A VET provider intending to undergo ownership and / or control changes must meet and comply with certain rules, regulations and requirements.
Whoever is involved and is a part of the changing of ownership of RTOs and CRICOS must meet specific obligations.
A change of ownership for a registered provider can be a tedious and prolonged task.
Compliance Crew’s is here to guide you through the process and alleviate the exhausting and prolonged task by providing information on notification requirements, supporting mandatory evidence and points to be taken into account while considering sale or purchase of a registered training provider.
CHANGE OF OWNERSHIP
Simply put, a change of ownership means when a change in company shareholding occurs.
Having mentioned that, ASQA refers to an event as a change of ownership, where there is a change of ownership and / or control of registered provider, but the Australian Business Number (ABN) / Australian Company Number (ACN) of the registered entity with ASQA remains unchanged and undisrupted.
ASQA outlines that a change in an entity’s shareholding of 50 per cent or more is considered as significant.
RTOs and CRICOS providers are not permitted to transfer their registration from one legal entity to another. However, if there is such a significant change of ownership or shareholding and / or control of the entity as mentioned above, then the registered provider can continue with this position provided they without fail notify the ASQA about this change.
A change of ownership is a complex and lengthy process involving various steps of scrutiny such as:
- notification to ASQA with supporting evidence;
- auditing of the parties involved;
- validation of evidence ensuring quality check on provider’s qualification, resources, ability and experience to carry out and deliver VET services; and
- compliance with regulatory requirements.
NOTIFICATION OBLIGATION, TIMEFRAMES AND REQUIREMENTS
A registered provider is under obligation to inform ASQA of a significant change of ownership via Notification of material change form that is available on the asqanet.[1]
Who is responsible for notifying ASQA of an event of change of ownership or impending change of ownership?
Notifying ASQA of an event of change of ownership or impending change of ownership, is a responsibility of the new owner that must be fulfilled within its respective timeframe as stated by the ASQA.
When do you notify ASQA of an event of change of ownership or impending change of ownership?
As per Section 25 (2) of the National Vocational Education and Training Regulator Act 2011 read with Standard 8.1 of the SRTOs, Providers registered as RTOs must notify ASQA of change of ownership as soon as practicable, with 90 days after the event the latest it can be received.
As per Section 17A (3) of the ESOS, providers registered as CRICOS only provider, any significant change of ownership is required to be notified to ASQA before it occurs.
How much does it cost to lodge a notification of material change?
No cost or charges are levied to lodge a notification of material change with the ASQA, except in case of a compliance audit to be conducted as a result by such notification that may incur compliance audit charges for RTOs regulated under the National Vocational Education and Training Regulator Act 2011.
MANDATORY SUPPORTING EVINDENCE AND REQUIREMENTS UNDER DIFFERENT OWNERSHIP SITUATIONS
A notification of change of ownership via Notification of material change form, must be accompanied and supported by evidentiary documents.
The range of evidences to be provided along with the material change form are:
- Fit and Proper Person Declarations;[2]
- Financial Viability Risk Assessment (FVRA) tool with supporting evidence[3]
- Self-assessment tool with supporting evidence [4]
A fit and proper person declaration ensures that competent and capable individuals are parties to change of ownership and responsible for the functioning of the organization. This declaration is to be signed and executed by every Executive Officer / High Managerial Agent who has acquired or increased their shareholding / ownership in the registered provider’s entity to 15 per cent or more.
A FVRA is an assessment that outlines the information regarding a provider’s financial resources, expenses incurred, its ongoing capacity and capability to achieve desired outcomes.
A Self-assessment tool is a guide that ensures the mandatory regulation, requirements and standards have been met and complied with. It comprises of two (2) sections that have to be completed depending upon size and nature of the change of ownership and number of students. A Self-Assessment Tool has two (2) different version to be complied with i.e., Standard version and ELICOS version:
- Self-assessment tool for change of ownership (Standard version
- Self-assessment tool for change of ownership (ELICOS version)[5]
As per ASQA, there are specific additional supporting evidences that must be submitted by the registered provider in certain ‘significant change of ownership’ situations.
The additional evidentiary requirements to be fulfilled in the following change of ownership situations are: –
- A change of ownership or shareholding of 50 per cent or more within a 12-month period
- a Financial Viability Risk Assessment (FVRA) tool with supporting evidence – This is to be completed as a new registration (start-up) application type;
- Section A of the appropriate Self-Assessment tool must be completed and submitted by the registered providers with supporting evidence
- A change of ownership or shareholding of 100 per cent within a 12-month period
Both Section A and B of the appropriate Self-Assessment Tool must be completed and submitted by the registered providers with supporting evidence under this situation and having either:
- no ongoing students, or
- not had more than 10 students complete a course within the previous 12 months of registration
- A change of Executive officer / legal name
- a full Australian Securities and Investments Commission (ASIC) report listing all details of the company;
- a full ASIC report listing all details of the parent company, if the parent company is not a natural person; and
- an organization chart that reflects the new ownership, structure and reporting lines of the RTO.
ASQA RESPONSE TO CHANGE OF OWNERSHIP
ASQA will process and record the notifications of change of ownership only when the complete Notification of material change form along with supporting evidence has been submitted by the registered providers.
On receiving of the notifications, the ASQA will respond in the following ways:
- Compliance Audits
The notifications outlining that a significant change of ownership has occurred that is subject to additional evidentiary support and requirements as mentioned above. ASQA will conduct a Compliance Audit to review the factual and substantiating value of that evidence.
This audit is carried out with prime focus on reviewing that whether the training provider has ample resources to provide quality training and assessment, accurate information, and adequate support to students.
This audit will consider the registered provider’s compliance with:
- the relevant regulatory framework, i.e., VET Quality Framework and ESOS; and
- the clauses and standards in the Self-Assessment Tool for Change of Ownership.
If during this audit, it is found that there is non-compliance on registered provider’s part, then proportionate regulatory action will be taken by ASQA.
Compliance Audit charges may apply to RTOs regulated under the National Vocational Education and Training Regulator Act 2011.
- Additional Scrutiny in the following 12-months period
Registered training providers that have undergone a significant change of ownership may also be subjected to an
‘Additional Scrutiny’ in the following 12 months period after the completion of the Compliance audit activities.
The Scrutiny applies and extends to all the applications for change of scope of registration from the registered providers during this period and through provider review at the end of the period.
These situations may lead to regulatory actions which could result in or include further compliance audits.
UNDERGOING CHANGE OF OWNERSHIP? FIGURING OUT NOTIFICATION OF MATERIAL CHANGE PROCESS?
LET US HELP YOU
Since, the process of change of ownership and Notification to ASQA can be lengthy and complicated, it is best to seek professional and expert advice like the ones present at our organization.
Our services include, but are not limited to, advising and assisting on:
- Preparation, review and lodgment of notification “Material Change or event – Change of Ownership.
- Fit and Proper Person Declarations for all Higher Managerial Agents and share holder(s) of 15% or more.
- Resource validation
- Completion of the self-assessment tool
- Consulting with your accountant and completion of the Financial Viability Risk Assessment Tool (FVRA).
- Review of any supporting evidence that may be required
- Lodgement of application
- Audit attendance (as required)
[2] fit-and-proper-person-requirements-declaration
[3] financial-viability-risk-assessment-tool
