review the rights attached to the shares and any separate reportable changes
Acquisition of shares in an ultimate parent company	Indirect change may not require a new licence where the licensed entity’s direct ownership remains unchanged	Assess the full group structure and any reporting obligations
Transfer of target company shares between group entities	May constitute a direct change of ownership despite remaining within the same group	Assess the actual transfer against Home Office guidance before restructuring
Acquisition by a company that already holds a sponsor licence	Buyer’s existing licence does not automatically authorise sponsorship by the target	Determine the appropriate licensing arrangements for each legal entity
Share acquisition followed by transfer of employees to another group company	May create additional sponsorship and business transfer requirements	Assess the subsequent employee transfer separately from the original share sale
Share acquisition involving several licensed subsidiaries	Different licences may be affected differently depending on their ownership structures	Undertake an entity-by-entity sponsor licensing assessment

 

This matrix is intended as a practical framework rather than a substitute for analysing the transaction’s legal structure.

Complex transactions can involve several ownership changes, intermediate holding companies and separate employing entities.

In these circumstances, a single group-wide conclusion may not adequately address the sponsor licensing position of each company.

Each licensed organisation should be assessed individually to determine whether its existing licence can continue, whether the Home Office must be notified and whether a replacement application is required.

Where sponsored workers are involved, the assessment should also address the continuity of their sponsorship and any implications for planned recruitment.

 

 

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Section D: Reporting a Share Sale to the Home Office

 

A company holding a UK sponsor licence must comply with the Home Office’s reporting requirements when a share sale results in a relevant change to its ownership or organisational circumstances.

These obligations apply separately from any requirement to obtain a replacement sponsor licence. Reporting a share sale does not, by itself, preserve the existing licence where the Home Office’s change-of-ownership rules require a new application.

Equally, the fact that a buyer or target company intends to apply for a new licence does not remove any applicable obligation to notify the Home Office of the transaction.

The sponsor must therefore establish whether the share sale is reportable, which organisation is responsible for making the notification, the deadline for reporting and whether additional licensing action is necessary.

These questions should be resolved before completion wherever possible.

The Home Office’s Workers and Temporary Workers sponsor guidance, Part 3, sets out the reporting requirements for organisational changes, including mergers, takeovers and changes of ownership. The guidance also contains examples illustrating how different corporate transactions affect sponsor licences.

For employers involved in acquisitions, the principal compliance risk is assuming that a share sale requires no Home Office action because the target company continues operating under the same legal identity.

Where a relevant change of ownership has occurred, the sponsor must comply with the applicable reporting requirements regardless of whether its trading name, company registration number or employment arrangements remain unchanged.

 

1. What information must be reported following a share sale?

 

The information required by the Home Office depends on the nature of the transaction and the changes affecting the licensed organisation.

Where a share sale results in a relevant change of ownership, the sponsor should provide sufficient information to explain the transaction and establish the company’s ownership position following completion.

This may include:

 

• The identity of the licensed sponsoring organisation.
• The date on which the relevant share transaction completed.
• The identity of the acquiring shareholder or corporate entity.
• The nature and extent of the ownership change.
• The ownership structure before and after completion.
• Whether the change is direct or indirect.
• Whether the licensed organisation remains the employer of its existing sponsored workers.
• Any associated changes to the company’s business activities, trading arrangements or organisational structure.
• Any changes affecting the sponsor’s key personnel.
• Whether a replacement sponsor licence application is required or has been submitted.

 

The precise information and evidence should be determined by reference to the Home Office procedure applicable to the transaction.

A straightforward acquisition of all the shares in a single UK company may be relatively easy to explain.

A complex acquisition involving several holding companies, overseas parent entities or multiple licensed subsidiaries may require a more detailed account of the corporate structure.

Where the transaction involves indirect ownership changes, the sponsor should avoid describing the acquisition in terms that incorrectly suggest the direct ownership of the licensed organisation has changed.

Conversely, where the direct controlling shareholding has transferred to another company, the sponsor should not describe the transaction merely as an internal reorganisation without explaining the actual ownership change.

The notification should accurately reflect the legal substance of the transaction.

 

2. Reporting the share sale through the Sponsor Management System

 

Licensed sponsors ordinarily report relevant organisational changes through the Home Office’s Sponsor Management System (SMS).

SMS is the online platform used to administer sponsor licences, manage Certificates of Sponsorship and report specified changes affecting the sponsoring organisation and its sponsored workers.

The organisation’s authorised Level 1 User is generally responsible for making the relevant SMS reports.

Where a share sale creates a reportable organisational change, the Level 1 User should follow the applicable SMS reporting procedure and provide the information required by the Home Office.

The sponsor should ensure that the notification is accurate, complete and consistent with the final transaction documents.

Particular care is needed where the acquisition affects the individuals who previously managed the sponsor licence.

For example, the target company’s existing Level 1 User may be a departing director, HR manager or other employee whose role ends at completion.

If that individual is no longer available to make the required report, the company may encounter practical difficulties accessing SMS or communicating with the Home Office.

The parties should therefore establish before completion who will retain authorised access to the system and who will be responsible for making any required notifications.

Where the existing sponsor’s access arrangements have changed or the Home Office’s merger and takeover procedures require a different reporting route, the organisation should follow the specific procedure set out in the sponsor guidance.

The buyer should not assume that it can simply use its own SMS account to make reports on behalf of a separate licensed company without establishing the appropriate authority and procedure.

Similarly, the target company should not share SMS login credentials with unauthorised individuals as a substitute for properly managing its sponsorship responsibilities.

Access arrangements should comply with the Home Office’s requirements for sponsor key personnel and authorised SMS users.

 

3. The 20-working-day reporting deadline

 

The Home Office generally requires licensed sponsors to report relevant organisational changes within 20 working days of the change occurring.

Where a share sale constitutes a reportable change of ownership, the sponsor should identify the date on which the relevant change took effect and calculate the applicable reporting deadline.

In a conventional share purchase, the relevant date will ordinarily be completion, when ownership of the shares passes to the buyer.

However, the position may require closer examination where a transaction involves staged completion, conditional transfers, different classes of shares or a series of acquisitions.

The sponsor should not automatically use the date on which the share purchase agreement was signed if ownership did not change until a later completion date.

Equally, the parties should not assume that the reporting period begins only when the company’s internal HR or compliance team becomes aware that completion has occurred.

The deadline should be assessed by reference to the actual event giving rise to the reporting obligation.

Where the transaction also requires a replacement sponsor licence application, the company must comply with the separate application requirements and any corresponding deadline.

For relevant direct changes of ownership, the Home Office’s change-of-ownership guidance provides for a new licence application within 20 working days where the applicable conditions require it.

The reporting and application obligations should therefore be included as separate actions in the transaction timetable.

For example, where a controlling shareholding in a licensed company transfers to a new owner, the organisation may need both to report the change and to submit a replacement licence application within the applicable period.

Completing one action does not automatically satisfy the other.

The parties should also distinguish between submitting an application within the prescribed period and receiving a decision from the Home Office.

The organisation cannot assume that a replacement licence will be granted within 20 working days simply because that period applies to the submission of the application.

Where an application is required, the business should prepare the necessary evidence before completion wherever possible and submit the application promptly once the applicable procedure permits.

Waiting until the final day of the reporting or application period increases the risk of errors, incomplete submissions and missed deadlines.

 

4. Documents supporting a share sale notification

 

For an ownership-change request made through the relevant SMS function, the sponsor must complete and send the submission sheet, together with any required supporting evidence, within 5 working days.

The supporting documentation will depend on the type of acquisition, the corporate structure and the procedure being followed.

Employers should prepare relevant documents in advance rather than assume that the Home Office will accept a brief description of the share sale without further evidence.

Potential supporting documents include:

 

• A completed share purchase agreement or relevant extracts identifying the transaction parties and shares acquired.
• Completion documents confirming when the ownership change took effect.
• Updated shareholder information.
• Corporate structure charts showing the position before and after completion.
• Companies House filings or other corporate records reflecting the transaction.
• Details of the acquiring company and any relevant parent entities.
• Information confirming whether the licensed company remains the legal employer of its sponsored workers.
• Documents explaining associated changes to business operations or management arrangements.
• Evidence supporting any required replacement sponsor licence application.

 

Not every document will be required in every case.

The sponsor should follow the applicable Home Office instructions and provide the evidence requested through the relevant reporting or application process.

Where the acquiring company is incorporated overseas, the parties may need to provide additional information to explain the ownership chain and identify the entities exercising control over the UK sponsor.

Where the transaction involves several subsidiaries, separate documentation may be necessary to establish how each licensed organisation has been affected.

The sponsor should ensure that information submitted to the Home Office is consistent with the final corporate documents and the company’s public filings.

Any differences between the transaction documents, Companies House records and the information held on SMS should be identified and explained where relevant.

The organisation should retain copies of all evidence submitted, together with any acknowledgements or subsequent Home Office correspondence.

 

5. Who is responsible for reporting the share sale?

 

The responsibility for complying with sponsor reporting obligations rests with the licensed sponsoring organisation.

In a conventional share sale, the target company ordinarily remains the same legal entity following completion.

Accordingly, where it continues to hold the relevant sponsorship responsibilities, it must ensure that the applicable Home Office reporting requirements are met.

The fact that a buyer has acquired control of the company’s shares does not automatically transfer those responsibilities to the buyer’s separate legal entity.

However, the transaction documents may allocate responsibility between the parties for preparing information, making arrangements for submission and providing supporting evidence.

For example, the share purchase agreement may require the seller to cooperate with the buyer in preparing the Home Office notification or providing information about the target company’s previous ownership structure.

The buyer may also require the target company’s directors and sponsor key personnel to remain available for a specified period after completion to assist with the transition.

These contractual arrangements can help ensure that the reporting process is completed efficiently.

They do not, however, replace the sponsor’s regulatory obligations.

Where the transaction involves a merger, takeover or transfer of sponsored workers, the Home Office may prescribe specific reporting responsibilities for the affected organisations.

The parties should follow those requirements rather than assume that the same reporting procedure applies to every transaction.

For practical purposes, the acquisition plan should identify:

 

1. The licensed entity responsible for compliance.
2. The individual authorised to make the required SMS report.
3. The person responsible for preparing supporting documents.
4. The person responsible for any replacement licence application.
5. The individual responsible for monitoring deadlines and Home Office correspondence.
6. The person responsible for confirming that the required actions have been completed.

 

Responsibility should be expressly allocated rather than left to informal assumptions between the buyer, seller and target company’s management.

 

6. What happens after the Home Office receives the notification?

 

The Home Office will consider the reported change in accordance with the applicable sponsor licensing rules.

The outcome depends on the nature of the transaction and its consequences for the licensed organisation.

Where the transaction involves a relevant direct change of ownership, the existing sponsor licence will normally be revoked or, in specified circumstances, made dormant.

The organisation may need to obtain a replacement licence to continue sponsoring workers.

Where the transaction involves an indirect ownership change higher up the corporate group, the outcome may differ.

The Home Office’s published examples recognise that a change in the ownership of a parent company does not necessarily require the licensed subsidiary to obtain a new sponsor licence where its direct ownership and relevant operating arrangements remain unchanged.

However, the organisation must still comply with any reporting requirements arising from the transaction and any associated organisational changes.

The Home Office may request further information to establish the circumstances of the acquisition.

It may also consider whether changes to the organisation’s business activities, personnel or sponsorship arrangements create additional compliance issues.

Where a replacement licence application is required, the Home Office will assess that application against the relevant eligibility and suitability requirements.

This may involve reviewing the company’s corporate documentation, operational arrangements, compliance systems and the suitability of its proposed key personnel.

The Home Office may also undertake compliance checks or request further evidence before deciding whether to grant the new licence.

Employers should not assume that submitting a notification automatically confirms that their existing sponsor licence can continue.

Nor should they assume that the Home Office’s acknowledgement of a report amounts to approval of a replacement licence application.

The company should monitor the position until the relevant licensing outcome has been established and any necessary follow-up action completed.

 

7. What happens if a share sale is reported late?

 

Failure to report a relevant change of ownership within the prescribed period can constitute a breach of the sponsor’s reporting duties.

The Home Office may take compliance action where a licensed organisation fails to meet its obligations.

Depending on the circumstances and applicable guidance, this may include action affecting the organisation’s sponsor licence.

The consequences can be particularly serious where the share sale also required a replacement licence application and the organisation failed to submit that application within the relevant deadline.

In those circumstances, the issue may affect not only the sponsor’s compliance record but also its ability to continue sponsoring existing workers.

A business should not assume that a late notification automatically restores its previous licensing position or removes the consequences of missing a mandatory deadline.

Where the company discovers that a reportable share sale has not been notified, it should promptly establish:

 

1. When the relevant ownership change occurred.
2. Whether the transaction required Home Office notification.
3. Whether the existing sponsor licence was affected by the change.
4. Whether a replacement licence application was required.
5. Whether any applicable reporting or application deadlines have expired.
6. How existing sponsored workers may be affected.
7. What corrective action is available under the Home Office procedures.

 

The organisation should then address any outstanding obligations through the appropriate Home Office process.

Where the failure is material, specialist immigration advice should be obtained before making representations or taking steps that could affect the company’s licensing position.

Employers should also preserve relevant documents and correspondence, including records explaining how the failure occurred and the measures taken to prevent recurrence.

A retrospective compliance review may be necessary where the reporting failure indicates wider weaknesses in the organisation’s sponsorship governance.

 

8. Share sale Home Office reporting checklist

 

The following checklist can help employers manage the reporting requirements arising from a share acquisition.

 

Action	Purpose	Timing
Identify the licensed organisation	Confirm which legal entity holds the sponsor licence	Before signing
Review the proposed ownership change	Determine whether the transaction is direct or indirect and assess the relevant Home Office rules	Before completion
Confirm reporting obligations	Establish whether the transaction must be notified to the Home Office	Before completion
Assess replacement licence requirements	Determine whether a new application is necessary	Before completion
Identify the reporting trigger date	Establish when the relevant ownership change takes effect	At completion
Confirm SMS access	Ensure that an authorised user can make the required report	Before and immediately after completion
Prepare supporting documents	Provide accurate information about the acquisition and resulting ownership structure	Before and after completion
Submit the Home Office notification	Comply with the applicable reporting requirements	Within the prescribed deadline, generally 20 working days
Submit any required new licence application	Address the separate licensing requirement arising from the ownership change	Within the applicable application deadline
Retain submission evidence	Demonstrate compliance with reporting and application obligations	At submission
Monitor Home Office correspondence	Respond to requests for further information and establish the licensing outcome	Following submission
Review sponsored worker arrangements	Confirm the implications for existing sponsorship and immigration permission	Throughout the transaction and transition

 

The reporting process should be incorporated into the wider transaction timetable, with clear responsibility for each action.

Where a share acquisition involves several licensed companies, the parties should undertake a separate assessment for each sponsor rather than assume that one group-wide notification will satisfy all reporting obligations.

Early planning is particularly important where the acquisition also involves changes to key personnel, HR systems, sponsored worker arrangements or the organisation’s operating structure.

These changes may create additional reporting requirements that need to be addressed alongside the ownership notification.

The central compliance objective is to ensure that the Home Office receives accurate information about the relevant transaction within the applicable deadline and that any resulting sponsor licensing requirements are completed correctly.

 

 

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Section E: What Happens to Sponsored Workers After a Share Sale?

 

A share sale involving a company that employs sponsored workers can create significant immigration compliance considerations, even where the employees remain in their existing roles and continue working for the same legal employer.

In a conventional share acquisition, the company itself ordinarily remains unchanged. Its shareholders change, but its existing employment contracts generally continue without the employees transferring to another legal entity.

However, the Home Office’s sponsor licensing rules operate separately from the principles governing corporate identity and employment continuity.

Where a share sale constitutes a relevant change in direct ownership under C4.5, the existing sponsor licence will be revoked or, where sponsored workers have transferred under the relevant arrangements, made dormant. Where the company remains the employer and wishes to continue sponsoring its existing workforce, it must make the required new sponsor licence application within 20 working days of the change.

This does not necessarily mean that every sponsored employee must immediately make a new immigration application.

