Selling a service
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Other |
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Read this information if you are thinking about:
- selling or purchasing an early learning service,
- changing the legal name of the service provider or
- changing the service provider ownership type.
- Changing ownership of a service
- Fit and proper assessment
- Changing the legal name of the service provider
- Changing the ownership type of the service provider
- Frequently asked questions
Changing ownership of a service
What do I need to know?
If you are considering selling or transferring ownership of a service you operate to another service provider, or you are considering purchasing a service, it is important you understand the steps involved in the process and the rules that govern licensed early childhood services.
Before any change is made to the identity of the service provider operating the service, the current service provider must apply for an amendment to the licence.
If you are planning on selling your service we recommend you contact your local Ministry of Education office so the application process can be explained.
Applying for an amendment does not guarantee we will issue a licence to the provider proposing to take ownership of your service.
The Ministry does not become involved in commercial sale and purchase agreements. Both parties should undertake their own due diligence before committing to a sale and purchase agreement.
As part of the application process the Ministry undertakes a review of documentation provided with the application, however a visit to the service to assess compliance with regulatory requirements does not occur until after the licence has been amended.
If you are considering purchasing a service, it is important you understand the implications if the service is subject to regulatory action at any stage. More information about the different tools the Ministry can use to address non-compliance can be found below:
If your service is not currently operating, the service’s licence has been suspended, or a Notice of Intention to Cancel has been issued, please contact your local Ministry of Education office before applying for an amendment to the licence.
If you are unsure if the change you are considering is a change to the identity of the service provider, or you have any questions about the application process, please contact your local Ministry of Education office for advice.
How do I apply?
When applying for any licence amendment, the service provider currently operating the licence is always the applicant.
You apply by completing and submitting an EC/9 application form to your local Ministry of Education office.
The EC/9 application is relevant to change of service provider identity for centre-based and home-based services.
There are two parts to the application. Part A is completed by you, the service provider currently operating the service, and Part B is completed by the proposed service provider.
The application form includes information on how to complete the form.
If the application submitted is incomplete or incorrect, we will provide you with an opportunity to supply the required information.
A complete application means the application is ready for us to assess. It does not mean the licence amendment has been agreed to at this point.
How long will the application process take?
Complete applications will be assessed as soon as possible, however you should allow up to 30 working days for the application to be processed.
We recommend you factor this timeframe into your planning.
How do I know what documents to send in?
The documents that must accompany the application can be found in the document checklist section of the EC/9 application form.
What happens next?
When a completed EC/9 application has been received, we will:
- Carry out a fit and proper assessment of the proposed service provider.
- Review the documentation submitted with the application.
Fit and proper assessment
A fit and proper assessment is the process we carry out to determine if the proposed service provider is suitable to operate the service.
We use information on the statutory declaration completed by a representative from the proposed service provider, to assess whether they, and each person involved in the governance of the proposed service provider, is fit and proper.
More information about making a statutory declaration and who can be an authorised witness can be found below:
Making a statutory declaration – govt.nz(external link)
The completed statutory declaration form, along with a list of names and the roles of individuals involved in the governance of the proposed service provider must accompany the application.
The Ministry has discretion to request a Police vet for any individual proposed to be involved in the governance of a service provider.
Making an affirmative declaration
Answering in the affirmative to any statement on the statutory declaration does not automatically exclude the proposed service provider from being deemed fit and proper to hold a licence.
Information and documentation relevant to any affirmative statement must accompany the application. This information will be reviewed and considered as part of the fit and proper assessment process.
We will follow up if more information is required to ensure our decision about the suitability of the proposed provider (or individuals) to operate the service is fair and reasonable.
Given the range of unique circumstances that may be identified, all decisions about the suitability of the proposed service provider to operate a service are made on a case-by-case basis at the Secretary’s discretion.
What if the proposed new service provider is not fit and proper?
If the proposed service provider is assessed as not fit and proper to operate the service, the application will be declined, and the current service provider named on the licence continues to be responsible for the operation of the service.
Assessment of staff safety checking records
Staff safety checking records will also be examined as part of the assessment of the application to ensure all children’s workers currently employed or engaged by the service have been correctly safety checked.
This assessment will provide the incoming service provider with assurance that any staff employed or engaged at the time the amendment was assessed have been correctly safety checked.
The new provider is, however, ultimately responsible for safety checking and must:
- get familiar with the safety check requirements and our guidance
- have a written procedure in place that reflects the new service's governance and management
- check that all safety checking has been appropriately completed for all existing staff
- undertake a risk assessment for each staff member
- check that records are in place, collated and stored securely on file, and made available to us on request
- complete full safety checking and Police vetting as applicable for all new employees.
If any records are unclear, incomplete, or there is any suggestion a person poses a risk to children's safety, then the new provider must do their own full safety check of existing staff.
More information on safety checking can be found here:
Safety checking: general guidance
When does the licence get amended?
Providing all requirements have been met, the licence can be amended on the date specified on the application (or another agreed date).
Written confirmation the sale and purchase of the service has been successfully completed is required from the legal representatives of both parties before any amendment to the licence occurs. The licence will not be amended without this confirmation.
