Change of ownership
Change of ownership
A “change of ownership” for the purposes of the National Health Service (Pharmaceutical and Local Pharmaceutical Services Regulations 2013 (the Regulations) covers the situation where the legal identity of the pharmacy contractor has changed. Before a change of ownership takes place, the proposed incoming pharmacy contractor must make an application pursuant to regulation 26 of the Regulations. Unless there is good cause for delay, NHS England must determine the change of ownership application as soon as it is practicable to do so and within 30 days of the date on which all the required information and documentation was received by them (this will include fitness to practise and references when the new pharmacy owner is already on the pharmaceutical list).
There are a number of different type of transfers of pharmacy businesses which may or may not be covered by the Regulations which are:
- Mr A sells his pharmacy business to Mr B;
- Mr A transfers his pharmacy business to a limited company incorporated/registered at Companies House (in which Mr A is a shareholder);
- Company A buys shares in Company B (a pharmacy retail business) and Company B continues to carry on the pharmacy retail business;
- Company A buys shares in Company B (a pharmacy retail business) and closes Company B down so that Company A now carries on the pharmacy retail business
Scenario one is a straightforward example of where Mr A sells his pharmacy retail business to Mr B. This transfer of the pharmacy retail business would constitute a change of ownership in accordance with the Regulations and so require a change of ownership application to NHS England for approval.
Scenario two is when Mr A transfers his pharmacy business to a limited company. Generally, pharmacy contractors tend to proceed in this manner for retirement, financial planning purposes or it may be to benefit from limited liability protection. It is reported that whilst the majority of contractors appear aware that they need to notify GPhC for the purposes of premises registration and registering the superintendent, there may be less awareness of the need to submit a change of ownership application to NHS England and where appropriate, a transfer of ownership in respect of pharmacy premises to GPhC.
Scenario three which often causes confusion is where Company A takes over Company B by buying its shares and Company B continues to carry on the pharmacy retail business. This is unlikely to be a change of ownership for the purposes of the Regulations as all that has happened is that the issued share capital is now in new hands. Therefore, no change of ownership application is needed.
Nevertheless, then as is likely to be the case, where the directors of Company B have also changed, then within 30 days of the change of director, NHS England (via the local NHS team) must be duly notified using their template notification forms (under “Chapter 11” – Annex 1) together with FTP information about the directors’ and superintendent pharmacist. In addition, the GPhC must also be notified of the new superintendent pharmacist details.
Scenario four where company A buys shares in company B (a pharmacy retail business) and closes Company B down so that Company A carries on the pharmacy retail business. A change in the legal identity of the pharmacy contractor has taken place and therefore this transfer of the pharmacy retail business is likely to constitute a change of ownership for the purposes of the Regulations. So a change of ownership application to NHS England is required.
Superintendent pharmacist
Nomination of a superintendent is only relevant for bodies corporate which carry on a pharmacy retail business. Where there are changes to the superintendent GPhC must be notified of the new superintendent who is a pharmacist, a link to their website appears here. We would always encourage that where there is a new superintendent that GPhC is notified immediately.
Pharmacy premises
When ownership of pharmacy premises also transfers from one owner to another, the new owner must notify the GPhC within the timescales outline on their website by completing and submitting a Transfer of ownership of a pharmacy premises form available here.
FAQs
Q. I am the sole proprietor of a pharmacy and in the process of buying an additional pharmacy from a sole trader. Do I need to do anything?
Yes. This is a change of ownership. The purchase of the pharmacy would be conditional upon you successfully obtaining the grant of a change of ownership application by NHS England. Application forms can be found here for the online portal. Paper application forms can be found here. When ownership of pharmacy premises also transfers from one owner to another (as takes place here) the new owner must apply to GPhC within the timescales outlined on their website by completing and submitting a Transfer of ownership of a pharmacy premises form.
Q. I am a sole proprietor of a pharmacy. Is it a good idea to set up a limited company?
There are some who pursue this option. Often for retirement, financial planning purposes or it may be to gain the benefit from limited liability protection. It is recommended that you seek professional advice from a financial advisor with further information available on the FCA website and/or qualified solicitor with a valid practising certificate.
Q. I am buying shares in ABC Limited which will continue to provide pharmaceutical services. I will become a director and will be appointed superintendent pharmacist. Do I need to do anything?
Yes, you must within 30 days notify NHS England using their template notification form of change to directors of the company together with FTP information about the directors’ and superintendent pharmacist. In addition, the GPhC must also be notified of the new superintendent pharmacist details.
This is not a change of ownership for the purposes of the Regulations so there is no need to make a change of ownership application to NHS England.
Q. A pharmacy owner has died, been adjudged bankrupt or becomes a person who lacks mental capacity (within the meaning of the Mental Capacity Act 2005) to carry on the pharmacy business. What happens next?
GPhC must be notified as soon as possible of what has happened. There is no legal change in the identity of the pharmacy contractor. The representative/s “steps into the shoes” of the deceased. The representative carries on the pharmacy retail business. No change of ownership within the meaning of the Regulations has taken place so no change of ownership application to NHS England is required. However, NHS England must be informed of the identity and authority of the deceased’s representatives e.g. grant of probate, letter of administration etc.
There are provisions in the Medicines Act 1968 and Health Act 2006 which permits the representative (which means his executor or administrator) of a deceased pharmacy owner to carry on the pharmacy business for up to five years from the date of the death of the pharmacy owner. The representative of the deceased pharmacy owner must notify the GPhC providing his/her name and address, and the name of the pharmacist whose representative he/she is (i.e. the deceased pharmacy owner) and meet the conditions outlined in the legislation.
The same provisions apply to a pharmacy owner who has been adjudged bankrupt or becomes a person who lacks capacity (within the meaning of the Mental Capacity Act 2005).
In the case of the adjudged bankrupt their representative is generally permitted to carry on the pharmacy business for a period of three years from the date on which the pharmacy owner is adjudged bankrupt and in the case of a person who lacks capacity then generally for a period of three years from the date of the appointment of the deputy or guardian.
Q. How long does a change of ownership application take to process?
Unless there is good cause for delay, NHS England must determine the change of ownership application as soon as it is practicable to do so and within 30 days of the date on which all the required information and documentation was received by them.
Q. How much is the fee for a change of ownership application?
Different fees apply depending on whether the applicant is an existing or new pharmacy contractor. If existing then £150 and if new then £250. Pharmacy contractors should check the Fees Directions.
Q. I was in negotiations to sell my pharmacy retail business to another pharmacy contractor. The change of ownership application to NHS England was successfully granted. Unfortunately, the proposed sale fell through. Do I need to do anything?
Yes, it would be sensible to notify NHS England that the proposed sale fell through and that the change of ownership will no longer take place. If you do nothing, the grant of the change of ownership application will lapse after six months from the date on which you were sent notice of NHS England’s decision but informing NHS England as above will help ensure that it does not erroneously amend details on the pharmaceutical list.
Q. I am a director of company A which is buying a pharmacy retail business. We have submitted a change of ownership application to NHS England but because I was convicted of a criminal offence several year ago, they have indicated that the application would take longer than 30 days. Are they allowed to delay?
Yes, NHS England can delay determining the change of ownership application where there is “good cause” for delay. Depending on the nature of the criminal conviction this could have an impact on NHS England’s assessment and subsequent decision in respect of the application. For example, if you were convicted of murder or any other criminal offence with sentence of imprisonment of over 6 months then NHS England must refuse the application. Similarly, situations where a NHS fraud investigation or sexual offence involved or related to the applicant. For full details, you should review the Regulations.