The Home Office provides specific arrangements for sponsored workers affected by mergers, takeovers and changes of ownership. Where the relevant conditions are satisfied, existing workers may be able to continue under the appropriate sponsorship arrangements without applying for fresh immigration permission solely because of the corporate transaction.

The position depends on the structure of the acquisition, whether the legal employer changes, the sponsor licensing requirements and the steps taken by the organisation.

Employers should therefore assess sponsored worker continuity as a distinct workstream within the transaction, rather than assume that the immigration position automatically follows the company’s continued legal existence.

 

1. Does a share sale change the employer of sponsored workers?

 

In a conventional share sale, the target company remains the same legal entity following completion.

The buyer acquires shares in the company rather than directly acquiring the company’s employment contracts.

As a result, existing employees ordinarily remain employed by the target company under their existing contractual arrangements.

For example, Company A holds a Skilled Worker sponsor licence and employs 30 sponsored workers. Company B acquires all the shares in Company A.

Following completion, Company A continues to exist and remains the legal employer of those workers.

The employees do not ordinarily transfer to Company B simply because Company B has become the shareholder of Company A.

Their employment contracts, continuity of employment and contractual rights generally remain with Company A.

However, the share acquisition may still affect Company A’s sponsor licence because the Home Office applies specific rules to changes of ownership.

The employer should therefore distinguish between continuity of employment and continuity of immigration sponsorship.

The fact that the employment relationship remains unchanged does not, by itself, establish that the company’s existing sponsor licence can continue.

Similarly, the fact that a replacement licence may be required does not automatically mean that the employees have changed employer.

These are separate legal questions requiring separate consideration.

 

2. Can sponsored workers continue working after the share sale?

 

Sponsored workers may be able to continue working following a share sale, provided their immigration permission remains valid and the applicable Home Office sponsorship requirements are satisfied.

The Home Office’s change-of-ownership guidance includes arrangements intended to address sponsorship continuity where a licensed organisation undergoes a relevant corporate transaction.

Where the employer is required to obtain a replacement sponsor licence, the organisation must comply with the relevant reporting and application requirements within the prescribed period.

Compliance with those requirements is important to the treatment of existing sponsored workers.

For example, where a company undergoes a direct change of ownership and must apply for a replacement licence, the Home Office’s published guidance provides for the position of existing sponsored workers to be addressed through the applicable change-of-ownership arrangements.

Where the relevant conditions are met, workers may not need to make new immigration applications solely because the company’s ownership has changed.

However, the employer should not assume that submitting a replacement licence application automatically guarantees continued sponsorship in every circumstance.

The organisation must establish the applicable procedure and comply with any requirements affecting its existing workers.

Where the application is refused, the organisation fails to meet the prescribed requirements or the Home Office takes enforcement action, the consequences for sponsored workers may be different.

The company should therefore maintain accurate records of its sponsored workforce and monitor the licensing position throughout the transaction.

Employers should also distinguish the position of existing sponsored workers from the ability to recruit and sponsor additional overseas workers.

The arrangements protecting existing sponsorship do not necessarily authorise the organisation to assign new Certificates of Sponsorship while a replacement licence application is being considered.

 

3. What happens to existing Certificates of Sponsorship?

 

A Certificate of Sponsorship (CoS) is an electronic sponsorship record assigned by an authorised sponsor to support a worker’s immigration application.

Where a company undergoes a share sale, the treatment of existing Certificates of Sponsorship depends on the ownership change and the resulting sponsor licensing arrangements.

Workers who already hold valid immigration permission based on sponsorship by the target company should not automatically be treated as requiring a new CoS solely because the company’s shares have been acquired.

Where the Home Office’s change-of-ownership continuity provisions apply, existing sponsored workers may be able to continue under the appropriate sponsorship arrangements without being required to obtain a new CoS and make a fresh immigration application.

However, this should be distinguished from Certificates of Sponsorship that have been assigned but have not yet been used to support an immigration application.

It should also be distinguished from future Certificates of Sponsorship that the company intends to assign after completion.

The organisation’s ability to assign new Certificates of Sponsorship may be affected where its existing licence is being revoked and a replacement application is required.

Employers should therefore review their CoS position before completion, including:

 

• Certificates of Sponsorship assigned to workers who already hold immigration permission.
• Certificates assigned to applicants who have not yet submitted their visa applications.
• Certificates associated with immigration applications awaiting a Home Office decision.
• Planned Certificates of Sponsorship for new overseas recruits.
• Upcoming applications to extend existing workers’ immigration permission.
• Requests for additional CoS allocations.

 

The company should establish whether any of these matters require action before or after completion.

Where a worker’s immigration application is imminent, the transaction timetable and the sponsor’s licensing position may affect the appropriate approach.

The employer should not assume that unused Certificates of Sponsorship can be relied upon without considering the consequences of the ownership change.

 

4. What happens to pending Skilled Worker visa applications?

 

A share sale can create additional complications where a company has sponsored workers whose immigration applications are still being considered by the Home Office.

For example, an overseas worker may have been assigned a Certificate of Sponsorship by the target company and submitted a Skilled Worker visa application before the acquisition completes.

Alternatively, an existing sponsored employee may have submitted an application to extend their immigration permission or change employment.

Where the company’s sponsor licence is affected by the share sale, the organisation should assess how the change may affect those applications.

The outcome will depend on the applicable sponsorship rules, the stage of the immigration application and the Home Office’s treatment of the ownership change.

Employers should not assume that a pending application will automatically continue unaffected where the sponsoring organisation’s existing licence is being revoked.

Equally, they should not assume that every pending application must be withdrawn and resubmitted solely because a share transaction has completed.

The appropriate action should be determined by reference to the specific circumstances and current Home Office requirements.

Before completion, the target company should identify all outstanding immigration applications involving its sponsored workforce.

This review should include:

 

• Initial Skilled Worker visa applications.
• Applications to extend existing sponsored permission.
• Applications involving a change of employment or sponsor.
• Applications made by workers switching from another immigration route.
• Applications involving accompanying dependants where relevant to the employee’s circumstances.

 

The employer should then assess whether the ownership change creates any additional action or risk.

Where necessary, the company should obtain advice before making changes to the sponsorship records or communicating with the affected applicants.

 

5. Can sponsored workers move to a replacement sponsor licence without new visa applications?

 

The Home Office’s sponsor guidance provides specific arrangements for existing sponsored workers affected by changes of ownership and certain corporate transactions.

These arrangements recognise that a corporate acquisition may change the sponsor licensing position without necessarily changing the underlying employment relationship.

Where a licensed company undergoes a relevant direct change of ownership and is required to obtain a new sponsor licence, the Home Office’s published examples address the treatment of existing sponsored workers.

For example, a company may be acquired through the transfer of a controlling number of shares to a new owner.

The existing sponsor licence is affected by the ownership change, and the company is required to report the transaction and apply for a replacement licence within the applicable period.

Where the organisation complies with the relevant requirements and the replacement licensing arrangements are accepted, existing sponsored workers may be able to continue without submitting fresh immigration applications solely because of the share acquisition.

This is an important distinction for employers.

Without the relevant continuity arrangements, a corporate acquisition involving a substantial sponsored workforce could create considerable administrative and operational disruption.

However, the continuity provisions are conditional and should not be treated as an automatic entitlement.

The organisation must establish which Home Office procedure applies and ensure that the relevant requirements are satisfied.

In particular, employers should consider:

 

1. Whether the transaction constitutes a relevant change of ownership.
2. Whether the existing sponsor licence is being revoked or made dormant.
3. Whether the organisation is required to apply for a replacement licence.
4. Whether the reporting and application requirements have been met within the applicable deadlines.
5. Whether the sponsored workers remain employed by the same legal entity.
6. Whether any separate changes to the workers’ employment circumstances require reporting or further immigration action.
7. Whether the Home Office has imposed any additional requirements affecting sponsorship continuity.

 

The position may differ where the share acquisition is followed by a transfer of employees to another group company.

In that situation, the employer must also consider the Home Office’s rules concerning business transfers and changes in the sponsoring organisation.

The company should therefore avoid treating a share acquisition and a subsequent employee transfer as a single event for immigration purposes.

 

6. What happens if the replacement sponsor licence application is refused?

 

Where a company is required to apply for a replacement sponsor licence following a share sale, approval is not guaranteed.

The Home Office will assess the application against the applicable eligibility and suitability requirements.

This may include reviewing the organisation’s business activities, operational presence, compliance systems, key personnel and previous sponsorship history.

Where the previous licence has been revoked and the replacement application is unsuccessful, existing sponsored workers may face cancellation action. A non-complicit worker with more than 60 days remaining will normally have permission shortened to 60 calendar days; where 60 days or less remain, permission will normally not be shortened further.

Where the Home Office cancels or curtails a worker’s permission, the worker’s immigration position will depend on the terms and effective date of the relevant decision and any applicable rights or alternative immigration options.

The organisation should therefore assess the implications for individual workers rather than rely on a general assumption about the outcome.

From a commercial perspective, refusal can also disrupt workforce planning, recruitment and the delivery of contracts dependent on sponsored employees.

These risks should be identified during due diligence.

Where the target company has a history of sponsor compliance concerns, the buyer should consider whether those issues could affect the outcome of a replacement licence application.

Relevant concerns may include previous reporting failures, inadequate sponsored worker records, outstanding Home Office investigations or weaknesses in the organisation’s right to work checking arrangements.

The buyer should also consider whether the transaction documents adequately address the consequences of an unsuccessful licence application.

Where refusal occurs, the organisation should obtain specialist advice promptly to establish the reasons for the decision, the available options and the implications for affected workers.

 

7. Can the company continue recruiting overseas workers after the share sale?

 

A company’s ability to recruit additional overseas workers after a share sale depends on its sponsor licensing position.

Where the transaction does not affect the validity of the existing licence, the organisation may be able to continue sponsoring workers, subject to its normal sponsorship obligations and any applicable restrictions.

However, where a relevant direct change of ownership requires a replacement licence, the company should not assume that it can continue assigning new Certificates of Sponsorship under its previous authorisation.

The Home Office’s arrangements for existing sponsored workers should not be confused with permission to undertake new sponsorship activity.

For example, a company may be able to maintain the position of workers already sponsored before the transaction while its replacement licence application is being considered.

That does not necessarily mean it can assign Certificates of Sponsorship to new recruits during the same period.

The employer should therefore review planned international recruitment before completion.

This is particularly important where the business has:

 

• Overseas candidates awaiting Certificates of Sponsorship.
• Recruitment campaigns involving Skilled Worker sponsorship.
• Employees approaching the expiry of their existing immigration permission.
• Pending requests for additional CoS allocations.
• Commercial contracts dependent on the recruitment of overseas workers.
• Plans to expand operations following the acquisition.

 

The acquiring business should establish whether the sponsor licensing timetable could delay any of these activities.

Where necessary, recruitment plans should be adjusted to reflect the company’s ability to assign Certificates of Sponsorship lawfully.

Employers should also avoid making unconditional promises to prospective sponsored workers before the necessary licensing arrangements have been confirmed.

 

8. Communicating with sponsored workers during a share sale

 

A share acquisition can create uncertainty for sponsored workers, particularly where they become aware that the company’s sponsor licence may need to be replaced.

Employees may be concerned about whether they can continue working, whether they need to make new visa applications and whether the transaction affects their immigration permission.

The employer should therefore plan appropriate communications as part of the immigration transition.

Where the legal employer remains unchanged, employees should be informed of that distinction where relevant.

However, the company should avoid suggesting that continued employment automatically guarantees continued immigration sponsorship.

Communications should accurately explain the position established under the Home Office’s change-of-ownership rules.

Depending on the circumstances, the employer may need to explain:

 

• Whether the employees’ legal employer is changing.
• Whether the company’s sponsor licence is affected by the transaction.
• Whether a replacement sponsor licence application is required.
• Whether existing sponsored workers need to make new immigration applications.
• Whether the company requires additional information or documents from employees.
• Who employees should contact with immigration-related questions.
• Whether any further changes to employment arrangements are planned.

 

Where the company is awaiting a Home Office decision, communications should distinguish between confirmed arrangements and matters that remain subject to approval.

The organisation should also take care when communicating with employees whose immigration permission is approaching expiry.

Those workers may require individual advice to establish how the licensing transition affects their immigration timetable.

Employee communications should be coordinated between HR, the sponsor licence compliance team and the advisers managing the transaction.

This can help avoid inconsistent information being provided by different departments or group companies.

 

9. Sponsored worker continuity checklist

 

Employers should undertake a sponsored workforce review before completing a share acquisition involving a licensed sponsor.

The review should establish the position of existing sponsored employees, identify immigration matters requiring attention and assess the consequences of any replacement licence application.

 

Area	Question	Required action
Legal employer	Will sponsored workers remain employed by the same legal entity?	Confirm the employment structure before and after completion
Sponsor licence	Will the existing licence be affected by the ownership change?	Assess the relevant Home Office change-of-ownership rules
Replacement application	Is a new sponsor licence required?	Prepare and submit any required application within the applicable deadline
Existing immigration permission	Can workers continue under the applicable continuity provisions?	Confirm the relevant Home Office requirements
Certificates of Sponsorship	Are there assigned, unused or pending Certificates of Sponsorship?	Review the position of each relevant CoS
Pending visa applications	Are any sponsored workers awaiting immigration decisions?	Assess the implications of the ownership change
Permission expiry dates	Do any workers need extensions during the licensing transition?	Review application timetables and sponsorship requirements
New recruitment	Can the organisation continue assigning new Certificates of Sponsorship?	Confirm the licensing position before making new assignments
Employee transfers	Will workers subsequently move to another group company?	Assess separate business transfer and sponsorship requirements
Employee communications	Have affected workers received accurate information?	Provide appropriate updates and identify a point of contact
Home Office decision	What action is required once the licensing outcome is known?	Implement the applicable sponsorship arrangements and review outstanding issues

 

The review should be proportionate to the size and complexity of the sponsored workforce.

A company sponsoring a small number of employees may be able to assess each worker individually.

A larger organisation may require a structured workforce audit covering multiple immigration routes, business units and employment locations.

Where the acquisition involves several licensed subsidiaries, the position of workers sponsored by each entity should be reviewed separately.

The buyer should also establish whether the transaction will be followed by changes to job roles, reporting lines, salaries, work locations or employing entities.

These subsequent changes may create additional sponsorship obligations even where the initial share acquisition does not require individual workers to make new immigration applications.

The objective is to maintain lawful and properly documented sponsorship arrangements throughout the transaction while identifying any risks to workforce continuity before they affect employees or business operations.

 

 

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Section F: Sponsor Licence Due Diligence Before a Share Purchase

 

Sponsor licence due diligence should form part of the legal and regulatory review undertaken before acquiring shares in a UK company that employs sponsored workers.

A buyer acquiring a licensed business is not simply acquiring a company with an existing immigration authorisation. It is also acquiring exposure to the target company’s sponsorship arrangements, compliance history, workforce dependencies and potential Home Office enforcement risks.

These matters can affect the value of the business, the continuity of its operations and the buyer’s ability to implement its post-acquisition plans.

Where the share transaction constitutes a relevant change in direct ownership under C4.5, the existing sponsor licence will be revoked or, where sponsored workers have transferred under the relevant arrangements, made dormant. Where the company remains the employer and wishes to continue sponsoring its workers, it must make the required new sponsor licence application within 20 working days of the change.

In these circumstances, historic compliance weaknesses may become particularly important because the Home Office can examine the organisation’s eligibility and suitability when considering the new application.

Even where an indirect acquisition does not require a replacement licence, the buyer should still investigate the target company’s existing sponsorship arrangements and regulatory exposure.

The immigration due diligence process should also extend beyond sponsored workers.

From 1 October 2026, the statutory right to work checking framework was extended to additional categories of working arrangements, including relevant worker contracts, individual subcontracting arrangements and qualifying online matching arrangements.

This increases the importance of examining how the target company engages and verifies individuals working for the business, rather than limiting the review to conventional employees.

A comprehensive assessment should therefore cover sponsor licence validity, historic compliance, sponsored worker records, right to work systems, key personnel, enforcement risks and the commercial implications of any disruption to sponsorship.

 

1. Verify the target company’s sponsor licence

 

The first step is to confirm that the target company holds the sponsor licence it claims to possess and that the licence covers the immigration routes relevant to its workforce.

