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ASQA has changed the rules for purchase and sale of RTO’s

Australian Skills Quality Authority has made it crystal clear that “Registered training organisations (RTOs) and Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) providers are not permitted to transfer their registration from one legal entity to another. However, where a change of company shareholdings occurs, but the ABN/ACN of the entity registered with ASQA does not change, then the provider may continue as long as they notify ASQA of the change of ownership”. 

If you are involved in a change of ownership, either as disposer or acquirer, it is important you understand your obligations. These obligations are set out in the NVR Act and the ESOS Act. If your provider is only registered as an RTO, then you are required to notify ASQA of change of ownership as soon as practicable after the event. This is a requirement under s25(2) of the National Vocational Education and Training Regulator Act 2011. If your training provider is registered as a CRICOS-only provider, or as both an RTO and CRICOS provider, you must notify ASQA of a change of ownership as soon as practicable before the change takes effect.  This is a requirement under s17A (3) of the Education Services for Overseas Students Act 2000. 

ASQA is considering the registration is provided to the applicant’s ability to comply with the Vocational Education and Training (VET) Quality Framework and the Education Services for Overseas Students (ESOS) Framework (if applicable). ASQA seeks to ensure that buying into a training provider is not a way for a purchaser to circumvent the scrutiny applied to initial applications. When an entity that is an RTO changes ownership, therefore, its registration cannot transfer to a person or corporation that acquires the RTO as a different legal entity. 

Additional evidentiary requirements  

ASQA has introduced new evidentiary requirements for the following change of ownership situations. These changes are a part of ASQA’s commitment to ensuring providers are able to demonstrate regulatory compliance and are able to deliver quality outcomes for their students. 

When 50 per cent or more of a provider’s ownership changes within a 12-month period

  • Where 50 per cent or more of the ownership of a training provider—or their parent entity/ultimate owner—changes at once or over a 12-month period, additional evidence must be submitted to ASQA. In this situation, you are required to complete and provide ASQA with:
  • a Financial Viability Risk Assessment Tool—this must be completed as a new registration (start-up) application type
  • Section A of the Self-Assessment Tool for Change of Ownership1—this must include the required supporting evidence detailed in the tool. 

     

    When 100 per cent of a provider’s ownership changes within a 12-month period

    Where a training provider—or their parent entity/ultimate owner—change 100 per cent of their shareholdings over a 12-month period, both Section A and B of the Self-Assessment Tool for Change of Ownership must be completed and submitted to ASQA if the provider has either:

    • no ongoing students, or
    • not had more than 10 students complete a course within the previous 12 months of registration

     

    Possible consequences of change of ownership 

    Compliance audits 

    Where significant changes to ownership are subject to additional evidentiary requirements. ASQA will conduct a compliance audit to review that evidence. The audit will consider the training provider’s compliance with:

    • the relevant regulatory framework (VET Quality or ESOS legislative) 
    • the clauses and standards in the Self-Assessment Tool for Change of Ownership

     

    This audit will focus on whether your training provider is, and will remain, sufficiently resourced to provide quality training and assessment, accurate information, and adequate support to students. If non-compliance is found during a compliance audit, proportionate regulatory action will be taken.

    Increased scrutiny for 12 months

    Training providers that have a significant change of ownership will also face additional scrutiny in the 12 months after the compliance activity is finalised.This scrutiny will be applied to any applications to change scope of registration from training providers during this period, and through a provider review at the conclusion of the period. Both of these activities may trigger regulatory action, which could include further compliance audits. 

    Charges

    There is no cost to lodge a notification of material change; however, a compliance audit activity triggered by a notification may incur compliance audit charges for any RTO regulated under the NVR Act. 

    For further information, please refer to New guidance on change of ownership obligations: 

    https://www.asqa.gov.au/news-publications/news/new-guidance-change-ownership-obligations  

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