Changes of Ownership and Changes in Control 1 

Proposed Regulations Redline 

§ 600.2 Definitions. 

Additional location: A physical facility that is geographically apartseparate from the main campus of

theinstitution and within the same ownership structure of the institution, at which the institution 

offers atleast 50 percent of an educational program. An additional location participates in the Title 

IV programs only through the certification of the main campus and may qualify as a branch campus.

* * * 

Branch campus: A physical facility that is separate fromn additional location of an institution that is

geographically apart and independent of the main campus of the institution and within the same

ownership structure of the institution, and that also. The Secretary considers a location of an 

institutionto be independent of the main campus if the location -

(1) Is approved by the Secretary as a branch campus; and

(2) Is independent from the main campus, meaning the location—

(1i) Is permanent in nature;

(2ii) Offers courses in educational programs leading to a degree, certificate, or other

recognized educational credential; 

(3iii) Has its own faculty and administrative or supervisory organization; and

(4iv) Has its own budgetary and hiring authority.

* * *

Distance education: 

(1) Education that uses one or more of the technologies listed in paragraphs (2)(i) through (iv) of this

definition to deliver instruction to students who are separated from the instructor or instructors and

tosupport regular and substantive interaction between the students and the instructor or 

instructors, either synchronously or asynchronously.

(2) The technologies that may be used to offer distance education include - 

(i) The internet;

(ii) One-way and two-way transmissions through open broadcast, closed circuit, 

cable, microwave, broadband lines, fiber optics, satellite, or wireless communications

devices;

(iii) Audio conference; or
Changes of Ownership and Changes in Control 2 

(iv) Other media used in a course in conjunction with any of the technologies listed 

in paragraphs (2)(i) through (iii) of this definition.

(3) For purposes of this definition, an instructor is an individual responsible for delivering course

contentand who meets the qualifications for instruction established by an institution's accrediting

agency.

(4) For purposes of this definition, substantive interaction is engaging students in teaching, learning, 

andassessment, consistent with the content under discussion, and also includes at least two of the

following -

(i) Providing direct instruction;

(ii) Assessing or providing feedback on a student's coursework;

(iii) Providing information or responding to questions about the content of a course

orcompetency;

(iv) Facilitating a group discussion regarding the content of a course or competency; or

(v) Other instructional activities approved by the institution's or program's accrediting agency.

(5) An institution ensures regular interaction between a student and an instructor or instructors by, 

priorto the student's completion of a course or competency -

(i) Providing the opportunity for substantive interactions with the student on a predictable 

and scheduled basis commensurate with the length of time and the amount of content in the

courseor competency; and

(ii) Monitoring the student's academic engagement and success and ensuring that an 

instructoris responsible for promptly and proactively engaging in substantive interaction 

with the studentwhen needed on the basis of such monitoring, or upon request by the

student.

(6) Except for an additional location at a correctional institution as described in the definition of 

an additional location in this section, fFor an institution that offers on-campus programs and 

distance education programs, the distance education programs are associated with the main 

campus of the institution. For an institution that only offers distance education programs, the

institution is locatedwhere its administrative offices are located and approved by its accrediting

agency.

* * *

Main campus: The primary physical facility at which the institution offers eligible programs, within 

thesame ownership structure of the institution, and certified as the main campus by the 

Department andthe institution’s accrediting agency.

* * *
Changes of Ownership and Changes in Control 3 

Nonprofit institution: An institution that -

(1)

(i) Is owned and operated by one or more nonprofit corporations or associations and the 

Secretaryhas determined that, no part of the net earnings of which benefits any private 

shareholder or individual;

(ii) Is legally authorized to operate as a nonprofit organization by each State in which it is 

physically located; and

(iii) Is determined by the U.S. Internal Revenue Service to be an organization to which

contributions are tax-deductible in accordance with section 501(c)(3) of the Internal 

Revenue Code (26 U.S.C. 501(c)(3)); except that

(iv) When the Secretary makes the determination regarding net earnings, the Secretary

considersthe entirety of the relationship between the institution, nonprofit entities in its 

ownership structure, and other parties. By way of example, fFor purposes of participating in 

the federal student aid programs, a nonprofit institution is generally not an institution that:

(A) Is an obligor (either directly or through any entity in its ownership chain) on a debt owed 

toa former owner of the institution or a natural person or entity related to or affiliated with 

the former owner of the institution unless such debts are associated with the sale of an 

asset that was sold at or below fair market value and the interest and fees on such debt is at 

or below the prevailing market rate as determined by an independent appraiser; or

(B) Either directly or through any entity in its ownership chain, enters into, or maintains, a

revenue-based servicing agreement with a former owner of the institution or a natural

personor entity related to or affiliated with the former owner of the institution unless such 

arrangements are at or below fair market value as determined by an independent 

appraiser; or

(2) For a foreign institution -

* * *

§ 600.4 Institution of higher education.

(a) An institution of higher education is a public or other private nonprofit educational institution that -

(1) Is in a State, or for purposes of the Federal Pell Grant, Federal Supplemental Educational

OpportunityGrant, Federal Work-Study, and Federal TRIO programs may also be located in the 

Federated States of Micronesia or the Marshall Islands;

(2) Admits as regular students only persons who -

(i) Have a high school diploma;

(ii) Have the recognized equivalent of a high school diploma; or
Changes of Ownership and Changes in Control 4 

(iii) Are beyond the age of compulsory school attendance in the State in which the 

institution isphysically located;

(3) Is legally authorized to provide an educational program beyond secondary education in the State

in which the institution is physically located in accordance with § 600.9;

(i) Provides an educational program -

(A) For which it awards an associate, baccalaureate, graduate, or professional degree;

(B) That is at least a two-academic-year program acceptable for full credit 

toward a baccalaureate degree; or

(C) That is at least a one academic year training program that leads to a certificate, or other

nondegree recognized credential, and prepares students for gainful employment in a 

recognized occupation; and

(ii) May provide a comprehensive transition and postsecondary program, as described in 34 

CFR part 668, subpart O; and

(4) Is -

(i) Accredited or preaccredited; or

(ii) Approved by a State agency listed in the FEDERAL REGISTER in accordance with 34 CFR part 

603, if the institution is a public postsecondary vocational educational institution that seeks to

participate only in Federal student assistance programs.

(b) An institution is physically located in a State if it has a campus or other instructional site in that

State.

(c) The Secretary does not recognize the accreditation or preaccreditation of an institution unless the

institution agrees to submit any dispute involving an adverse action, such as the final denial, 

withdrawal,or termination of accreditation, to arbitration before initiating any other legal action.

§ 600.20 Notice and application procedures for establishing, reestablishing, maintaining, or

expandinginstitutional eligibility and certification. 

* * *

(g) Application for provisional extension of certification.

(1) If a private nonprofit institution, a private for-profit institution, or a public institution participating 

in the title IV, HEA programs undergoes a change in ownership that results in a change of control as

described in 34 CFR 600.31, the Secretary may continue the institution's participation in those

programson a provisional basis, if—

(i) No later than 90 days prior to the change in ownership the institution notifies the 

Secretary of the proposed change on a fully completed form designated by the Secretary 
Changes of Ownership and Changes in Control 5 

and supported by the state authorization and accrediting documents identified in paragraph 

(g)(2)(i) and (ii) ofthis section, and supported by copies of the financial statements identified 

in paragraph (g)(2)(iii) and (iv) of this section; and

(ii) If the proposed ownership structure reported to the Secretary under paragraph (g)(1)(i) 

of this section changes, any changes must be reported to the Secretary promptly, and the 

change in ownership cannot occur earlier than 90 days following the date the change is 

reported to theSecretary; and

(iii) The institution under the new ownership submits a “materially complete application” that

is received by the Secretary no later than 10 business days after the day the change occurs.

(2iii) Notwithstanding the submission of the items required by paragraphs (g)(1)(i) -and (iii) of this

section, the Secretary may determine that the participation of the institution should not be

approvedcontinued following the change in ownership.