The buyer should obtain the organisation’s sponsor licence details and verify the legal identity of the licensed entity.

This is particularly important where the target operates through several companies, trading names or subsidiaries.

A corporate group may hold multiple sponsor licences, or a licence may be held by one entity while workers perform duties across different parts of the group under arrangements permitted by the Home Office.

The buyer should not assume that every company within the group is independently authorised to sponsor workers.

The review should establish:

 

• The full legal name of the sponsor licence holder.
• The company’s registration number and registered address.
• The sponsor licence number.
• The immigration routes for which the organisation is licensed.
• Whether the licence holds an A-rating or B-rating, where applicable.
• Whether the licence is subject to any restrictions or compliance action.
• The identity of the Authorising Officer, Key Contact and authorised SMS users.
• The employing entities responsible for existing sponsored workers.
• Whether any other group companies hold separate sponsor licences.

 

The buyer should also review the target company’s position on the Home Office’s public register of licensed sponsors, while recognising that the register does not provide a complete account of the organisation’s compliance history or internal sponsorship records.

Where the target holds a B-rated licence, the buyer should establish the reasons for the rating and examine the applicable action plan.

A B-rating may restrict the organisation’s ability to undertake new sponsorship activity and may indicate wider compliance weaknesses requiring remediation.

Where the company is subject to suspension or an ongoing Home Office investigation, the buyer should assess the potential consequences for the transaction and any replacement licence application.

The sponsor licence review should also be reconciled against the proposed corporate structure following completion.

This will help establish which licences may be affected by the acquisition and whether separate applications or notifications will be required.

 

2. Review the company’s sponsor compliance history

 

A company’s previous compliance with its sponsor duties can be relevant to the buyer’s assessment of regulatory risk and the prospects of obtaining any required replacement licence.

The Home Office expects licensed sponsors to maintain appropriate systems for monitoring sponsored workers, keeping prescribed records and reporting relevant changes.

Where a business has failed to comply with those obligations, it may face enforcement action affecting its sponsor licence.

The buyer should therefore review the target company’s sponsorship compliance history rather than rely solely on confirmation that the licence remains active.

The review should examine:

 

• Previous Home Office compliance visits and their outcomes.
• Any sponsor licence downgrading, suspension or revocation action.
• Historic failures to report changes through SMS.
• Previous breaches of sponsored worker record-keeping requirements.
• Outstanding Home Office correspondence or requests for information.
• Any compliance action plans and evidence of their completion.
• Internal immigration compliance audits.
• Previous advice or reports identifying sponsor compliance weaknesses.
• Any civil penalties or other immigration enforcement action affecting the business.
• Changes to the company’s ownership or structure that may not have been reported correctly.

 

The buyer should request sufficient documentation to understand the nature of any previous compliance issues and the steps taken to address them.

Where the target has undergone earlier acquisitions, restructurings or changes of ownership, those transactions should also be reviewed.

A failure to comply with the sponsor licensing requirements arising from an earlier transaction may create continuing regulatory exposure.

The assessment should distinguish between historic breaches, outstanding compliance concerns and risks that have been satisfactorily remediated.

Not every previous compliance issue will necessarily prevent a new licence from being granted. However, unresolved weaknesses may become material where the Home Office reassesses the organisation’s suitability.

The buyer should also distinguish between the requirements applicable when a particular event occurred and those currently in force.

This is especially important when reviewing right to work records following the changes introduced on 1 October 2026.

Historic checks should be assessed against the legal requirements applicable at the relevant time, including any subsequent repeat-check obligations. The introduction of new checking procedures does not automatically mean that checks correctly completed under an earlier regime were defective.

 

3. Audit the existing sponsored workforce

 

The buyer should obtain an accurate account of all workers sponsored by the target company.

This is necessary to understand the scale of the company’s sponsorship responsibilities and identify workers whose immigration position may be affected by the transaction.

The review should establish the number of sponsored workers, the immigration routes involved and the nature of their employment arrangements.

It should also examine whether the company’s sponsorship records are accurate and consistent with the workers’ actual circumstances.

For each sponsored worker, the buyer should consider reviewing:

 

• The worker’s identity and immigration status.
• The immigration route under which the worker is sponsored.
• The identity of the sponsoring legal entity.
• The assigned Certificate of Sponsorship.
• The worker’s sponsored occupation and job duties.
• The salary and working hours recorded for sponsorship purposes.
• The worker’s actual salary and employment arrangements.
• The normal work location and any relevant changes.
• The expiry date of the worker’s immigration permission.
• Any outstanding immigration applications.
• Previous changes to employment circumstances requiring Home Office reporting.
• Evidence of compliance with applicable sponsorship record-keeping requirements.

 

The buyer should examine whether sponsored workers are performing the roles described in their Certificates of Sponsorship and whether their salary arrangements satisfy the applicable immigration requirements.

Where workers have changed roles, salaries, working hours or work locations, the review should establish whether the relevant Home Office reporting requirements were met.

The audit should also identify workers approaching the expiry of their immigration permission.

These cases may require particular attention where a replacement sponsor licence application is expected to coincide with an extension or other immigration application.

The company’s record-keeping arrangements should be assessed against the applicable Home Office sponsor guidance, including Appendix D, which sets out the documents sponsors must retain.

The October 2026 version of Appendix D should be considered when reviewing current obligations, while historic records should be assessed by reference to the requirements applicable when the relevant checks or events occurred.

Where the business sponsors a substantial workforce, the buyer may wish to use a structured audit process to identify inconsistencies between HR records, payroll information, immigration documentation and SMS records.

Any material discrepancies should be investigated before completion wherever possible.

 

4. Assess the commercial importance of the sponsored workforce

 

The commercial significance of a sponsor licence can vary considerably between businesses.

For some organisations, sponsorship supports a relatively small number of specialist roles.

For others, sponsored workers form a substantial proportion of the workforce and are essential to the delivery of contracts, operational capacity or planned expansion.

The buyer should therefore consider the commercial consequences of any interruption to the company’s ability to sponsor workers.

This assessment should extend beyond the immediate legal requirements of the share sale.

Relevant considerations include:

 

• The proportion of the workforce employed under sponsored immigration routes.
• The seniority and specialist expertise of sponsored employees.
• The extent to which business operations depend on sponsored workers.
• The availability of alternative recruitment options.
• Upcoming immigration permission expiry dates.
• Planned overseas recruitment and future sponsorship requirements.
• Contracts or projects dependent on particular sponsored employees.
• The potential cost of recruitment delays or workforce disruption.
• The impact of an unsuccessful replacement licence application.

 

Where the target relies heavily on sponsored workers, sponsor licence continuity may be a material transaction risk.

For example, a business providing specialist engineering, healthcare, technology or professional services may depend on overseas employees whose skills are difficult to replace quickly.

If the acquisition results in a requirement for a replacement sponsor licence, the buyer should consider how the application process may affect workforce planning and future recruitment.

The buyer should also establish whether the target has made commercial commitments that depend on its ability to sponsor additional workers after completion.

These considerations may influence the transaction timetable, contractual protections and post-acquisition integration plan.

 

5. Investigate outstanding Home Office enforcement matters

 

Outstanding immigration enforcement matters should be treated as a significant area of due diligence.

A sponsor licence may be subject to investigation or compliance action even where the organisation continues to appear on the public register of licensed sponsors.

The buyer should therefore ask the target company to disclose any current or threatened Home Office action affecting its sponsorship arrangements.

This should include:

 

• Scheduled or recent Home Office compliance visits.
• Outstanding requests for sponsorship records.
• Notifications of potential sponsor duty breaches.
• Proposed licence downgrading or suspension.
• Existing compliance action plans.
• Investigations concerning sponsored workers’ roles, salaries or employment arrangements.
• Allegations involving illegal working or inadequate right to work checks.
• Previous or pending civil penalty proceedings.
• Any relevant criminal investigations or proceedings involving immigration compliance.

 

The buyer should establish the status of each matter, the potential regulatory consequences and whether the target has taken appropriate corrective action.

Where the company is required to obtain a replacement sponsor licence following the acquisition, unresolved enforcement issues may affect the Home Office’s assessment of the application.

The buyer should not assume that a change of shareholders will remove the regulatory consequences of the target company’s previous conduct.

Because the target company ordinarily remains the same legal entity following a share sale, its existing liabilities and compliance history generally remain with the company.

The share purchase agreement may allocate financial risk between the parties, but contractual protections do not prevent the Home Office from exercising its regulatory powers.

Where serious compliance concerns are identified, the buyer should consider whether remediation is required before completion and whether the transaction should proceed before the licensing implications have been established.

 

6. Review sponsor licence key personnel and SMS access

 

The Home Office requires licensed sponsors to appoint individuals responsible for managing sponsorship and maintaining appropriate access to the Sponsor Management System.

The principal roles include the Authorising Officer, Key Contact and Level 1 User.

These individuals perform important functions in the organisation’s sponsorship governance.

A share acquisition may result in changes to the company’s directors, senior management or HR personnel.

Where individuals responsible for sponsorship are expected to leave following completion, the buyer should identify suitable replacements and establish the applicable Home Office requirements for changing key personnel.

The review should consider:

 

• Whether the current Authorising Officer will remain with the company.
• Whether the Key Contact will continue in the role.
• Whether the existing Level 1 User will retain authorised SMS access.
• Whether additional authorised SMS users are required.
• Whether the proposed replacement personnel satisfy the Home Office’s eligibility and suitability requirements.
• Whether changes to key personnel must be reported.
• Whether the organisation has appropriate procedures for managing SMS access and security.
• Whether responsibility for sponsorship is clearly allocated within the post-acquisition management structure.

 

The buyer should not assume that it can simply appoint individuals from another group company to manage the target’s sponsor licence without considering the applicable Home Office requirements.

Similarly, the target should not continue using the SMS credentials of an individual who has left the organisation or is no longer authorised to perform the relevant role.

The review should also establish whether the company has adequate internal oversight of SMS reporting.

Where a single employee is responsible for all sponsorship administration, the business may be exposed to operational risk if that individual leaves unexpectedly.

The buyer should therefore consider whether additional training, documented procedures or alternative authorised personnel are required.

These arrangements are particularly important where the share sale triggers a requirement to report the ownership change or submit a replacement licence application shortly after completion.

 

7. Review right to work compliance, including the 1 October 2026 changes

 

Right to work compliance should form a separate and detailed part of immigration due diligence.

Although sponsor licensing and right to work checking are distinct legal regimes, failures in either area can create significant regulatory exposure for an acquiring business.

Employers are required to conduct prescribed right to work checks to establish a statutory excuse against civil liability for employing an individual who does not have permission to undertake the work in question, where the statutory conditions are satisfied.

From 1 October 2026, the statutory right to work framework was extended to additional working arrangements beyond conventional employment contracts.

The expanded regime includes relevant individuals engaged under worker contracts, individual subcontracting arrangements and qualifying online matching arrangements.

As a result, a buyer should not limit right to work due diligence to individuals classified as employees within the target company’s HR system.

The review should examine the full range of working arrangements potentially covered by the applicable legislation.

 

8. Identify the workforce covered by the expanded checking regime

 

The buyer should establish how the target company engages individuals who perform work for the business.

This may include conventional employees, workers engaged under other contractual arrangements, individual subcontractors and individuals providing services through qualifying online matching arrangements.

The legal classification of each arrangement should be assessed against the applicable right to work legislation and Home Office guidance.

The company should not assume that describing an individual as self-employed, a contractor or a consultant necessarily places the engagement outside the relevant checking requirements.

Equally, the expanded regime should not be interpreted as requiring identical checks for every commercial supplier or every individual working for an independent third-party organisation.

The obligations depend on the legal and factual circumstances of the engagement.

Due diligence should therefore examine:

 

• The categories of individuals engaged by the business.
• The contractual basis on which work is performed.
• Whether the arrangements fall within the expanded statutory right to work framework.
• Which organisation is responsible for conducting the prescribed checks.
• Whether appropriate checks have been completed.
• Whether records have been retained in accordance with the applicable requirements.
• Whether repeat checks are required for individuals with time-limited permission.
• Whether the target has updated its procedures to reflect the October 2026 changes.

 

Where the business uses large numbers of contractors or flexible workers, the buyer should consider whether the existing HR and procurement systems provide sufficient visibility of the individuals engaged.

A fragmented engagement model may create compliance risks where different departments arrange work without central oversight of right to work requirements.

 

9. Assess the right to work checking methods used

 

The buyer should examine how the target company conducts right to work checks and whether its procedures comply with the Home Office requirements applicable to each category of worker.

Depending on the individual’s immigration status and the relevant rules, prescribed checks may involve the Home Office online right to work service, an eligible digital verification service, a manual document check or the Employer Checking Service.

The correct checking method depends on the circumstances.

The company should not assume that one verification method is suitable for every individual.

For example, individuals holding digital immigration status may need to demonstrate their right to work through the Home Office online service.

Where an individual cannot provide the prescribed evidence through the normal checking routes, the employer may need to consider whether the Employer Checking Service is appropriate.

The review should establish whether the target’s HR personnel understand the distinction between the available methods and retain the evidence required to establish a statutory excuse.

It should also examine whether checks are conducted at the appropriate time and whether any required follow-up checks are completed.

 

10. Review digital verification providers and procedures

 

Digital verification has become an increasingly important component of right to work compliance.

The October 2026 changes should be considered alongside the applicable digital verification requirements and the supplementary code governing digital right to work checks.

Where the target uses a digital verification service, the buyer should establish whether the provider satisfies the certification and registration requirements applicable to the prescribed checking route.

The review should also determine whether the service is being used only for individuals and documents covered by that route.

For example, the ability to use certain expired passports through an eligible digital verification process should not be confused with a general permission to accept expired passports under every right to work checking method.

The buyer should assess:

 

• The identity of the digital verification provider.
• The provider’s relevant certification and registration status.
• The checking services supplied to the target company.
• Whether the service is appropriate for the individuals being checked.
• Whether the required verification outputs and evidence are retained.
• Whether the employer completes any additional steps required under the applicable guidance.
• Whether digital re-verification procedures comply with the current rules.
• Whether contractual arrangements provide access to records following completion.

 

Where the acquiring group intends to replace the target’s HR or digital verification system, the buyer should ensure that historic checking evidence remains accessible.

A system migration should not result in the loss of records required to demonstrate compliance with right to work obligations.

 

11. Distinguish historic checks from current requirements

 

The buyer should assess historic right to work checks against the requirements applicable when those checks were required.

The introduction of new checking procedures on 1 October 2026 does not automatically invalidate checks that were correctly completed under the previous regime.

Similarly, the extension of the statutory framework should not be treated as automatically creating retrospective liability for arrangements that were outside its scope before commencement.

However, the business must comply with the requirements applicable to relevant work and checks following the changes, including any repeat checks required under the current regime.

The due diligence review should therefore distinguish between:

 

1. Checks completed before 1 October 2026 under the rules applicable at that time.
2. Checks required for relevant engagements beginning on or after 1 October 2026.
3. Repeat checks required on or after 1 October 2026.
4. Existing working arrangements that may require assessment under the expanded framework.
5. Historic checking failures that remain relevant to the organisation’s compliance position.

 

Employers should not automatically undertake blanket retrospective rechecking of their entire workforce solely because the law has changed.

Any additional checks should be undertaken on a legally appropriate basis and in accordance with the Home Office’s current guidance.

 

12. Assess discrimination risks in right to work procedures

 

The Home Office’s updated code of practice on avoiding unlawful discrimination in right to work checks took effect on 1 October 2026.

The buyer should assess whether the target’s checking procedures are consistent with the applicable code.

Right to work checks should be conducted fairly and consistently, without treating individuals less favourably because of their nationality, ethnic origin or other protected characteristics.

The review should consider whether the organisation applies different checking procedures to individuals based on assumptions about their immigration status or appearance.

It should also assess whether the company’s recruitment and onboarding processes provide appropriate routes for individuals who cannot use a particular digital checking method.

Where HR functions are to be centralised following the acquisition, the buyer should ensure that the group’s procedures reflect the current discrimination safeguards.

Training may be necessary for HR personnel, recruitment teams, line managers and other individuals responsible for arranging work.

 

13. Review right to work records and potential enforcement exposure

 

The buyer should examine whether the target has retained the evidence necessary to demonstrate that prescribed right to work checks were completed correctly.