What happens if the application is declined?
If your application is declined, the change cannot take place and as the service provider named on the licence, you must continue to operate the service and comply with the regulations.
If the circumstances that led to the application being declined change, you are welcome to reapply.
You may appeal the decision to a District Court within 14 days after the date of receipt of the notification the application has been declined, or such further additional time as the Court may allow.
What happens after the licence is amended?
Following the licence amendment, the new service provider becomes legally responsible for the operation of the service. The former service provider does not have any legal responsibility for the service from the date the licence is amended but must continue to hold financial and other records for the period(s) set out in legislation.
Between six (6) and nine (9) weeks after the licence is amended, an onsite licence assessment will take place to ensure the new service provider is meeting regulatory requirements.
To reduce the amount of time Ministry staff are on site, a range of documentation for assessment may be requested in advance of the visit. This is likely to include safety checking records for any children’s workers who were not part of the assessment of safety checking carried out by the Ministry prior to the licence being amended.
If we identify non-compliances following the licence assessment, appropriate regulatory action will be taken and may result in the service’s licence being reclassified to provisional, or in the case of immediate risk to children the licence being suspended.
More information about the different tools the Ministry can use to address non-compliance can be found here:
What about funding?
Information about how funding is managed when there is a change of service provider identity and the processes that need to be followed by the seller and purchaser can be found in the ECE Funding Handbook.
ECE Funding Handbook(external link)
If the bank account funding is deposited into will change following the licence amendment, an RS2 Early Childhood Service/Playgroup Bank Account Form must be completed and sent in with the application. The RS2 form can be found below. No change will be made to bank account details until the licence has been amended.
RS2 form: Early Childhood Service/Playgroup Bank Account Form [PDF, 88 KB]
The Ministry will not split payments between parties. Any split of funding payments should be negotiated between the seller and purchaser. Legal and financial advisers should assist negotiations.
Following the amendment of the licence to the new provider, the former provider is required to forward a copy of a financial statement to the ECE Funding team by post or email:
Ministry of Education
PO Box 1666
Wellington
Email:ece.funding@education.govt.nz.
This document must cover the period from the end of the providers last financial year until the changeover date.
Changing the legal name of the service provider
What you need to know
Because a change to the legal name is a change to the identity of the service provider, you must apply to make the change.
Applying for a licence amendment to change the name of the legal entity that operates your service cannot be used as a means of transferring ownership to another legal entity.
If you are unsure if the change you are considering is a change to the legal name of the service provider, or you have any questions about the application process, please contact your local Ministry of Education office for advice.
How do I apply?
As the provider operating the licence you apply by completing and submitting Part A of an EC/9 application form to your local Ministry of Education office.
The application includes information on how to complete the form, as well as a list of documents that must accompany the application.
What happens next?
When a complete application has been received, we are required assess the application and supporting documentation.
A complete application means the application is ready for us to assess. It does not mean the licence amendment has been agreed to at this point.
When does the licence get amended?
Providing all requirements have been met, the licence will be amended on the date you specified on the application, or if more time is required, on a date agreed by you and the Ministry.
Changing the ownership type of the service provider
If you are proposing to change the ownership type of the service provider operating one or more early learning services, please complete and submit the required sections of an EC/9 application form.
Examples of a change to the service provider ownership type include a move from a Company to an Incorporated Society, or from a Sole Trader to a Company.
For more information, please contact your local Ministry of Education office.
Frequently asked questions
Who or what is the service provider?
The service provider is the body, agency or person who operates the licensed early childhood centre, or in the case of a home-based service, the body, agency, or person who provides, or offers to provide, that education or care.
All licensed services must be governed by a functioning legal entity.
If you are unclear who the service provider is, or you have any questions about whether the changes you are considering are a change in the identity of the service provider, contact us.
Do I have to apply for a change of service provider identity if there is a change to the shareholding of the parent (holding) company?
Although an application to amend the licence may not be required when a change to the shareholding of the parent/holding company occurs, to ensure compliance with regulatory requirements is being maintained, the Ministry is able to undertake a licence assessment visit at any time. We recommend you contact us so we can work through the implication of the changes you are proposing.
What if I operate multiple services and I want to sell several at the same time?
If you are multi service provider who is planning to sell several services at the same time, the Early Learning Regulation team can help co-ordinate the application process.
Email: eceregulations.planning@education.govt.nz
We can also help coordinate the process if you are a large provider seeking to change the legal name of the service provider.
Is there an application fee for a change of service provider identity?
There is no cost for applying to change the identity of the service provider or legal name of the service provider.
What about confidentiality?
The Ministry has processes in place to ensure any personal and commercially sensitive information provided is protected and only used for the purpose it is intended for.
How long will the post amendment on-site assessment visit take?
The amount of time spent on site will depend on a range of factors, including the size of the premises, the number of homes visited, as well as the Ministry staff available to undertake the visit.
How can I get a copy of the assessment tool?
Contact your Ministry of Education office and ask for a copy of the EC/3 assessment tool for your service type to be sent to you.
Will the service’s licence number change if the service provider changes?
The licence number is unique to the service and does not change when there is a change of service provider.
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