(32) For purposes of this section, a private nonprofit institution, a private for-profit institution, or 

a public institution submits a materially complete application if it submits a fully completed

application form designated by the Secretary supported by -

(i) A recently updated copy of the institution's State license or equivalent document that - as of

theday before the change in ownership - authorized or will authorize the institution to provide a

program of postsecondary education in the State in which it is physically located;

(ii) A recently updated copy of the document from the institution's accrediting association that - 

asof the day before the change in ownership - granted or will grant the institution accreditation

status, including approval of any non-degree programs it offers;

(iii) Audited financial statements of the institution's two most recently completed fiscal years

thatare prepared and audited in accordance with the requirements of 34 CFR 668.23; and

(iv) Audited financial statements of the institution's new owner's two most recently completed

fiscal years that are prepared and audited in accordance with the requirements of 34 CFR 

668.23, or equivalent information for that owner that is acceptable to the Secretary.; or, if at 

least two years of audited financial statements are not available, financial surety protection in

the amount ofat least 25 percent of the institution’s prior year volume of title IV aid, as required 

in 34 CFR 668.176; and

(v) If deemed necessary by the Secretary, financial surety protection in the amount of at least an

additional 10 percent of the institution’s prior year volume of title IV aid, or a larger amount as

determined by the Secretary. If any entity in the new ownership structure holds a 50 percent or

greater direct or indirect voting or equity interest in another institution or institutions, the

financialprotection may also include the prior year volume of Title IV aid, or a larger amount as 

determined by the Secretary, for all institutions under such common ownership.

(h) Terms of the extension.

(1) If the Secretary approves the institution's materially complete application, the Secretary provides

theinstitution with a temporary provisional Program Participation Agreement (TPPPA). The 
Changes of Ownership and Changes in Control 6 

provisional PPA extends the terms and conditions of the program participation agreement that were 

in effect for the institution before its change of ownership.

(2) The TPPPA provisional PPA expires on the earlier of -

(i) The last day of the month following the month in which the change of ownership 

occurred,unless the provisions of paragraph (h)(3) of this section apply.The date on which 

the Secretarysigns a new provisional program participation agreement (PPPA);

(ii) The date on which the Secretary notifies the institution that its application is denied; or

(iii) The last day of the month following the month in which the change of ownership

occurred,unless the provisions of paragraph (h)(3) of this section apply. The date on which 

the Secretaryco-signs a new provisional program participation agreement (PPPA).

(3) If the provisional TPPPA will expire under the provisions of paragraph (h)(2)(iii) of this section, the

Secretary extends the provisional TPPPA on a month-to-month basis after the expiration date

describedin paragraph (h)(2)(iii) of this section if, prior to that expiration date, the institution 

provides the Secretary with the financial information required under 34 CFR 668.176.

(i) A “same day” balance sheet showing the financial position of the institution, as of the date

ofthe ownership change, that is prepared in accordance with Generally Accepted Accounting

Principles (GAAP) published by the Financial Accounting Standards Board and audited in

accordance with Generally Accepted Government Auditing Standards (GAGAS) published by 

theU.S. General Accounting Office;

(ii) If not already provided, approval of the change of ownership from the State in which

theinstitution is located by the agency that authorizes the institution to legally

provide postsecondary education in that State;

(iii) If not already provided, approval of the change of ownership from the

institution'saccrediting agency; and

(iv) A default management plan unless the institution is exempt from providing that 

planunder 34 CFR 668.14(b)(15).

§ 600.21 Updating application information.