The review should include both the checking process and the records retained.

Where the company cannot demonstrate that the required checks were completed, it may face difficulty establishing a statutory excuse if illegal working is identified.

The buyer should therefore assess:

 

• Whether prescribed checks were completed before the relevant work commenced.
• Whether the correct checking method was used.
• Whether the required evidence was retained.
• Whether checks were completed for individuals covered by the expanded regime.
• Whether repeat checks were undertaken where required.
• Whether the company has procedures for identifying expiring immigration permission.
• Whether there are unexplained gaps in checking records.
• Whether any individuals are working outside the conditions of their immigration permission.
• Whether the company has received Home Office enquiries or enforcement correspondence concerning illegal working.

 

The review should also establish whether the business has previously received civil penalties or other enforcement action.

Where weaknesses are identified, the buyer should assess their legal significance and whether corrective action is required.

The organisation should not assume that conducting a late check automatically establishes a statutory excuse for an earlier period of non-compliance.

However, prompt corrective action may still be important in managing current and future risk.

Right to work due diligence should therefore be treated as both a historic liability assessment and a review of the systems the acquiring business will inherit following completion.

 

14. Review immigration warranties and indemnities in the share purchase agreement

 

The share purchase agreement should address material immigration compliance risks identified during due diligence.

In a share sale, the target company ordinarily retains its existing liabilities and regulatory history.

The buyer may therefore acquire a company exposed to financial and operational consequences arising from previous sponsorship or right to work compliance failures.

Appropriate contractual protections can help allocate financial risk between the buyer and seller.

Depending on the transaction, the buyer may seek warranties concerning:

 

• The validity and status of the target company’s sponsor licence.
• The accuracy of information provided about sponsored workers.
• Compliance with sponsor reporting and record-keeping obligations.
• The absence of undisclosed Home Office investigations.
• Previous sponsor licence downgrading, suspension or revocation action.
• Compliance with applicable right to work checking requirements.
• The absence of undisclosed illegal working civil penalties.
• The accuracy of information concerning pending immigration applications.
• Compliance with the requirements applicable to previous corporate changes.
• The disclosure of material correspondence with the Home Office.

 

Where specific risks have been identified, the buyer may also seek indemnities addressing defined losses arising from those matters.

For example, a buyer may require protection against financial liabilities associated with a disclosed historic right to work compliance failure.

However, warranties and indemnities are contractual arrangements between the transaction parties.

They do not prevent the Home Office from taking enforcement action or guarantee that a replacement sponsor licence will be granted.

Nor do they necessarily compensate the business for every operational consequence of losing the ability to sponsor workers.

The buyer should therefore avoid treating contractual protections as a substitute for regulatory due diligence or compliance remediation.

Where sponsor licensing is commercially critical, the transaction strategy should address the underlying immigration risk directly.

 

15. Consider immigration-related completion conditions and undertakings

 

Where sponsor licensing is material to the transaction, the parties should consider whether specific immigration obligations need to be incorporated into the completion arrangements.

The appropriate approach will depend on the transaction structure and the extent to which the relevant requirements can be satisfied before completion.

For example, the buyer may require the seller to provide complete sponsorship records, cooperate with Home Office reporting and ensure that existing compliance obligations continue to be met until completion.

The parties may also agree undertakings concerning the availability of key personnel, access to immigration records and assistance with any required replacement licence application.

Potential provisions include:

 

• Requirements to disclose material Home Office correspondence received before completion.
• Obligations to maintain sponsor compliance systems during the period between signing and completion.
• Restrictions on material changes to sponsored workers’ employment arrangements without appropriate consultation.
• Requirements to provide current sponsored worker and right to work records.
• Obligations to preserve access to SMS and other relevant systems.
• Cooperation with ownership-change reporting and replacement licence applications.
• Requirements to notify the buyer of any new immigration enforcement concerns.
• Post-completion assistance with Home Office enquiries or compliance visits.

 

The parties should recognise that a replacement sponsor licence application may be required as a consequence of the completed ownership change.

It may therefore not be possible to obtain the replacement licence before completion in every transaction.

The completion conditions should reflect the applicable Home Office procedure rather than assume that all licensing requirements can be satisfied in advance.

Where the acquisition depends heavily on continued sponsorship, the buyer should assess the commercial consequences of the period between completion and the Home Office’s decision.

This may require contingency planning for recruitment delays, operational disruption or an unsuccessful licence application.

 

16. Sponsor licence due diligence risk matrix

 

The following matrix illustrates common immigration compliance risks arising during the acquisition of a licensed sponsor.

 

Due diligence issue	Potential risk	Recommended buyer action
Direct change of ownership	Existing licence may be revoked or made dormant	Determine whether a replacement licence is required and prepare the application strategy
Indirect change of ownership	Incorrect assessment of reporting or licensing obligations	Review the full corporate structure and applicable Home Office guidance
B-rated sponsor licence	Restrictions on sponsorship and unresolved compliance concerns	Review the action plan and assess the prospects of compliance remediation
Outstanding Home Office investigation	Potential enforcement action affecting sponsorship	Review correspondence, allegations and available remedial measures
Inaccurate sponsored worker records	Reporting failures and potential sponsor duty breaches	Audit SMS, HR, payroll and immigration records
Sponsored workers approaching visa expiry	Immigration applications may coincide with licensing transition	Prepare individual immigration timetables
Dependence on sponsored workers	Operational disruption if sponsorship is interrupted	Assess commercial exposure and contingency arrangements
Departing sponsor key personnel	Loss of SMS access or inadequate sponsorship governance	Prepare compliant replacement and access arrangements
Expanded right to work checking scope	Relevant worker or individual subcontractor engagements may not be covered by existing procedures	Review engagement categories and update checking controls for the October 2026 regime
Digital verification provider	Checking arrangements may not satisfy applicable certification or registration requirements	Verify provider status, checking procedures and retained evidence
Historic right to work records	Inability to demonstrate compliance with the rules applicable at the relevant time	Audit records against historic requirements and any subsequent repeat-check duties
Discriminatory checking procedures	Potential discrimination liability and inconsistent compliance practices	Review procedures against the current Home Office discrimination code
Previous illegal working penalties	Financial liability and possible wider immigration compliance concerns	Review enforcement history and contractual protections
Planned post-acquisition restructuring	Further reporting, sponsorship or employment transfer obligations	Assess integration plans before implementation

 

The significance of each risk will depend on the target company’s circumstances.

A company with a small sponsored workforce and established compliance systems may present a relatively limited immigration risk profile.

By contrast, a business with extensive overseas recruitment, multiple licensed entities, unresolved compliance concerns or substantial contractor engagement arrangements may require a more detailed review.

The buyer should prioritise issues that could affect the company’s ability to continue operating lawfully or maintaining its sponsored workforce after completion.

 

17. Why sponsor licence due diligence should begin before signing

 

Immigration due diligence is most effective when undertaken before the parties become contractually committed to the acquisition.

At that stage, the buyer can identify material sponsor licensing risks, seek further information and consider whether the transaction structure or timetable should be adjusted.

Where the review is delayed until after signing, the parties may have limited flexibility to address problems before completion.

This can be particularly problematic where the target company requires a replacement sponsor licence and has outstanding compliance weaknesses that could affect the application.

Early due diligence also allows the buyer to identify the employees whose immigration position may be affected by the transaction and assess the consequences for planned recruitment.

The review should involve appropriate coordination between corporate advisers, immigration specialists, HR personnel and those responsible for the target company’s sponsor licence.

Where the acquisition involves several licensed subsidiaries, the buyer should ensure that the review covers each relevant legal entity.

It should also consider the intended post-completion operating structure, including any plans to consolidate HR systems, transfer employees or centralise right to work checking procedures.

The October 2026 right to work changes make this wider assessment particularly important where the target engages individuals through worker contracts, individual subcontracting arrangements or qualifying online matching arrangements.

The buyer should establish whether the target’s current systems reflect the expanded checking regime and whether the acquiring group will need to implement additional controls following completion.

Ultimately, sponsor licence due diligence should enable the buyer to understand both the immediate regulatory consequences of the share sale and the continuing immigration compliance obligations it will inherit through ownership of the target company.

Where material risks are identified, the findings should inform the transaction documents, completion arrangements, licensing strategy and post-acquisition integration plan.

 

 

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Section G: Sponsor Licence Actions Before and After Completion

 

A share sale involving a licensed sponsor should be managed through a structured immigration compliance plan covering the period before signing, the interval between signing and completion, completion itself and the subsequent transition.

The objective is to establish the sponsor licensing consequences before ownership changes, ensure that the correct Home Office notifications and applications are made within the prescribed deadlines and protect the position of existing sponsored workers.

This requires coordination between the buyer, seller, target company, corporate transaction advisers, HR personnel and those responsible for managing the sponsor licence.

Where the transaction constitutes a relevant change in direct ownership under C4.5, the existing licence will be revoked or, where sponsored workers have transferred under the relevant arrangements, made dormant. Where the company remains the employer and wishes to continue sponsoring workers, it must make the required new sponsor licence application within 20 working days of the change.

These consequences should be anticipated rather than discovered after completion.

The compliance plan should identify the legal entity responsible for each action, the documents required, the applicable deadlines and the individual accountable for ensuring compliance.

The plan should also address the wider workforce compliance arrangements that the acquiring business will inherit.

From 1 October 2026, the statutory right to work checking framework was extended to additional working arrangements beyond conventional employment contracts. Buyers should therefore consider whether the target company’s procedures cover the relevant categories of workers and individual subcontractors, as well as its existing employees.

Although the right to work changes do not themselves alter the fundamental sponsor licence rules governing share acquisitions, they are relevant to the buyer’s assessment of the target company’s compliance systems and its post-acquisition integration plans.

 

1. Before signing: establish the sponsor licensing position

 

The first priority is to determine how the proposed share sale will affect the target company’s sponsor licence.

This assessment should begin during due diligence, before the parties enter into a binding share purchase agreement.

The buyer should confirm the identity of the licensed organisation and review the ownership structure before and after the proposed acquisition.

The review should establish whether the transaction involves a direct change of ownership, an indirect change higher up the corporate group or a restructuring that does not alter the relevant ownership arrangements.

These distinctions matter because different corporate arrangements may have different consequences under the Home Office’s change-of-ownership guidance.

For example, an acquisition involving the transfer of a controlling number of shares in the licensed company will normally be treated differently from a transaction involving shares in an ultimate parent company where the licensed subsidiary’s direct ownership remains unchanged.

The parties should establish whether the existing licence will be revoked or made dormant and whether the target company is required to submit a fresh sponsor licence application.

Where a new licence is necessary, the buyer should assess whether the company will be able to satisfy the Home Office’s eligibility and suitability requirements following completion.

This includes examining its existing compliance arrangements, the individuals responsible for sponsorship and any outstanding enforcement concerns.

The pre-signing review should also identify sponsored workers whose continued employment is commercially important.

A buyer should understand the consequences of any interruption to sponsorship before committing to a transaction whose value depends on retaining those employees.

The assessment should also consider the company’s right to work compliance arrangements, including whether its procedures reflect the expanded checking requirements introduced on 1 October 2026.

Pre-signing actions should include:

 

1. Confirm the target company’s sponsor licence status, rating and authorised immigration routes.
2. Obtain accurate pre-acquisition and post-acquisition ownership structure charts.
3. Determine whether the transaction constitutes a relevant direct or indirect change of ownership.
4. Establish whether the existing licence will be affected and whether a replacement application is required.
5. Review the target company’s immigration compliance history.
6. Audit the sponsored workforce and identify outstanding immigration matters.
7. Assess the implications for recruitment and planned Certificates of Sponsorship.
8. Review the categories of individuals engaged by the business and the applicable right to work checking requirements.
9. Identify contractual protections and transaction risks requiring further attention.
10. Prepare an immigration compliance timetable covering the period before and after completion.

 

The findings should be recorded in the immigration due diligence report and reflected in the transaction’s legal and commercial planning.

 

2. Between signing and completion: prepare the immigration transition

 

Where signing and completion take place on different dates, the intervening period provides an opportunity to prepare for the sponsor licensing consequences of the transaction.

The target company should continue complying with its existing sponsorship obligations throughout this period.

This includes maintaining sponsored worker records, making required SMS reports, monitoring immigration permission and ensuring that sponsored employees continue working in accordance with their sponsorship arrangements.

The parties should avoid assuming that signing the share purchase agreement itself necessarily changes the company’s ownership.

The relevant ownership change will ordinarily take effect at completion, although the precise position depends on the transaction documents and structure.

The compliance plan should therefore identify the event that triggers the applicable Home Office reporting and application requirements.

Where a new sponsor licence application will be required, the parties should prepare as much of the application as the Home Office process permits before completion.

This may include gathering corporate documents, reviewing compliance systems, identifying proposed key personnel and preparing information about the company’s business activities and sponsored workforce.

The organisation should not submit an application on an incorrect factual basis or assume that a post-completion licensing requirement can always be satisfied before the ownership change occurs.

The timing and procedure must follow the applicable Home Office guidance.

The parties should also confirm who will retain access to the Sponsor Management System after completion.

This is particularly important where the existing Level 1 User, Authorising Officer or HR director is expected to leave the company as part of the transaction.

Arrangements should be made to preserve access to sponsorship records and ensure that an appropriately authorised individual can make the required reports.

The target company should also identify any sponsored workers whose immigration permission is due to expire shortly before or after completion.

Where immigration applications are pending, the employer should assess whether the ownership change creates additional requirements or risks.

The signing-to-completion period should also be used to review the target company’s right to work procedures.

Where the business engages individuals through worker contracts, individual subcontracting arrangements or qualifying online matching arrangements, the buyer should establish whether the current procedures reflect the expanded statutory framework.

Any proposed changes to checking systems, digital verification providers or HR record-keeping arrangements should be planned before implementation.

The parties should also ensure that relevant compliance records will remain accessible after completion.

 

3. Completion day: confirm the ownership change and activate the reporting plan

 

Completion is the point at which the share transaction ordinarily takes effect and ownership of the relevant shares passes to the buyer.

For sponsor licensing purposes, this can be the event that triggers the obligation to report a change of ownership and, where applicable, submit a new licence application.

The parties should confirm the actual completion date rather than rely solely on the date originally anticipated in the transaction timetable.

Where completion is delayed, accelerated or implemented in stages, the reporting plan should be updated accordingly.

The target company’s immigration compliance team should receive confirmation that completion has occurred and be provided with the final transaction details needed for the Home Office notification.

This should include confirmation of the acquiring entity, the ownership structure following completion and any changes affecting the licensed organisation.

Where the transaction involves several subsidiaries, the parties should identify separately which sponsor licences are affected.

A group-wide announcement that an acquisition has completed is not a substitute for determining the reporting obligations of each licensed entity.

The organisation should also confirm that its sponsor licence key personnel remain able to discharge their responsibilities.

If the transaction results in immediate management changes, the parties should ensure that immigration compliance responsibilities have been transferred appropriately.

Completion-day actions should include:

 

• Confirming the legal completion date and effective ownership change.
• Finalising the post-completion corporate structure chart.
• Identifying each affected sponsor licence.
• Confirming responsibility for Home Office reporting.
• Checking that the relevant Level 1 User can access SMS.
• Finalising supporting documents for the notification.
• Activating the timetable for any required new licence application.
• Confirming whether sponsored workers’ employment arrangements have changed.
• Ensuring that immigration and right to work records remain accessible.
• Recording outstanding immigration compliance actions.

 

These steps should be incorporated into the wider completion checklist.

Where the buyer intends to integrate the target’s HR systems immediately after completion, the transition should be managed so that sponsorship reporting, immigration monitoring and right to work checking functions remain operational.

 

4. Within 20 working days: complete the Home Office reporting and application requirements

 

The Home Office’s sponsor guidance generally requires relevant organisational changes to be reported within 20 working days.

Where the change-of-ownership provisions require a fresh sponsor licence application, the applicable guidance also provides for the new application to be made within the prescribed period.

For a direct change of ownership involving the transfer of a controlling number of shares, the Home Office’s published examples indicate that the licensed organisation must report the change and apply for a new licence within 20 working days where the relevant requirements apply.

The parties should confirm the precise requirements applicable to their transaction.

