Section R4-39-110. Change of Ownership or Control

A.      In this Section, “change of ownership or control” means:

1.        For a privately held corporation whose control is vested in those who control the voting stock of the corporation, 50 percent or more of the voting stock changes within a five-year period;

2.        For a publicly traded corporation whose control is vested in the voting members of the board of directors:

a.         Fifty percent or more of the voting members of the board of directors change within a 12-month period, or

b.        The chief executive officer of the corporation changes;

3.        For a non-profit corporation whose control is vested in the voting members of the board of directors:

a.         Fifty percent or more of the voting members of the board of directors change within a 12-month period, or

b.        The chief executive officer of the corporation changes;

4.        For a limited partnership whose control is vested in a cor- porate general partner, if under subsections (A)(1), (A)(2), or (A)(3), the corporate general partner has a change of ownership or control;

5.        For a limited liability company whose control is vested in members who control a majority of the interest in the company, if 50 percent or more interest changes within a 12- month period; or

6.        For a sole proprietor, if 50 percent or more interest changes within a five-year period.

B.       In determining whether a change of ownership or control has occurred, the Board shall deem that a change of ownership or control has not occurred if the interest is transferred by opera- tion of law or inheritance to a parent, grandparent, spouse, or child.

C.      A licensee shall:

1.        No later than seven calendar days after change of owner- ship or control, notify the Board in writing of the change of ownership or control; and

2.        No later than seven calendar days after any change of interest or change of the voting members of the board of directors of more than 20 percent but less than 50 percent, notify the Board in writing of the change.

D.      No later than 60 calendar days after a change of ownership or control, a licensed private accredited institution shall submit to the Board a license application packet including:

1.        The filing fee required under R4-39-201(E);

2.        Either:

a.         Information and documentation specified in R4-39- 103(D)(5), (D)(8), (D)(9) and (D)(10) and R4-39-

104(D)(2), (D)(3), (D)(5), (D)(7) through (D)(11), (D)(14) and (D)(15); or

b.        If required by an accrediting agency that accredits the licensee’s programs or the institution through which the programs are operated, a copy of change of ownership documents submitted by the licensee to the accrediting agency;

3.        Attestation that the applicant will assume financial responsibility for the payment of all student tuition refunds for which the institution has an obligation; and

4.        Other information determined by the Board to be relevant to the determination of the applicant’s compliance with licensing requirements under this Article.

E.       No later than 60 calendar days after a change of ownership or control, a licensed private non-accredited institution shall sub- mit to the Board a license application packet, including:

1.        The filing fee required under R4-39-201(E);

2.        For a private non-accredited vocational institution, infor- mation and documentation specified in R4-39-104(D)(2), (D)(3), (D)(5), (D)(7) through (D)(11), and (D)(14) through (D)(16);

3.        For a private non-accredited degree-granting institution, information, documentation, and fees specified in R4-39- 107(C)(4) and R4-39-104(D)(2), (D)(3), (D)(5), (D)(7) through (D)(11), and (D)(14) through (D)(16);

4.        Attestation that the applicant will assume financial responsibility for all student refunds for which the institu- tion has a financial obligation; and

5.        Other information determined by the Board to be relevant to the determination of the applicant’s compliance with licensing requirements under this Article.

F.       The Board shall not grant a license for a change of ownership or control to an applicant if:

1.        Within 10 years before the date of filing an application packet required in subsections (D) or (E) or since the start date of the current licensure period, an individual with 20 percent or more ownership in the applicant institution has been convicted in this state or any other state or jurisdic- tion of a felony or any crime related to the operation of an educational institution, unless the conviction has been absolutely discharged, expunged, or vacated;

2.        Within 10 years before the date of filing an application packet required in subsections (D) or (E) or since the start date of the current licensure period, a person with 20 per- cent or more ownership in the applicant institution has had a license to operate a vocational program, vocational institution, degree program, or degree-granting institution revoked in Arizona or in any state or jurisdiction; or

3.        The applicant provides false or misleading information on or with an application required by this Section.

G.      The Board shall grant a license for a change of ownership or control to an applicant, if the applicant:

1.        Demonstrates compliance with A.R.S. §§ 32-3021 through 32-3027, as applicable; and

2.        Meets the application requirements in subsection (D) or (E).

H.      The Board may conduct an inspection, pursuant to A.R.S. § 41-1009, of an applicant’s or a licensee’s place of business to determine compliance with the requirements of this Article.

Historical Note

Adopted effective May 21, 1985 (Supp. 85-3). Amended

effective February 23, 1993 (Supp. 93-1). R4-39-110 renumbered to R4-39-109; new Section R4-39-110 renumbered from R4-39-111 and amended (Supp. 98-4).

Amended by final rulemaking at 11 A.A.R. 2262, effec- tive August 6, 2005 (Supp. 05-2).