(a) Reporting requirements. Except as provided in paragraph (b) of this section, an eligible 

institutionmust report to the Secretary in a manner prescribed by the Secretary no later than 10 

days after the change occurs, of any change in the following:

* * * 

(6)(i) Changes in ownership. An eligible institution must report any change in the ownership of the

institution that does not result in a change of control as described in § 600.31 and subject to the

requirements of § 600.20(g) and (h), whereby a natural person or entity acquires at least a 5 

percentownership interest (direct or indirect) of the institution.
Changes of Ownership and Changes in Control 7 

(ii) Changes in control. A natural person or legal entity's ability to affect substantially the actions of

theinstitution if that natural person or legal entity did not previously have this ability. The Secretary

considers a natural person or legal entity to have this ability if the person - 

(iA) The natural person acquires,Holds alone or together with another member or members 

ofhis or hertheir family, at least a 25 percent “ownership or voting interest” in the institution

(direct or indirect) as defined in § 600.31(b);

(iiB) The entity acquires, alone or together with an affiliated natural person or entity, at least 

a 25 percent ownership or controlling interest in the institution (director or indirect) as

defined in § 600.31(b);

(iiiC) The natural person or entity acquiresRepresents or holds, either alone or together 

with another natural person or entity, under a voting trust, power of attorney, proxy, or 

similar agreement at least a 25 percent “ownership or controlling interest” in the institution

(direct orindirect), as defined in § 600.31(b); or

(ivD) The natural person becomesIs a general partner, managing member, the chief executive

officer, or chief financial officer, director, or other officer of the institution or of an entity which

has at least a 25 percent ownership or controlling interest in the institution (direct or indirect)

as defined in § 600.31(b); or

(vE) The entity becomes a general partner or managing member of an entity which has at least

a 25 percent ownership or controlling interest in the institution (direct or indirect) as defined in 

§ 600.31(b).

* * * 

(14) In addition to the reporting required by paragraphs (a)(6) and (b) of this section, any change in 

theownership of the institution that does not result in a change of control as described in § 600.31 

and subject to the requirements of § 600.20(g) and (h), including the addition or elimination of any 

entities in the ownership structure, a change of entity from one type of business structure to 

another, and any excluded transactions under § 600.31(e).

(15) In addition to the reporting required by paragraphs (a)(6), (a)(14) and (b) of this section, any

changein the ownership of the institution that does not result in a change of control as described in § 

600.31 and subject to the requirements of § 600.20(g) and (h), whereby a natural person or entity 

acquires at least a 5 percent ownership interest (direct or indirect) of the institution.

§ 600.31 Change in ownership resulting in a change in control for private nonprofit, private forprofitand public institutions.

(a)

(1) Except as provided in paragraph (a)(2) of this section, a private nonprofit, private for-profit, or 

publicinstitution that undergoes a change in ownership that results in a change in control ceases to 

qualify as an eligible institution upon the change in ownership and control. A change of ownership 

that results in achange in control includes any change by which a person who has or thereby acquires 
Changes of Ownership and Changes in Control 8 

an ownership interest in the entity that owns the institution or the parent of that entity, acquires or

loses the ability tocontrol the institution.

(2) If a private nonprofit, private for-profit, or public institution has undergone a change in ownership

that results in a change in control, the Secretary may, under the provisions of § 600.20(g) and (h),

continue the institution's participation in the title IV, HEA programs on a provisional basis, provided

thatthe institution submits, under the provisions of § 600.20(g), a materially complete application -

(i) No later than 10 business days after the change occurs; or

(ii) For an institution owned by a publicly-traded corporation, no later than 10 business days 

afterthe institution knew, or should have known of the change based upon SEC filings, that the 

changeoccurred.

(3) In order to reestablish eligibility and to resume participation in the title IV, HEA programs,

theinstitution must demonstrate to the Secretary that after the change in ownership and

control -

(i) The institution satisfies all the applicable requirements contained in §§ 600.4, 600.5, and

600.6,except that if the institution is a proprietary institution of higher education or 

postsecondary vocational institution, it need not have been in existence for two years before 

seeking eligibility; and

(ii) The institution qualifies to be certified to participate under 34 CFR part 668, subpart B.