It is important to distinguish between notifying the Home Office and applying for a replacement licence.

A report of the share sale does not necessarily satisfy the requirement to submit a new licence application.

Similarly, preparing an application does not automatically fulfil the sponsor’s duty to notify UKVI of the ownership change.

Where both steps are required, they should be separately assigned and monitored.

The organisation should retain evidence of each submission, including the submission date, supporting documents and any acknowledgement or correspondence received from the Home Office.

The compliance team should also maintain a record of subsequent requests for information and the deadlines for responding.

The 20-working-day period should be treated as a regulatory deadline, not as a recommended target date.

Where possible, the organisation should submit the required information promptly after completion rather than wait until the end of the permitted period.

Employers should also distinguish between the deadline for submitting a replacement licence application and the time taken by the Home Office to reach a decision.

Submitting the application within the prescribed period does not mean that the new licence will necessarily be granted within that period.

Where the company employs sponsored workers, the licensing plan should address their position during the period in which the application is being considered.

 

5. During the new licence application: maintain compliance and manage workforce risk

 

Where a fresh sponsor licence application is required, the company should continue to maintain appropriate immigration compliance arrangements while the Home Office considers the application.

The organisation should not assume that submitting an application guarantees approval or automatically authorises unrestricted sponsorship activity.

The Home Office may request further evidence, examine the company’s compliance arrangements or conduct a compliance visit before reaching a decision.

The business should therefore ensure that its records, policies and personnel are ready for scrutiny.

Particular attention should be given to sponsored workers whose immigration position depends on the licensing outcome.

The Home Office’s change-of-ownership provisions include arrangements for existing sponsored workers in specified circumstances.

Where the applicable conditions are met, those workers may be able to continue without making new immigration applications solely because of the share acquisition.

However, the employer must comply with the relevant reporting and licensing requirements and should not assume that the continuity provisions apply automatically in every case.

The company should maintain an accurate record of affected workers and establish whether any individual action is required.

The organisation should also review planned overseas recruitment.

Where the existing licence is being revoked and the replacement application remains outstanding, the employer should not assume that it can continue assigning Certificates of Sponsorship as before.

Recruitment plans may need to be adjusted to reflect the licensing timetable and any restrictions on sponsorship activity.

The organisation should communicate appropriately with affected workers and managers, avoiding assurances that go beyond the position established under the Home Office rules.

Where the application encounters difficulties, the employer should assess the implications promptly and obtain advice on the available options.

During this period, the company must also maintain its wider right to work compliance arrangements.

Where individuals are engaged under arrangements covered by the expanded statutory scheme introduced on 1 October 2026, the employer should ensure that the applicable prescribed checks are completed.

The organisation should continue monitoring immigration permission expiry dates, conducting required repeat checks and retaining evidence in accordance with the current Home Office guidance.

Any changes to digital verification systems should be managed so that the company continues using appropriate checking methods and retains the evidence required to establish a statutory excuse where available.

 

6. After the new licence is granted: update sponsorship arrangements

 

Where the Home Office grants a replacement sponsor licence, the organisation should confirm that the new authorisation accurately reflects its business and intended sponsorship activities.

The company should check the immigration routes covered by the licence, the appointed key personnel and any conditions or requirements associated with the grant.

It should also establish how existing sponsored workers are to be recorded under the new licence in accordance with the Home Office’s change-of-ownership procedures.

Where the applicable provisions permit workers to continue without submitting new immigration applications, the employer should ensure that the necessary sponsorship records and Home Office processes are completed.

The company should not assume that the grant of a new licence automatically resolves every outstanding issue.

For example, the business may still need to address changes to sponsored workers’ employment arrangements, request an allocation of Certificates of Sponsorship or update its internal compliance procedures.

The organisation should also review its recruitment pipeline and establish when it can resume or commence new sponsorship activity under the replacement licence.

A post-grant compliance review should confirm that the company’s records accurately reflect the new ownership structure and that the individuals managing sponsorship understand their responsibilities.

The review should also examine whether the company’s wider right to work systems remain appropriate following the acquisition.

Where the target’s procedures are being integrated into the acquiring group’s HR systems, the buyer should ensure that the resulting arrangements comply with the current statutory checking requirements.

Historic right to work records should be preserved, including evidence of checks correctly completed under earlier requirements.

Any additional checks should be undertaken where legally required and in accordance with the applicable Home Office guidance.

 

7. Post-completion integration: avoid creating further sponsor licence problems

 

The initial share acquisition may be followed by changes to the target company’s operations.

These can include the consolidation of HR functions, the relocation of employees, changes to reporting lines, restructuring of departments or the transfer of workers to another group company.

Each subsequent change should be assessed separately for immigration compliance purposes.

For example, the acquiring group may decide to transfer employees from the target company into an existing UK subsidiary.

That transfer may involve a change of legal employer and raise sponsorship issues distinct from those arising from the original share sale.

Similarly, changes to a sponsored worker’s role, salary or work location may create reporting obligations or, in some circumstances, require a new immigration application.

The fact that the organisation has recently obtained a replacement sponsor licence does not remove these continuing duties.

The buyer should therefore include immigration compliance in its post-acquisition integration programme.

HR integration decisions should not be implemented without considering their implications for sponsored workers and the organisation’s sponsor licence.

This is particularly important where the acquiring group intends to centralise employment arrangements across several subsidiaries.

The integration programme should also address the right to work changes introduced on 1 October 2026.

Where the target engages individuals through worker contracts, individual subcontracting arrangements or qualifying online matching arrangements, the buyer should assess whether those engagements fall within the expanded checking regime.

Responsibility for conducting checks should be clearly allocated between the relevant entities and departments.

The group should not assume that transferring responsibility for HR administration automatically transfers the legal responsibility for complying with right to work obligations.

Where the buyer intends to introduce a centralised digital verification provider, it should confirm that the provider meets the certification and registration requirements applicable to the checking services being used.

The business should also ensure that records retained by the target’s previous provider remain accessible where required.

Any migration of HR systems should preserve the evidence needed to demonstrate compliance with historic and current right to work obligations.

Finally, the acquiring group should review its recruitment and onboarding procedures against the Home Office’s code of practice on avoiding unlawful discrimination, effective from 1 October 2026.

Checking procedures should be applied consistently and should not result in individuals being treated less favourably because of nationality, ethnic origin or other protected characteristics.

 

8. Allocate responsibility for post-completion sponsor compliance

 

Following completion, the acquiring business should establish clear governance arrangements for immigration sponsorship.

The organisation should identify who has operational responsibility for managing the sponsor licence, who oversees compliance and who is authorised to make decisions affecting sponsored workers.

Where the target company continues as a separate legal entity, its sponsor obligations must be managed appropriately even if HR functions are provided centrally by the acquiring group.

The buyer should ensure that the sponsor’s key personnel meet the relevant Home Office requirements and have sufficient authority to perform their roles.

The governance arrangements should cover:

 

• Oversight of the sponsor licence and Home Office correspondence.
• SMS access and reporting responsibilities.
• Sponsored worker record keeping.
• Monitoring immigration permission expiry dates.
• Reporting changes to sponsored workers’ circumstances.
• Right to work compliance for individuals covered by the current statutory framework.
• Oversight of digital verification providers and checking procedures.
• Retention of historic and current right to work evidence.
• Training for HR personnel, recruitment teams and line managers.
• Compliance with the Home Office’s code of practice on avoiding unlawful discrimination.
• Internal audits and escalation of compliance concerns.
• Review of proposed corporate and workforce changes.

 

These arrangements should be documented and communicated to relevant personnel.

Where the acquisition involves a large sponsored workforce, the buyer may wish to conduct a formal post-completion immigration compliance audit to confirm that the transition has been implemented correctly.

The audit should also consider whether the target company’s wider workforce engagement arrangements have been appropriately assessed following the October 2026 extension of the right to work regime.

The company should distinguish between historic checks completed under previous requirements and checks or repeat checks required under the current framework.

It should not automatically conduct blanket retrospective rechecking solely because the legal regime has changed.

Instead, the organisation should establish when additional checks are required and ensure that the appropriate procedures are followed.

 

9. Sponsor licence share sale completion timetable

 

The following timetable illustrates how immigration compliance responsibilities can be incorporated into a share acquisition.

 

Transaction stage	Sponsor licence priority	Key output
Initial due diligence	Identify licences and assess compliance history	Sponsor licence risk assessment
Before signing	Determine change-of-ownership consequences	Licensing strategy
Before signing	Review sponsored workforce and right to work compliance, including the October 2026 changes	Workforce compliance assessment
Signing to completion	Prepare reporting documents and any required application	Immigration transition plan
Completion	Confirm ownership change and reporting trigger	Verified completion information
Post-completion reporting period	Submit required Home Office notifications	Evidence of reporting
Applicable application period	Submit any required replacement licence application	Application confirmation
Application assessment	Respond to UKVI and maintain compliance	Updated evidence and compliance records
Licence decision	Implement the Home Office outcome	Confirmed sponsorship arrangements
Post-acquisition integration	Review further workforce and corporate changes	Ongoing compliance programme
HR systems integration	Confirm right to work checking methods, digital verification arrangements and record retention	Updated workforce compliance controls

 

The timetable should be adapted to the transaction’s complexity.

A straightforward acquisition of a single UK company may involve relatively limited immigration administration.

A multinational acquisition involving several licensed subsidiaries, substantial sponsored workforces and planned restructuring may require a dedicated immigration compliance workstream.

In either case, the essential principle is the same: sponsor licensing requirements should be addressed before ownership changes, implemented within the applicable Home Office deadlines and monitored throughout the post-completion transition.

The acquiring business should also ensure that the target’s right to work procedures reflect the statutory framework applicable from 1 October 2026 and that any subsequent integration of HR systems does not create gaps in checking, monitoring or record keeping.

 

 

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Section H: Share Sale vs Asset Sale: Sponsor Licence Differences

 

The distinction between a share sale and an asset sale is fundamental when assessing the sponsor licensing consequences of a corporate acquisition.

Although both transactions may result in a buyer acquiring control of an operating business, they involve different legal mechanisms and can have different implications for the organisation’s sponsor licence and sponsored workforce.

In a share sale, the buyer acquires shares in the company that operates the business. The company ordinarily continues as the same legal entity and remains the employer of its existing workforce.

In an asset sale, the buyer acquires specified assets or business operations from the seller. Employees may transfer to the buyer or another entity, potentially under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).

For immigration purposes, the parties must distinguish between a change in ownership of the licensed sponsor and a change in the legal entity employing sponsored workers.

The Home Office has specific rules governing changes of ownership, mergers, takeovers and business transfers. The relevant requirements depend on the legal structure and circumstances of the transaction.

 

1. Sponsor licence implications of a share sale

 

In a conventional share acquisition, the target company continues to exist after completion.

Its shareholders change, but its legal identity ordinarily remains unchanged.

For example, Company A holds a Skilled Worker sponsor licence and employs 20 sponsored workers. Company B acquires all the shares in Company A.

Following completion, Company A remains the legal employer of those workers. Their employment contracts do not ordinarily transfer to Company B simply because Company B has acquired the shares.

However, the transaction involves a direct change of ownership of the licensed organisation.

Under C4.5, where a controlling number of shares transfers to a new owner, the existing licence will be revoked or, where sponsored workers have transferred under the relevant arrangements, made dormant.

Company A may therefore need to apply for a replacement sponsor licence to continue sponsoring workers.

The organisation must also comply with the applicable reporting requirements.

Where the relevant Home Office conditions are satisfied, existing sponsored workers may be able to continue under the appropriate sponsorship arrangements without submitting new immigration applications solely because of the ownership change.

It is therefore incorrect to assume either that the sponsor licence automatically survives because the company remains the same legal entity or that every sponsored worker automatically requires a new visa.

The position must be determined by reference to the applicable change-of-ownership rules.

A different analysis may apply where the transaction involves an indirect change of ownership higher up the corporate group.

For example, where the shares in an ultimate parent company are acquired but the licensed subsidiary’s direct ownership remains unchanged, the Home Office’s published examples recognise that a replacement licence may not be required.

Any associated reporting obligations must nevertheless be considered.

 

2. Sponsor licence implications of an asset sale

 

An asset sale involves the transfer of specified assets, business operations or undertakings rather than the acquisition of shares in the company that owns them.

Depending on the transaction, the buyer may acquire property, contracts, intellectual property, equipment, goodwill and other business assets.

Employees may also transfer to the buyer or another legal entity.

Where TUPE applies, employment contracts and associated employment rights may transfer automatically to the new employer, subject to the relevant statutory provisions.

However, the transfer of employment under TUPE does not automatically transfer the seller’s sponsor licence to the buyer.

Sponsor licences are granted to specific organisations and cannot simply be assigned as commercial assets.

Where sponsored workers transfer to a new employer as part of a qualifying business transfer, the Home Office’s sponsorship rules must be considered.

The acquiring organisation may need to hold an appropriate sponsor licence or obtain one within the period prescribed by the relevant guidance.

The parties must also comply with any applicable reporting requirements.

For example, Company A holds a Skilled Worker sponsor licence and operates a manufacturing business.

Company B purchases the manufacturing business and its assets. The relevant employees, including sponsored workers, transfer from Company A to Company B.

Following completion, Company B becomes the legal employer of those workers.

Company B cannot assume that Company A’s sponsor licence transfers with the business.

The parties must establish the sponsorship requirements applicable to the transfer, including whether Company B already holds an appropriate licence and whether additional licensing action is required.

Where the relevant Home Office business transfer provisions apply, sponsored workers may not need to make fresh immigration applications solely because their employment has transferred.

However, this depends on the circumstances and compliance with the applicable requirements.

The position should be established before completion to avoid disruption to the transferred workforce.

 

3. Share sale and asset sale comparison table

 

The following table summarises the principal differences between share acquisitions and asset purchases involving sponsored workers.

 

Issue	Share sale	Asset sale
What does the buyer acquire?	Shares in the target company	Specified assets, business operations or undertakings
Does the target company remain the same legal entity?	Ordinarily yes	The seller remains a separate entity unless other restructuring occurs
Does the legal employer change?	Ordinarily no, unless employees are subsequently transferred	May change where employees transfer to the buyer or another entity
Does TUPE ordinarily apply?	Not merely because shares are sold	May apply where the statutory conditions for a relevant transfer are satisfied
Does the sponsor licence automatically transfer to the buyer?	No; a relevant direct ownership change may affect the target’s licence	No; the seller’s licence does not automatically transfer with the assets
Could a new sponsor licence be required?	Yes, particularly where controlling shares in the licensed organisation transfer to a new owner	Yes, depending on the acquiring employer’s existing licensing position and the applicable transfer rules
Are Home Office notifications required?	Where the transaction constitutes a reportable ownership or organisational change	Where the applicable business transfer and sponsorship reporting rules require notification
Do sponsored workers automatically need new visas?	Not necessarily; relevant continuity provisions may apply	Not necessarily; qualifying business transfer provisions may apply
Does the buyer’s existing licence automatically resolve the position?	No; the identity of the employing and sponsoring entity remains relevant	No; the buyer must establish that its licence covers the relevant sponsorship arrangements
Principal immigration risk	Failure to identify a relevant ownership change and comply with replacement licensing requirements	Failure to establish appropriate sponsorship arrangements for transferred workers

 

The comparison illustrates why the transaction’s legal structure must be established before assessing sponsor licence requirements.

Commercial terminology can be misleading. A transaction described as a takeover or acquisition may involve a share purchase, an asset transfer, a merger or several linked corporate steps.

The Home Office consequences should be assessed by reference to the actual legal arrangements rather than the label used by the transaction parties.

Where an acquisition involves both a share sale and a subsequent transfer of employees or business operations, each stage may create separate immigration compliance obligations.

 

 

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Section I: What If the Share Sale Is Not Reported Correctly?

 

Failure to comply with the Home Office’s change-of-ownership requirements can create serious consequences for a licensed sponsor and its sponsored workforce.

The risks are particularly significant where the transaction involves a direct change of ownership requiring the existing sponsor licence to be replaced.

A company may continue operating after a share sale without recognising that its ownership change has affected its immigration authorisation.

Its directors, HR personnel and sponsored employees may remain unchanged, creating the impression that sponsorship can continue without further action.

