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McGill & Co is a Scottish immigration law firm specialising in UK immigration, nationality and refugee law.

Acquiring a UK Business - Immigration Implications

12 April 2019 Iain Halliday Blog

Earlier this week, in a guest post on our blog, Dawn Robertson, an employment law specialist at Rooney Nimmo, wrote about what is involved from an employment law perspective in the sale of UK companies to companies based in other parts of the world.

The immigration law implications of a merger or acquisition depend on whether the purchaser is an individual or a company. There are three common scenarios:

  1. A non-EEA national acquires a UK company and wishes to relocate to the UK in order to manage the business;
  2. An overseas company acquires, or merges with, a UK company and wishes to relocate staff to the UK;
  3. An overseas or UK company acquires, or merges with, a UK company which currently employs one or more non-EEA nationals.

Individual acquiring a UK company

Up until 30 March 2019 those wishing to start or join a UK business would usually seek an entrepreneur visa. This route has now been replaced with an Innovator visa. As such, anyone interested in purchasing a UK based business must now apply under this new category.

The Innovator visa is designed for people with an innovative, viable and scalable business idea which is supported by an endorsing body. The visa is granted for a period of 3 years and, if the business is successful, it is possible to apply to stay in the UK permanently after 3 years. At least £50,000 must be available to invest in to the business.

The business idea can, in theory, involve the purchase of an existing UK business. However, with most of the Home Office’s approved endorsers aimed at new business which are starting from scratch, it may be difficult to obtain endorsement for a business plan which primarily concerns acquisition of an existing company.

The underlying purpose of the route has also shifted. The entrepreneur route, which the immigration rules stated was “for migrants who wish to establish, join or take over one or more businesses in the UK”, was much better suite to a scenario involving acquisition of  a UK company. The Innovator route, which the immigration rules state is for “experienced businesspeople seeking to establish a business in the UK”, is clearly aimed at new business ventures. As it is an entirely new application category, it remains to be seen how willing the Home Office (and the endorsing bodies) will be to grant applications from those looking to take over an existing UK company. Anecdotal evidence suggests they’re not.

As an alternative, consideration may be given to a Tier 2 (General) application. This requires the UK Company to have a Tier 2 sponsor licence, carry out a Resident Labour Market Test to demonstrate that there are no suitable settled UK workers who could take the job, and to comply with strict salary thresholds. This is a complex and lengthy process. However, given the terms of the new Innovator visa, in many cases Tier 2 will be the only available option.

Cross border merger or acquisition with relocation of overseas staff

In the context of a cross border merger or acquisition (where a company overseas acquires or merges with a UK company) a Tier 2 (Intra Company Transfer) application provides an effective way of transferring staff to the UK. The purpose of this route is to enable multinational employers to transfer their existing employees from outside the EEA to their UK branch.

The UK branch would need a Tier 2 sponsor licence, the staff member(s) coming to the UK must have been employed by the company overseas for at least 12 months (unless they earn over £73,900), and a salary of at least £41,500 must be paid (this can sometimes be higher, depending on the job). There is no Resident Labour Market Test; the staff member(s) can be transferred without any UK recruitment exercise taking place.

Merger or acquisition without relocation of overseas staff

Even when the purchasing company does not wish to bring overseas staff to the UK (or where both companies are based in the UK), a merger or acquisition can still raise immigration issues. These usually arise when the vendor employs non-EEA nationals. Following the merger or acquisition, the purchasing company will become responsible for these non-EEA members of staff. The process for ensuring compliance with the Tier 2 sponsored workers scheme varies depending on whether or not the Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘TUPE Regulations’) apply.

A Tier 2 sponsor licence is not transferrable so the purchasing company will need to apply for a licence from the Home Office. This must be done within 28 days of the transfer.

The vendor must also notify the Home Office of the change of ownership to ensure compliance with the reporting duties under their sponsor licence.

Where the TUPE Regulations (or other similar arrangements) apply, the purchasing company applying for and obtaining a licence is all that needs to be done. The non-EEA staff members do not need to have a new Certificate of Sponsorship assigned to them and do not need to make a new visa application (unless their role has changed). This is because they are deemed to have continued working for the same employer.

However, where the TUPE Regulations (or other similar arrangements) do not apply, the purchasing company will need to carry out a Resident Labour Market Test and can only recruit a non-EEA migrant if there is no suitably qualified UK based workers available to do the job. If the successful candidate after this recruitment process is a non-EEA national, they will need to be issued with a Certificates of Sponsorship and will need to make an application to the Home Office. This takes time and, in the interim, the non-EEA staff members are likely to have their visas cancelled. They will be given 60 days to make a new application, so the timing can be tight.

Whenever non-EEA employees are involved in the sale or acquisition of a business, it is essential to get immigration law advice. All of our lawyers are commercially minded and know how vital tackling your immigration issues are to the functioning of your business. As a result, we are proactive in our approach, ensuring that we take care of every potential difficulty. We can assist you no matter what immigration challenges your business faces. To discuss your requirements, contact us today by calling 0131 228 2083 for our Edinburgh office or 0141 248 6552 for our Glasgow office or complete our online enquiry form and a member of our team will get back to you right away.

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