(4) Voluntary Application Fee. An institution may voluntarily remit a fee to the Secretary for expedited 

consideration of a preacquisition review application and a materially complete application required 

under paragraph (2). The fee shall be equal to 0.1 percent of the title IV, HEA program funds for the 

previous institutional fiscal year for the institution being acquired, or $50,000, whichever is less. If an 

institution submits a fee, the Secretary must-- 

(i) Render a decision approving or denying the preacquisition review application and the 

materially complete application required under paragraph (2) within 90 days of receiving such 

applications; or

(ii)Refund the fee to the institution, unless there is good cause for an extension of the review 

period, and the Secretary sends a letter to the institution explaining why good cause exists. In 

no event may the Secretary extend either the review period on preacquisition review or the 

materially complete application required under paragraph (2) by more than 30 days, without 

refunding the fee.

(b) Definitions. The following definitions apply to terms used in this section:

Closely-held corporation. Closely-held corporation (including the term “close corporation”) means -

(1) A corporation that qualifies under the law of the State of its incorporation or organization 

as a statutory closeclosely-held corporation; or
Changes of Ownership and Changes in Control 9 

(2) If the State of incorporation or organization has no definition of closely-held 

corporationstatutoryclose corporation provision, a corporation the stock of which -

(i) Is held by no more than 30 persons; and

(ii) Has not been and is not planned to be publicly offered.

Control. Control (including the terms controlling, controlled by and under common control with) 

meansthe possession, direct or indirect, of the power to direct or cause the direction of the 

management and policies of a person, whether through the ownership of voting securities, by

contract, or otherwise.

Ownership or ownership interest.

(1) Ownership or ownership interest means a legal or beneficial interest in an institution or its

corporateparent, or a right to share in the profits derived from the operation of an institution or its 

corporate parent.

(2) For purposes of determining whether a change in ownership has occurred, changes in the

ownershipof the following are not included - Ownership or ownership interest does not include an 

ownership interest held by -

(i) A mutual fund that is regularly and publicly traded;

(ii) A U.S. institutional investor, as defined in 17 CFR 240.15a-6(b)(7);

(iii) A profit-sharing plan of the institution or its corporate parent, provided that all fulltimepermanent employees of the institution or its corporate parent are included in the

plan; or

(iv) An employee stock ownership plan (ESOP).

Parent. The parent or parent entity is the entity that controls the specified entity directly or indirectly 

through one or more intermediaries.

Person. Person includes a legal entity or a natural person.

Wholly-owned subsidiary. A wholly-owned subsidiary is one substantially all of whose outstanding

voting securities are owned by its parent together with the parent's other wholly-owned subsidiaries. 

(c) Standards for identifying changes of ownership and control -

(1) Closely-held corporation. A change in ownership and control occurs when -

(i) A person acquires more than 50 percent of the total outstanding voting stock of

thecorporation;

(ii) A person who holds an ownership interest in the corporation acquires control of more

than50 percent of the outstanding voting stock of the corporation; or
Changes of Ownership and Changes in Control 10

(iii) A person who holds or controls 50 percent or more of the total outstanding stock of

thecorporation ceases to hold or control that proportion of the stock of the corporation.

(2) Publicly traded corporations required to be registered with the Securities and

Exchange Commission (SEC). A change in ownership and control occurs when -

(i) A person acquires such ownership and control of the corporation so that the

corporation is required to file a Form 8K with the SEC notifying that agency of the change in

control; or

(ii) (A) A person who is a controlling shareholder of the corporation ceases to be a controlling

shareholder. A controlling shareholder is a shareholder who holds or controls through 

agreement both 25 percent or more of the total outstanding voting stock of the corporation and 

more shares of voting stock than any other shareholder. A controlling shareholder for this

purpose does not include a shareholder whose sole stock ownership is held as a U.S. institutional

investor, as defined in 17 CFR 240.15a-6(b)(7), held in mutual funds, held through a profitsharing plan, or held in an Employee Stock Ownership Plan (ESOP).

(B) When a change of ownership occurs as a result of paragraph (c)(2)(ii)(A) of this section, 

the institution may submit its most recent quarterly financial statement as filed with the 

SEC, alongwith copies of all other SEC filings made after the close of the fiscal year for which

a complianceaudit has been submitted to the Department of Education, instead of the 

“same day” balance sheet.