However, the Home Office’s sponsor licensing requirements operate independently of the company’s continued legal existence.

Where the transaction triggers reporting or replacement licensing obligations, the organisation must comply with those requirements within the applicable deadlines.

Failure to do so may expose the company to regulatory action, sponsorship disruption and wider commercial consequences.

 

1. Failure to report a change of ownership

 

Licensed sponsors are required to report relevant organisational changes within the period prescribed by the Home Office’s sponsor guidance.

For relevant changes of ownership, the reporting deadline is generally 20 working days.

Where a company fails to report a transaction that falls within these requirements, it may be in breach of its sponsor duties.

The Home Office may take compliance action in response to failures to meet sponsor obligations.

The consequences will depend on the circumstances, the nature of the breach and the applicable guidance.

For example, a company may fail to notify the Home Office because its corporate transaction advisers did not identify the sponsor licence as a regulatory issue.

Alternatively, the buyer may assume that the seller or target company’s previous management team has completed the required notification when no report has actually been submitted.

Neither explanation automatically removes the organisation’s regulatory responsibilities.

The sponsor should therefore maintain evidence confirming that the required report was made, including the submission date and any acknowledgement or correspondence received.

Where the organisation discovers an unreported change, it should investigate the circumstances promptly and establish the appropriate corrective action.

 

2. Failure to apply for a replacement sponsor licence

 

A failure to submit a required replacement sponsor licence application can be more serious than a reporting error alone.

Where a relevant direct change of ownership occurs under C4.5, the existing licence will be revoked or, where sponsored workers have transferred under the relevant arrangements, made dormant.

The organisation may be required to apply for a new licence within the prescribed period if it intends to continue sponsoring workers.

Failure to comply with that requirement can jeopardise the company’s ability to maintain sponsorship.

For example, Company A holds a sponsor licence and employs 40 sponsored workers.

Company B acquires a controlling shareholding in Company A. The parties correctly complete the corporate transaction but fail to consider the Home Office’s change-of-ownership requirements.

Company A continues operating and employing the same workers, but no replacement licence application is submitted.

The company may then discover that the transaction should have triggered action under the Home Office’s ownership-change provisions.

At that stage, the organisation may face significant difficulties because the relevant application deadline has already expired.

A late application should not be assumed to restore the previous licensing position or guarantee that the Home Office will permit sponsorship to continue.

The employer should obtain specialist advice promptly to establish the consequences and available options.

 

3. Consequences for existing sponsored workers

 

Failures relating to ownership-change reporting or replacement licensing can affect workers whose immigration permission depends on sponsorship by the company.

The Home Office’s change-of-ownership guidance includes arrangements intended to address continuity for existing sponsored workers where the applicable conditions are satisfied.

However, employers should not assume that those arrangements will protect the workforce where the organisation has failed to meet mandatory reporting or application requirements.

Where the company is unable to maintain appropriate sponsorship, the Home Office may take action affecting the immigration permission of sponsored workers.

The consequences for each individual depend on their immigration status, the relevant Home Office decision and the applicable immigration rules.

A sponsored worker does not necessarily lose immigration permission automatically on the date a reporting breach is identified.

However, the potential for cancellation or curtailment of permission can create significant uncertainty and disruption.

The organisation may also experience difficulties recruiting new overseas workers or supporting existing workers who require immigration extensions.

Where the company relies on sponsored employees to deliver essential services or fulfil contractual commitments, the commercial consequences may be substantial.

The employer should therefore assess the position of affected workers individually and avoid providing assurances that are not supported by the applicable Home Office rules.

 

4. Corrective action where a reporting or licensing failure is discovered

 

Where an organisation discovers that a share sale was not reported correctly, it should act promptly to establish the facts and identify the appropriate corrective steps.

The company should first determine the precise nature of the ownership change.

This includes reviewing the share purchase agreement, completion documents and ownership structure before and after the transaction.

The organisation should then establish which Home Office requirements applied and whether the relevant deadlines were met.

The corrective review should address:

 

1. The date on which the relevant ownership change occurred.
2. Whether the transaction constituted a direct or indirect change of ownership.
3. Whether the Home Office should have been notified.
4. Whether a replacement sponsor licence application was required.
5. Whether the relevant reporting and application deadlines have expired.
6. The current status of the existing sponsor licence.
7. The number and immigration status of affected sponsored workers.
8. Whether any Certificates of Sponsorship have been assigned since the transaction.
9. Whether any immigration applications have been submitted or remain outstanding.
10. The available corrective procedures and potential regulatory consequences.

 

The company should preserve all relevant records and correspondence.

Where a report remains outstanding, the organisation should establish the appropriate Home Office procedure for addressing the omission.

Where a required replacement application was not submitted, specialist advice should be obtained before assuming that a late application will resolve the problem.

The organisation should also consider whether the failure reflects wider weaknesses in its compliance systems.

For example, the company may have inadequate procedures for notifying its immigration compliance team of corporate changes.

Alternatively, responsibility for sponsorship may have been allocated to an individual who left the business following completion.

Corrective action should therefore address both the immediate regulatory issue and the underlying governance weakness.

 

5. How buyers can reduce sponsor licence enforcement risks

 

The most effective way to reduce sponsor licensing risk is to identify the relevant obligations before completion.

The buyer should include immigration compliance within the transaction’s legal due diligence and establish whether the acquisition will affect any sponsor licences held by the target group.

Where a replacement licence is required, the application strategy should be prepared in advance and implemented within the prescribed period.

The buyer should also ensure that the target company has appropriate personnel and systems to maintain sponsorship compliance during the transition.

Risk mitigation measures may include:

 

• Obtaining specialist advice on the sponsor licensing consequences of the proposed transaction.
• Reviewing the target company’s immigration compliance history.
• Auditing existing sponsored worker records.
• Identifying outstanding Home Office investigations or enforcement concerns.
• Preparing ownership-change reporting documentation before completion.
• Establishing responsibility for any required replacement licence application.
• Preserving authorised access to SMS.
• Monitoring the applicable reporting and application deadlines.
• Reviewing planned recruitment and pending immigration applications.
• Including appropriate immigration warranties, indemnities and undertakings in the transaction documents.
• Conducting a post-completion sponsor compliance review.

 

The buyer should also examine the target company’s right to work compliance arrangements.

From 1 October 2026, the statutory checking framework was extended to additional working arrangements, including relevant worker contracts, individual subcontracting arrangements and qualifying online matching arrangements.

The acquisition review should therefore assess whether the target’s checking procedures cover the individuals falling within the applicable regime.

It should also consider digital verification arrangements, historic checking evidence, required repeat checks and the Home Office’s updated code of practice on avoiding unlawful discrimination.

Where compliance weaknesses are identified, the buyer should establish whether they require remediation before or after completion and whether they create material financial or operational exposure.

Contractual protections can help allocate risk between the parties, but they do not replace the need to comply with Home Office requirements.

 

 

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Section J: Sponsor Licence Share Sale Checklist

 

A sponsor licence share sale checklist can help buyers, sellers and licensed organisations manage the immigration requirements arising from a corporate acquisition.

The checklist should cover the entire transaction, from initial due diligence through to completion and post-acquisition integration.

The precise actions will depend on the ownership structure, the number of licensed entities involved, the size of the sponsored workforce and whether the transaction requires a replacement sponsor licence.

Where the acquisition involves several licensed subsidiaries, the checklist should be completed separately for each relevant sponsor.

 

1. Before signing the share purchase agreement

 

The pre-signing stage should establish the immigration risks associated with the target company and the proposed ownership change.

Sponsor licence and transaction structure:

 

• Confirm the legal identity of each sponsor licence holder.
• Verify the status and rating of each sponsor licence.
• Identify the immigration routes covered by the existing licences.
• Review the ownership structure before and after the proposed acquisition.
• Determine whether the transaction involves a direct or indirect change of ownership.
• Establish whether a replacement sponsor licence application will be required.
• Identify any associated corporate changes that may create separate reporting obligations.

 

Sponsored workforce:

 

• Obtain a complete list of sponsored workers.
• Confirm the legal employer of each worker.
• Review Certificates of Sponsorship and immigration permission expiry dates.
• Identify pending visa applications and planned extensions.
• Assess compliance with sponsored salary, occupation and reporting requirements.
• Identify workers whose continued employment is commercially critical.
• Review planned overseas recruitment and CoS requirements.

 

Compliance and enforcement:

 

• Review historic Home Office compliance visits and correspondence.
• Identify outstanding investigations, action plans or enforcement concerns.
• Audit sponsor reporting and record-keeping procedures.
• Review the suitability and availability of sponsor key personnel.
• Assess right to work checking procedures and retained evidence.
• Review the categories of individuals covered by the expanded right to work regime effective from 1 October 2026.
• Examine digital verification providers and relevant certification or registration requirements.
• Review compliance with the current Home Office discrimination code.

 

Transaction protections:

 

• Identify immigration risks requiring warranties or indemnities.
• Consider appropriate pre-completion undertakings.
• Allocate responsibility for Home Office notifications and applications.
• Prepare a post-completion immigration transition plan.

 

2. At completion of the share sale

 

The completion checklist should ensure that the relevant ownership change is accurately recorded and that the immigration compliance plan is activated.

 

• Confirm the actual completion date.
• Confirm the identity of the acquiring shareholder or entity.
• Finalise the ownership structure chart.
• Identify each sponsor licence affected by completion.
• Confirm whether the transaction triggers a Home Office reporting obligation.
• Confirm whether a replacement sponsor licence application is required.
• Establish the applicable reporting and application deadlines.
• Ensure that an authorised individual retains access to SMS.
• Confirm the availability of the Authorising Officer, Key Contact and Level 1 User.
• Obtain final transaction documents required for the Home Office process.
• Confirm whether sponsored workers remain employed by the same legal entity.
• Identify any immediate changes to sponsored workers’ employment arrangements.
• Ensure continued access to immigration and right to work records.
• Notify relevant HR and compliance personnel that the transaction has completed.

 

Where the transaction involves staged completion, the parties should establish whether different ownership changes occur on different dates.

Each relevant event should be assessed against the applicable Home Office requirements.

 

3. After completion of the share sale

 

The post-completion checklist should address the immediate Home Office requirements and the longer-term integration of immigration compliance systems.

Home Office reporting and licensing:

 

• Submit required ownership-change notifications within the prescribed deadline.
• Submit any required replacement sponsor licence application within the applicable period.
• Retain evidence of all submissions and supporting documents.
• Monitor Home Office correspondence and requests for information.
• Respond to compliance enquiries within the applicable deadlines.
• Confirm the Home Office’s treatment of the existing sponsor licence.
• Implement the arrangements required following any replacement licence decision.

 

Sponsored worker continuity:

 

• Confirm the position of existing sponsored workers under the applicable change-of-ownership provisions.
• Identify any workers requiring individual immigration action.
• Review pending visa applications and upcoming permission expiry dates.
• Confirm the company’s ability to assign new Certificates of Sponsorship.
• Review any planned employee transfers to other group entities.
• Report subsequent changes to sponsored workers’ circumstances where required.
• Provide accurate information to affected workers and managers.

 

Right to work and HR integration:

 

• Review the target’s checking procedures against the right to work framework applicable from 1 October 2026.
• Identify relevant worker, individual subcontractor and qualifying online matching arrangements.
• Confirm responsibility for prescribed checks across the group.
• Review digital verification providers and permitted checking methods.
• Preserve historic right to work evidence during HR system migration.
• Conduct repeat checks where legally required.
• Review procedures against the current Home Office discrimination code.
• Train relevant HR, recruitment and compliance personnel.
• Update internal policies and escalation procedures.

 

Ongoing governance:

 

• Confirm the suitability and responsibilities of sponsor key personnel.
• Review SMS access and security.
• Establish ongoing monitoring of immigration permission expiry dates.
• Implement periodic sponsorship compliance reviews.
• Assess further corporate restructurings before implementation.
• Maintain an auditable record of immigration compliance decisions.

 

4. Employer action matrix

 

The following matrix provides a consolidated view of the principal immigration compliance actions associated with a share acquisition.

 

Action	Responsible party	Timing	Principal risk if omitted
Assess the ownership change	Buyer and corporate/immigration advisers	Before signing	Incorrect sponsor licensing strategy
Verify sponsor licence status	Buyer and target company	Due diligence	Undisclosed licensing restrictions or enforcement concerns
Audit sponsored workers	Target HR and immigration compliance team	Before completion	Unidentified immigration and workforce risks
Review right to work compliance	Buyer and target HR/compliance teams	Due diligence and integration	Illegal working exposure and inadequate checking controls
Prepare Home Office reporting documents	Licensed sponsor and advisers	Before and immediately after completion	Incomplete or late notification
Confirm completion date	Corporate transaction team	At completion	Incorrect deadline calculation
Report relevant ownership changes	Licensed sponsor through the appropriate authorised process	Within the applicable reporting deadline	Breach of sponsor reporting duties
Submit any required replacement licence application	Relevant applicant organisation	Within the applicable application deadline	Loss or interruption of sponsorship capability
Monitor sponsored worker continuity	HR and immigration compliance team	Throughout the transaction	Immigration disruption affecting existing workers
Manage new overseas recruitment	HR and recruitment teams	During the licensing transition	Unlawful or unsupported sponsorship activity
Update key personnel and SMS arrangements	Licensed sponsor	As required following completion	Reporting failures and inadequate sponsor governance
Integrate right to work procedures	Buyer and group HR/compliance teams	Post-completion	Gaps in checking, verification or record retention
Review subsequent workforce transfers	Buyer, HR and immigration advisers	Before further restructuring	Additional unaddressed sponsorship obligations
Conduct post-completion compliance audit	Licensed sponsor and compliance advisers	Following integration	Unresolved regulatory weaknesses

 

The checklist should be adapted to the circumstances of the transaction and reviewed as the acquisition progresses.

For a business with a substantial sponsored workforce, immigration compliance may warrant a dedicated workstream alongside corporate, employment, tax and financial due diligence.

Where the target holds several sponsor licences, the buyer should ensure that each licensed organisation is assessed individually.

The parties should also recognise that the share acquisition may be only the first stage of a wider restructuring.

Subsequent employee transfers, changes to corporate ownership, integration of business operations and alterations to sponsored workers’ employment circumstances can create further Home Office obligations.

The principal objective is to preserve lawful sponsorship arrangements, comply with the applicable reporting and application requirements and ensure that the acquiring business has effective immigration and workforce compliance systems following completion.

 

 

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Section K: Need Advice on a Share Sale Involving a Sponsor Licence?

 

A share sale involving a licensed sponsor requires careful consideration of the Home Office’s change-of-ownership rules, particularly where the target company employs sponsored workers or relies on overseas recruitment.

The sponsor licensing consequences are not always apparent from the corporate transaction documents alone.

A direct transfer of the controlling number of shares in the licensed organisation under C4.5 will result in the existing sponsor licence being revoked or, where sponsored workers have transferred under the relevant arrangements, made dormant. Where the company remains the employer and wishes to continue sponsoring workers, it must make the required new sponsor licence application within 20 working days of the change.

By contrast, an indirect acquisition involving shares in a parent company may have different consequences, depending on the ownership structure and the Home Office’s applicable guidance.

The parties must also establish whether the transaction creates reporting obligations, how existing sponsored workers will be affected and whether the acquiring business can continue its planned recruitment activities.

Where immigration compliance issues are identified during due diligence, these may affect the transaction timetable, the terms of the share purchase agreement and the buyer’s post-completion integration plans.

DavidsonMorris advises employers on UK business immigration, sponsor licensing and workforce compliance, including the immigration implications of corporate acquisitions and restructurings.

Our solicitors can assist buyers, sellers and licensed organisations with:

 

• Sponsor licence transaction assessments: determining whether a proposed share sale constitutes a relevant change of ownership and whether a replacement sponsor licence is required.
• Immigration due diligence: reviewing sponsor licence status, compliance history, sponsored worker records, Home Office correspondence and outstanding enforcement concerns.
• Pre-completion planning: identifying immigration risks, preparing reporting documentation and establishing the applicable Home Office deadlines.
• Replacement sponsor licence applications: advising on eligibility, supporting evidence, key personnel and the application process following a relevant ownership change.
• Sponsored worker continuity: assessing the position of existing sponsored employees, pending immigration applications and future sponsorship requirements.
• Corporate restructuring: advising on sponsorship issues arising from subsequent employee transfers, group reorganisations and changes to employing entities.
• Right to work compliance: reviewing checking procedures, digital verification arrangements, workforce engagement models and record-keeping obligations.
• Home Office compliance and enforcement: assisting with compliance concerns, reporting failures, investigations and regulatory action affecting sponsor licences.
• Post-acquisition governance: reviewing sponsor compliance systems, SMS access, key personnel arrangements and ongoing workforce compliance responsibilities.

 

We can work alongside corporate, employment and other transaction advisers to ensure that immigration compliance is addressed within the wider acquisition process.

Early advice is particularly important where the target company has a substantial sponsored workforce, a history of sponsor compliance concerns or a business model dependent on continued access to overseas recruitment.

Employers should not wait until after completion to establish whether the transaction requires Home Office notification or a new sponsor licence application.

For advice on the sponsor licensing implications of a proposed or completed share sale, contact DavidsonMorris.

 

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Section L: Conclusion

 

A share sale can have significant consequences for a company’s UK sponsor licence, even where the business continues operating under the same legal identity and employing the same workers.

The central issue is whether the transaction constitutes a relevant change of ownership under the Home Office’s sponsor licensing rules.

Where a controlling number of shares in the licensed organisation transfers directly to a new owner under C4.5, the existing licence will be revoked or, where sponsored workers have transferred under the relevant arrangements, made dormant. Where the company remains the employer and wishes to continue sponsoring workers, it must make the required new sponsor licence application within 20 working days of the change.

Indirect changes of ownership involving parent companies can be treated differently and do not automatically require the licensed subsidiary to obtain a new licence.

The transaction’s legal structure must therefore be examined carefully before conclusions are reached about the existing licence.

Employers must also distinguish between reporting the ownership change and applying for a replacement licence. These are separate requirements, and the relevant Home Office deadlines must be observed.

The position of sponsored workers requires particular attention.

In a conventional share sale, the target company ordinarily remains the legal employer. Where the Home Office’s change-of-ownership continuity provisions apply and the relevant requirements are satisfied, existing sponsored workers may be able to continue without making fresh immigration applications solely because of the acquisition.

However, the arrangements are conditional and should not be confused with unrestricted permission to assign new Certificates of Sponsorship while a replacement licence application is outstanding.

Immigration due diligence should therefore form part of the acquisition process, covering the target company’s sponsor licence, compliance history, sponsored workforce, Home Office correspondence and planned recruitment.

The buyer should also review wider workforce compliance, including the statutory right to work requirements applicable from 1 October 2026 and the Home Office’s current record-keeping and discrimination guidance.

Where the acquisition is followed by employee transfers, corporate restructuring or changes to sponsored workers’ employment arrangements, those subsequent events may create additional immigration obligations.

The most effective approach is to establish the sponsor licensing consequences before signing, prepare the necessary documentation before completion and implement a clear compliance plan throughout the transition.

For employers, the objective is not simply to complete the share acquisition. It is to preserve lawful sponsorship arrangements, protect workforce continuity and ensure that the acquired business remains compliant with its ongoing Home Office obligations.

 

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Section M: Sponsor Licence Following a Share Sale FAQs

 

Can a sponsor licence be transferred when a company is sold?

No. A sponsor licence cannot simply be transferred to a buyer as part of a commercial sale.

Where the buyer acquires shares in the licensed company, the company ordinarily remains the same legal entity. However, a relevant direct change of ownership may still result in the existing sponsor licence being revoked or made dormant.

The company may need to apply for a replacement licence to continue sponsoring workers.

The position differs from an asset sale, where the business or employees may transfer to another legal entity. In that situation, the acquiring organisation must establish the appropriate sponsorship arrangements under the Home Office’s business transfer rules.

 

Does buying 100% of a company’s shares mean it needs a new sponsor licence?

Yes, where the acquisition constitutes a relevant change in direct ownership under C4.5.

The existing licence will be revoked or, where sponsored workers have transferred under the relevant arrangements, made dormant.

Where the company remains the employer and wishes to continue sponsoring workers, it must make the required new sponsor licence application within 20 working days of the change.

The parties should confirm the applicable reporting and application requirements before completion.

The fact that the target company retains its name, registration number and existing employees does not automatically preserve its previous sponsor licence.

 

What happens if a buyer acquires 51% of a licensed company?

An acquisition of 51% of the shares may constitute the transfer of the controlling number of shares and engage C4.5. The assessment should focus on whether the transaction is a relevant change in direct ownership, transfer of the controlling number of shares or another takeover arrangement falling within C4. Where C4.5 applies, the existing licence will be revoked or, where sponsored workers have transferred under the relevant arrangements, made dormant.

 

Does a minority share sale affect a sponsor licence?

A minority share sale does not, by itself, require a new sponsor licence. The parties should assess whether it nevertheless amounts to a change in direct ownership, transfer of the controlling number of shares or another takeover arrangement falling within C4. Voting or governance rights may be relevant factual context but are not a standalone Home Office test.

The company should also consider whether the investment results in any separately reportable organisational changes.

 

Does the sponsor licence remain valid if the company number stays the same?

Not necessarily.

In a conventional share sale, the target company ordinarily retains its company registration number because it remains the same legal entity.

However, the Home Office’s change-of-ownership rules can apply even where the company’s legal identity remains unchanged.

A relevant direct transfer of the controlling number of shares under C4.5 will result in the existing licence being revoked or, where sponsored workers have transferred under the relevant arrangements, made dormant, notwithstanding the fact that the company number, trading name and workforce remain the same.

Employers should assess the actual ownership change rather than rely on continuity of corporate registration.

 

Does an acquisition of the parent company require a new sponsor licence?

Not automatically.

Where the shares in a parent company are acquired, the licensed subsidiary’s immediate ownership may remain unchanged.

The Home Office’s published change-of-ownership examples recognise that an indirect acquisition of this nature can have different consequences from a direct transfer of controlling shares in the licensed organisation.

A replacement licence may not be required where the relevant ownership and operating arrangements of the licensed subsidiary remain unchanged.

However, the full corporate structure must be examined, together with any associated reporting obligations.

Complex acquisitions involving multiple intermediate holding companies should be assessed individually.

 

How long does a company have to report a share sale to the Home Office?

The Home Office generally requires relevant organisational changes to be reported within 20 working days.

Where a share sale constitutes a reportable change of ownership, the sponsor should establish when the relevant change took effect and calculate the applicable deadline.

In a conventional share purchase, the relevant date will ordinarily be completion, when ownership of the shares passes to the buyer.

Where the transaction also requires a replacement sponsor licence application, the organisation must comply with the separate application requirements and deadline.

Submitting a notification does not automatically satisfy the requirement to apply for a new licence.

 

Who reports a share sale to the Home Office?

The licensed sponsoring organisation is responsible for complying with its applicable Home Office reporting obligations.

In a conventional share sale, the target company ordinarily remains the same legal entity following completion.

Where it remains responsible for the relevant sponsorship obligations, the company must ensure that the required notification is made through the appropriate Home Office procedure.

The report will ordinarily be managed by an authorised Level 1 User through SMS, subject to the specific reporting arrangements applicable to the transaction.

The buyer, seller and target company should allocate responsibility for preparing documents and making the notification before completion.

Contractual arrangements between the parties do not remove the licensed organisation’s regulatory responsibilities.

 

Do sponsored workers need new visas after a share sale?

Not necessarily.

In a conventional share sale, the target company ordinarily remains the legal employer of its existing sponsored workers.

The Home Office’s change-of-ownership guidance includes arrangements under which existing sponsored workers may be able to continue without submitting new immigration applications solely because of the corporate transaction.

However, the relevant conditions must be satisfied, including compliance with applicable reporting and licensing requirements.

The position may differ where workers subsequently transfer to another legal employer or their employment circumstances change in a way that creates additional immigration requirements.

Employers should assess the position of affected workers before completion rather than assume that all existing visas either remain unaffected or must be replaced.

 

Can sponsored workers continue working while a replacement sponsor licence application is pending?

Existing sponsored workers may be able to continue working under the Home Office’s applicable change-of-ownership arrangements while the organisation follows the required licensing process.

The position depends on the nature of the transaction, the workers’ existing immigration permission and compliance with the relevant Home Office requirements.

The employer should not assume that submitting a replacement licence application automatically guarantees continued sponsorship in every circumstance.

It should also distinguish the position of existing sponsored workers from the ability to assign new Certificates of Sponsorship.

A company may be subject to restrictions on new sponsorship activity while its replacement licence application is being considered.

Where workers’ immigration permission is approaching expiry or an application is already pending, individual advice may be necessary.

 

Can the buyer use its existing sponsor licence for the acquired company?

Not automatically.

Where the buyer and target remain separate legal entities, the buyer’s sponsor licence does not necessarily authorise sponsorship by the target company.

The parties must establish which legal entity employs the sponsored workers and how the Home Office’s change-of-ownership provisions apply.

If the buyer intends to transfer employees from the target company into another group entity, that subsequent transfer may create separate sponsorship requirements.

The existence of an existing group licence should therefore not be treated as a substitute for assessing the target company’s licensing position.

 

What happens if a company fails to report a share sale?

Failure to report a relevant ownership change within the prescribed period can constitute a breach of the sponsor’s reporting duties.

The Home Office may take compliance action depending on the circumstances.

The consequences can be particularly serious where the transaction also required a replacement sponsor licence application and that application was not submitted within the applicable deadline.

The company may face difficulties maintaining sponsorship for existing workers and undertaking future overseas recruitment.

Where an omission is discovered, the organisation should promptly establish the relevant facts, assess the licensing consequences and obtain advice on the appropriate corrective action.

A late notification or application should not be assumed to restore the previous licensing position automatically.

 

Can a company apply for a replacement sponsor licence before the share sale completes?

The company can prepare for a replacement sponsor licence application before completion, but whether an application can be submitted in advance depends on the applicable Home Office procedure and the circumstances of the transaction.

Where the requirement arises because a change of ownership has taken effect, the organisation should ensure that its application reflects the correct legal and factual position.

Employers should not assume that a replacement licence can always be obtained before completion.

However, much of the supporting evidence, compliance review and key personnel planning can ordinarily be undertaken in advance.

Early preparation can help the organisation meet the applicable post-completion application deadline.

 

Does TUPE apply when a company is sold through a share sale?

TUPE does not ordinarily apply merely because the shares in a company are sold.

In a conventional share acquisition, the target company remains the legal employer of its workforce, so employees do not ordinarily transfer to another employer as a consequence of the share sale itself.

However, TUPE may become relevant where the acquisition is followed by a separate transfer of a business or employees to another legal entity and the statutory conditions are satisfied.

For immigration purposes, the distinction matters because a transfer of sponsored workers to another employer may create additional Home Office reporting and licensing requirements.

The parties should therefore assess any subsequent employee transfer separately from the original share acquisition.

 

What sponsor licence due diligence should a buyer undertake?

A buyer should review the target company’s sponsor licence status, immigration routes, compliance history, sponsored workforce and any outstanding Home Office enforcement concerns.

The review should establish whether the proposed acquisition will require a replacement sponsor licence and whether the company is likely to satisfy the applicable eligibility and suitability requirements.

It should also identify sponsored workers with pending immigration applications, upcoming permission expiry dates or employment arrangements that may require further action.

Right to work compliance should form a separate part of the review, including the checking framework applicable from 1 October 2026.

The buyer should examine whether the target’s procedures cover the relevant categories of workers and individual subcontractors, whether appropriate digital verification methods are used and whether historic checking evidence has been retained.

Any material risks should be addressed through the transaction structure, contractual protections, completion planning and post-acquisition compliance programme.

 

Do the October 2026 right to work changes affect share sale due diligence?

Yes. The statutory right to work framework was extended from 1 October 2026 to additional working arrangements beyond conventional employment contracts.

The expanded regime includes relevant worker contracts, individual subcontracting arrangements and qualifying online matching arrangements.

A buyer should therefore examine how the target engages individuals across its workforce and whether the applicable prescribed checks are being completed.

The review should also consider the target’s digital verification arrangements, evidence retention, repeat-check procedures and compliance with the current Home Office code of practice on avoiding unlawful discrimination.

The changes do not mean that every historic right to work check must automatically be repeated. Checks correctly completed under the requirements applicable at the time should be distinguished from checks or repeat checks required under the current regime.

 

Does a share sale require the company to repeat all right to work checks?

No. A share sale does not, by itself, create a general requirement to repeat every right to work check previously completed by the target company.

Where the target remains the same legal employer, existing checking records should be reviewed to establish whether the prescribed checks were correctly completed and whether any follow-up checks are required.

Historic checks should be assessed against the requirements applicable when they were undertaken.

Where the acquisition is followed by a transfer of employees to another legal employer, the right to work implications should be assessed separately, including any applicable provisions concerning transfers of employment.

The employer should also consider the expanded statutory checking framework effective from 1 October 2026 for relevant working arrangements.

Any additional checks should be undertaken where legally required and in a manner consistent with the Home Office’s discrimination guidance.

 

What happens if the target company is already under Home Office investigation?

An ongoing Home Office investigation can create material risk for a proposed share acquisition.

The buyer should establish the nature of the investigation, the allegations or concerns being examined and the potential consequences for the company’s sponsor licence.

Where the share sale requires a replacement licence application, unresolved compliance concerns may affect the Home Office’s assessment of the organisation’s suitability.

The buyer should review relevant correspondence, compliance visit findings and any corrective action undertaken by the target.

Appropriate contractual protections may help allocate financial risk between the parties, but they do not prevent the Home Office from exercising its regulatory powers.

Where the investigation concerns serious sponsorship breaches or illegal working, specialist advice should be obtained before the transaction proceeds.

 

Can a company continue recruiting overseas workers immediately after a share sale?

This depends on whether the share sale affects the company’s sponsor licence.

Where the transaction does not require a replacement licence and the existing authorisation remains valid, the company may be able to continue sponsoring workers, subject to its normal obligations and any applicable restrictions.

However, where a relevant direct change of ownership requires a new sponsor licence, the company should not assume that it can continue assigning Certificates of Sponsorship under its previous authorisation.

The Home Office’s continuity arrangements for existing sponsored workers do not necessarily permit new sponsorship activity while a replacement application is outstanding.

Employers should therefore review planned overseas recruitment before completion and establish when new Certificates of Sponsorship can lawfully be assigned.

 

What should a buyer do if the target’s sponsor licence has compliance problems?

The buyer should investigate the nature and seriousness of the compliance problems before completion.

This may involve reviewing Home Office correspondence, previous compliance visits, sponsored worker records, reporting failures and any outstanding action plans.

The buyer should establish whether the issues have been resolved and whether they could affect a required replacement sponsor licence application.

Where material weaknesses remain, the parties should consider whether remediation is necessary before completion.

The buyer should also assess the commercial consequences of potential sponsor licence restrictions or enforcement action.

Depending on the circumstances, appropriate contractual protections, completion undertakings and post-acquisition compliance measures may be required.

However, contractual protections cannot guarantee a favourable Home Office decision or remove the organisation’s regulatory responsibilities.

 

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Section N: Glossary

 

The following glossary explains the principal corporate, immigration and workforce compliance terms relevant to a share sale involving a UK sponsor licence.

 

Term	Meaning
Sponsor Licence	A sponsor licence is an authorisation granted by the Home Office allowing an eligible organisation to sponsor overseas workers under specified UK immigration routes. The licence is issued to a particular organisation and is subject to ongoing compliance duties. It cannot simply be transferred to another company as a commercial asset.
Licensed Sponsor	A licensed sponsor is an organisation authorised by the Home Office to sponsor workers under one or more eligible immigration routes. The organisation must comply with applicable sponsorship requirements, including reporting relevant changes, maintaining prescribed records and monitoring sponsored workers.
Share Sale	A share sale is a corporate transaction in which a buyer acquires shares in a company from its existing shareholders. The company ordinarily remains the same legal entity following completion, although the change in ownership may affect its sponsor licence under the Home Office’s change-of-ownership rules.
Asset Sale	An asset sale is a transaction involving the acquisition of specified business assets, operations or undertakings rather than shares in the company that owns them. Employees may transfer to another legal employer, potentially creating separate sponsorship requirements under the Home Office’s business transfer provisions.
Direct Change of Ownership	A direct change of ownership occurs where ownership of the licensed organisation itself changes. Under C4.5, the transfer of a controlling number of shares in a licensed sponsor to a new owner will result in the existing licence being revoked or, where sponsored workers have transferred under the relevant arrangements, made dormant. Where the company remains the employer and wishes to continue sponsoring workers, it must make the required new sponsor licence application within 20 working days of the change.
Indirect Change of Ownership	An indirect change of ownership occurs where ownership changes higher up a corporate group, such as through the acquisition of shares in a parent company. The licensed subsidiary’s immediate ownership may remain unchanged. The Home Office’s treatment depends on the corporate structure and applicable guidance, and a replacement licence is not automatically required in every indirect acquisition.
Controlling Shareholding	A controlling shareholding generally refers to a shareholding that gives its holder control over the company, commonly through majority voting rights. For sponsor licensing purposes, the actual rights and ownership arrangements must be assessed against the Home Office’s relevant change-of-ownership provisions rather than relying solely on the percentage of shares acquired.
Target Company	The target company is the company whose shares are being acquired. Where the target holds a sponsor licence, the buyer must establish how the proposed acquisition affects that licence and the organisation’s existing sponsorship responsibilities.
Acquiring Company	The acquiring company is the buyer or corporate entity acquiring shares or business assets. In a share acquisition, the acquiring company does not automatically become the legal employer of the target company’s workers or acquire the target’s sponsor licence.
Parent Company	A parent company is an organisation that controls one or more subsidiary companies. An acquisition involving shares in a parent company may constitute an indirect change of ownership for a licensed subsidiary, requiring assessment under the Home Office’s corporate change provisions.
Subsidiary	A subsidiary is a company controlled by another company. A subsidiary may hold its own sponsor licence, and its licensing position must be assessed separately where a corporate acquisition affects the wider group.
Sponsor Licence Revocation	Revocation is the withdrawal of a sponsor licence by the Home Office. Revocation may occur for different reasons, including serious sponsor compliance failures or relevant changes of ownership under the applicable sponsor guidance. The consequences for existing sponsored workers depend on the circumstances and relevant immigration rules.
Dormant Sponsor Licence	A dormant sponsor licence is a licence that the Home Office has placed into dormant status under specified circumstances. Dormancy can arise in certain corporate change situations and should not be treated as equivalent to an unrestricted active licence. The organisation must establish the implications for sponsorship under the applicable Home Office guidance.
Replacement Sponsor Licence	A replacement sponsor licence is a new licence obtained where an organisation’s previous licence can no longer continue following a relevant corporate change. The applicant must satisfy the applicable eligibility and suitability requirements. Submission of an application does not guarantee that a licence will be granted.
Sponsor Management System (SMS)	The Sponsor Management System is the Home Office’s online system used by licensed sponsors to manage specified sponsorship functions. These include assigning Certificates of Sponsorship, maintaining relevant sponsor information and reporting certain organisational and sponsored worker changes.
Authorising Officer	The Authorising Officer is the senior individual appointed by a sponsor to take overall responsibility for its sponsorship activities and compliance with the sponsor licensing arrangements. The individual must satisfy the applicable Home Office requirements.
Key Contact	The Key Contact is the individual nominated by the sponsoring organisation to act as its principal point of contact with the Home Office in relation to the sponsor licence, subject to the relevant sponsorship arrangements.
Level 1 User	A Level 1 User is an authorised individual who manages the sponsor’s day-to-day SMS activities and has access to the system functions permitted by the Home Office. Maintaining appropriate Level 1 User access is particularly important when key personnel change following an acquisition.
Level 2 User	A Level 2 User is a legacy SMS user role with more limited permissions than a Level 1 User. No new Level 2 Users can be appointed from 9 September 2026. Existing Level 2 Users must be upgraded to Level 1, where eligible, or deactivated by 8 March 2027.
Certificate of Sponsorship (CoS)	A Certificate of Sponsorship is an electronic record assigned by an authorised sponsor to support a worker’s immigration application. It contains information about the proposed employment and sponsorship arrangements. It is not a physical certificate or, by itself, permission to work in the UK.
Skilled Worker Visa	The Skilled Worker visa is a UK immigration route allowing eligible overseas nationals to undertake qualifying sponsored employment. Applicants must meet the applicable requirements, including sponsorship, occupation, salary and other relevant immigration criteria.
Sponsored Worker	A sponsored worker is an individual whose immigration permission is supported by an organisation holding the relevant sponsor authorisation. The worker’s ability to undertake employment is subject to the conditions of their immigration permission and the applicable sponsorship rules.
Sponsorship Continuity	Sponsorship continuity refers to the arrangements under which sponsorship of existing workers may continue following specified corporate changes. The Home Office’s merger, takeover and business transfer provisions can allow workers to continue without making fresh immigration applications solely because of the transaction, provided the relevant conditions are satisfied.
Immigration Permission	Immigration permission is the legal authorisation allowing an individual to enter or remain in the UK, subject to any applicable conditions. A sponsored worker’s immigration permission must be distinguished from the status of the employer’s sponsor licence and the identity of the legal employer.
Curtailment or Cancellation of Immigration Permission	Curtailment or cancellation refers to Home Office action affecting an individual’s existing immigration permission. The consequences of sponsor licence revocation or other sponsorship problems depend on the applicable immigration rules, the circumstances of the case and any relevant Home Office decision. Permission does not necessarily end automatically on the date a sponsor compliance issue arises.
TUPE	TUPE refers to the Transfer of Undertakings (Protection of Employment) Regulations 2006. These regulations can protect employees where a qualifying business or service provision transfer takes place. TUPE does not ordinarily apply merely because shares in a company are sold, but it may become relevant where employees subsequently transfer to another legal employer.
Business Transfer	A business transfer involves the transfer of business activities or operations from one organisation to another. Where sponsored workers move to a different legal employer, the Home Office’s business transfer sponsorship provisions may apply, including reporting and licensing requirements.
Immigration Due Diligence	Immigration due diligence is the assessment of a target company’s immigration compliance arrangements and associated regulatory risks before an acquisition. It may include reviewing sponsor licences, sponsored workers, Home Office correspondence, right to work records, enforcement history and the immigration implications of the proposed transaction.
Share Purchase Agreement (SPA)	A share purchase agreement is the principal contract governing the sale and purchase of shares. It may include warranties, indemnities, undertakings and other provisions addressing immigration compliance risks identified during due diligence.
Warranty	A warranty is a contractual statement concerning specified facts or circumstances. In a share acquisition, immigration warranties may address sponsor licence validity, compliance history, sponsored workforce information and the absence of undisclosed Home Office enforcement matters.
Indemnity	An indemnity is a contractual obligation intended to allocate responsibility for specified losses or liabilities. Immigration-related indemnities may address defined risks arising from historic compliance failures. They do not prevent the Home Office from taking regulatory action.
Completion	Completion is the stage at which a corporate acquisition is implemented in accordance with the transaction documents. In a conventional share sale, ownership of the relevant shares ordinarily transfers at completion. The actual effective date of the ownership change is important when calculating applicable Home Office reporting and application deadlines.
Right to Work Check	A right to work check is a prescribed verification process used to establish whether an individual has permission to undertake the relevant work in the UK. The appropriate method depends on the individual’s circumstances and the applicable legal framework. Correctly completed checks can provide a statutory excuse against civil liability where the statutory conditions are satisfied.
Statutory Excuse	A statutory excuse is a legal defence against a civil penalty for illegal working where the person or organisation responsible has conducted the prescribed right to work checks and satisfied the applicable requirements. The availability of the excuse depends on the circumstances and compliance with the relevant checking regime.
Digital Verification Service	A digital verification service is a service used to verify identity or right to work evidence through an authorised digital checking process. Employers must ensure that the service and checking method meet the certification, registration and other requirements applicable to the relevant right to work route.
Employer Checking Service (ECS)	The Employer Checking Service is a Home Office service used in specified circumstances where an employer needs confirmation of an individual’s right to work and the normal prescribed checking routes are not available or appropriate.
Positive Verification Notice (PVN)	A Positive Verification Notice is confirmation issued through the Employer Checking Service that an individual has the relevant right to work. Where the statutory conditions are satisfied, a Positive Verification Notice can establish a time-limited statutory excuse, subject to the applicable follow-up checking requirements.
Appendix D	Appendix D is the Home Office guidance specifying the documents and records that licensed sponsors must retain. The October 2026 version should be considered when reviewing current sponsor record-keeping obligations. Historic compliance should also be assessed against the requirements applicable when the relevant records or checks were required.
Worker Contract	A worker contract is a contractual working arrangement that may fall within the expanded statutory right to work checking framework effective from 1 October 2026. Whether a particular arrangement is covered depends on the applicable legislation and the facts of the engagement.
Individual Subcontractor	An individual subcontractor is an individual engaged to perform work under a subcontracting arrangement. Relevant individual subcontracting arrangements may fall within the expanded right to work checking framework introduced on 1 October 2026. The applicable obligations must be assessed by reference to the legal and factual circumstances.
Online Matching Arrangement	An online matching arrangement is an arrangement through which an online service or platform matches individuals with opportunities to perform work. Specified arrangements may fall within the expanded statutory right to work regime effective from 1 October 2026. Not every online platform or commercial introduction arrangement is necessarily covered.
Home Office Compliance Visit	A Home Office compliance visit is an assessment of an organisation’s eligibility for sponsorship or compliance with its sponsor duties. Visits may occur before a licence is granted or while an organisation holds a licence. The Home Office may examine sponsored worker records, recruitment practices, reporting arrangements and compliance systems.
Sponsor Licence Suspension	Sponsor licence suspension is a Home Office compliance measure that restricts the organisation’s sponsorship activities while concerns are investigated or assessed. Suspension is distinct from revocation, although unresolved or serious compliance concerns may ultimately lead to revocation.
A-Rating and B-Rating	An A-rating is the standard rating for a licensed sponsor that satisfies the applicable sponsorship requirements. A B-rating indicates that the sponsor is subject to specified compliance measures and restrictions, commonly involving an action plan. The rating can affect the organisation’s ability to undertake new sponsorship activity.
Illegal Working Civil Penalty	An illegal working civil penalty is a financial penalty that may be imposed where the relevant statutory requirements concerning illegal working are breached and no applicable statutory excuse is established. Historic and current right to work compliance should be reviewed during an acquisition to identify potential exposure.
Post-Acquisition Integration	Post-acquisition integration is the process of combining or coordinating the acquired business with the buyer’s existing operations. Changes to employment structures, HR systems, sponsored workers’ circumstances or corporate organisation may create further immigration compliance obligations after the initial share sale.

 

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Section O: Useful Links

 

The following resources provide further information about sponsor licensing, corporate changes, sponsored workers and right to work compliance.

Employers should consult the current versions of the relevant Home Office guidance when assessing a proposed or completed transaction.

 

Description	URL
Workers and Temporary Workers: Guidance for Sponsors, Part 3 – Sponsor Duties and Compliance Home Office guidance covering sponsor duties, organisational changes, reporting requirements and the treatment of mergers, takeovers and business transfers. The change-of-ownership provisions and Annex C4 are particularly relevant.	https://www.gov.uk/government/publications/workers-and-temporary-workers-guidance-for-sponsors-part-3-sponsor-duties-and-compliance
Workers and Temporary Workers: Guidance for Sponsors, Part 1 – Apply for a Licence Guidance on sponsor licence eligibility, suitability, applications and the Home Office’s assessment process.	https://www.gov.uk/government/publications/workers-and-temporary-workers-guidance-for-sponsors-part-1-apply-for-a-licence
Workers and Temporary Workers: Guidance for Sponsors, Part 2 – Sponsor a Worker Guidance on assigning Certificates of Sponsorship and the requirements applying to sponsored employment.	https://www.gov.uk/government/publications/workers-and-temporary-workers-guidance-for-sponsors-part-2-sponsor-a-worker
Appendix A: Supporting Documents for Sponsor Applications Home Office requirements concerning evidence submitted in support of sponsor licence applications.	https://www.gov.uk/government/publications/supporting-documents-for-sponsor-applications-appendix-a
UK Visa Sponsorship for Employers Government overview of employer sponsorship and the principal licensing requirements.	https://www.gov.uk/uk-visa-sponsorship-employers
Register of Licensed Sponsors: Workers The public register of organisations licensed to sponsor workers under eligible immigration routes.	https://www.gov.uk/government/publications/register-of-licensed-sponsors-workers
Companies House: Find and Update Company Information Official company information, including registered details, filing history and publicly available ownership information.	https://find-and-update.company-information.service.gov.uk/
Business Transfers and Takeovers: Employment Rights Government information about employment rights and responsibilities where business transfers and takeovers take place.	https://www.gov.uk/transfers-takeovers
Employer’s Guide to Right to Work Checks Home Office guidance on prescribed right to work checks, statutory excuses and the checking framework applicable to relevant working arrangements.	https://www.gov.uk/government/publications/right-to-work-checks-employers-guide
Right to Work Checklist Government guidance supporting the completion of prescribed right to work checks.	https://www.gov.uk/government/publications/right-to-work-checklist
Code of Practice on Avoiding Unlawful Discrimination in Right to Work Checks Home Office guidance on conducting checks fairly and consistently, including the updated requirements effective from 1 October 2026.	https://www.gov.uk/government/publications/right-to-work-checks-code-of-practice-on-avoiding-discrimination
Appendix D: Keeping Records for Sponsorship Home Office guidance on the documents sponsors must retain, including the updated October 2026 requirements.	https://www.gov.uk/government/publications/keep-records-for-sponsorship-appendix-d
Supplementary Code for Digital Right to Work Checks Guidance concerning digital right to work verification and the applicable requirements for eligible checking arrangements.	https://www.gov.uk/government/publications/supplementary-code-for-digital-right-to-work-checks-1-1
Sponsor Licence Overview of the UK sponsor licensing framework, employer obligations and key compliance considerations.	https://www.davidsonmorris.com/sponsor-licence/
Sponsor Licence Application Guidance on applying for a UK sponsor licence, including the application process and supporting requirements.	https://www.davidsonmorris.com/sponsor-licence-application/
Sponsor Licence Eligibility The eligibility and suitability requirements relevant to sponsor licence applicants.	https://www.davidsonmorris.com/sponsor-licence-eligibility/
Sponsor Licence Supporting Documents Guidance on the evidence required under the Home Office’s Appendix A requirements.	https://www.davidsonmorris.com/sponsor-licence-supporting-documents/
Sponsor Licence Fees Information about the costs associated with sponsor licence applications and employer sponsorship.	https://www.davidsonmorris.com/sponsor-licence-fees/
Sponsor Licence Processing Times Guidance on the time involved in Home Office consideration of sponsor licence applications.	https://www.davidsonmorris.com/sponsor-licence-processing-time/
Sponsor Licence Compliance Guidance on sponsor duties, record keeping, reporting and compliance management.	https://www.davidsonmorris.com/sponsor-licence-compliance/
Sponsor Licence Suspension Guidance on the implications of Home Office suspension action and the options available to affected sponsors.	https://www.davidsonmorris.com/sponsor-licence-suspension/
Sponsor Licence Revocation Guidance on sponsor licence revocation and its consequences for employers and sponsored workers.	https://www.davidsonmorris.com/sponsor-licence-revocation/
Right to Work Checks Employer guidance on right to work verification, statutory excuses and compliance procedures.	https://www.davidsonmorris.com/right-to-work-checks/
Illegal Working Guidance on employer responsibilities and immigration enforcement risks associated with illegal working.	https://www.davidsonmorris.com/illegal-working/
Skilled Worker Visa Guidance on the immigration route used by employers sponsoring eligible overseas workers.	https://www.davidsonmorris.com/skilled-worker-visa/

 

DavidsonMorris advises employers on sponsor licensing, corporate immigration compliance and the workforce implications of business acquisitions and restructurings.

Where a share sale involves an existing sponsor licence, the parties should establish the applicable Home Office requirements before completion and ensure that any required reporting or replacement licence application is managed within the prescribed deadlines.

For advice on a proposed or completed acquisition involving sponsored workers, contact DavidsonMorris.

 

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