(C) If a publicly-traded institution is provisionally certified due to a change in ownership

under paragraph (c)(2)(ii) of this section, and that institution experiences another change 

of ownership under paragraph (c)(2)(ii) of this section, an approval of the subsequent

change in ownership does not extend the original expiration date for the provisional

certification providedthat any current controlling shareholder was listed on the change of 

ownership application for which the original provisional approval was granted.

(3) Other entities.

(i) The term “other entities” means any entity which is not closely held nor required to be

registered with the SEC, and includes includes limited liability companies, limited liability

partnerships, limited partnerships, and similar types of legal entities. A change in ownership

andcontrol of an entity that is neither closely-held nor required to be registered with the SEC 

occurs when -–

(ii) The Secretary deems the following changes to constitute a change in ownership resulting 

in a change of control of such an entity:

(A) A person (or combination of persons) acquires at least 50 percent of the total

outstanding voting interests in the entity, or otherwise acquires 50 percent

control;

(B) A person (or combination of persons) who holds less than a 50 percent voting

interest in an entity acquires at least 50 percent of the outstanding voting 

interests inthe entity, or otherwise acquires 50 percent control;
Changes of Ownership and Changes in Control 11

(C) A person (or combination of persons) who holds at least 50 percent of the voting

interests in the entity ceases to hold at least 50 percent voting interest in the entity,

or otherwise ceases to hold 50 percent control;

(D) A partner in a general partnership acquires or ceases to own at least 50 percent 

of the voting interests in the general partnership, or otherwise acquires or ceases 

to hold50 percent control;

(E) Any change of a general partner of a limited partnership (or similar entity) if 

thatgeneral partner also holds an equity interest;

(F) Any change in a managing member of a limited liability company (or similar 

entity) if that managing member also holds an equity interest;

(G) Notwithstanding its voting interests, a A person becomes the sole member or

shareholder of a limited liability company or other entity which has a acquires or 

ceases to hold a 100 percent or equivalent direct or indirect interest in the institution;

(H) Notwithstanding its voting interests, a person is replaced as the sole member 

or shareholder of a limited liability company or other entity which has a 100

percent or equivalent direct or indirect interest in the institution; or or

(IH) The addition or removal of any person that provides or will provide the financial

statements to meet any of the requirements of § 600.20(g), (h) or Subpart L of 34 CFR

part 668, subpart L.

(iii) The Secretary deems the following interests to satisfy the 50 percent thresholds 

describedabove:

(A) A combination of persons, although each with less than 50 percent voting or

controlling interest in an entity, hold a combined voting interest of at least 50 percent

asa result of proxy agreements, voting agreements or other agreements (whether or 

not the agreement is set forth in a written document), or by operation of State law;

(B) A combination of persons, although each with less than 50 percent voting or

controlling interest in an entity, hold a combined voting or controlling interest of at

least 50 percent as a result of common management and control of that entity, either 

directly or indirectly; or

(C) A combination of individuals who are family members as defined in § 600.21,

although each with less than 50 percent voting or controlling interest in an entity, 

hold acombined voting or controlling interest of at least 50 percent.

(D) Notwithstanding the foregoing-

(1) If a person who alone or in combination with other persons (as described 

in paragraphs (c)(3)(i)-(iii) of this section) has less than a 50 percent voting or

controlling interest in an entity, the Secretary may determine that the 
Changes of Ownership and Changes in Control 12

person, either alone or in combination with other persons, has actual control 

over that entity and is subject to the requirements of this section.

(2) Any person who alone or in combination with other persons has the right 

to appoint a majority of any class of board members of an entity or an

institution is deemed to have control.

(i) A person who has or acquires an ownership interest acquires both control of at least 25 

percentof the total of outstanding voting stock of the corporation and control of the

corporation; or

(ii) A person who holds both ownership or control of at least 25 percent of the total

outstandingvoting stock of the corporation and control of the corporation, ceases to own or 

control that proportion of the stock of the corporation, or to control the corporation.

(4) General partnership or sole proprietorship. A change in ownership and control occurs when a 

personwho has or acquires an ownership interest acquires or loses control as described in this 

section.

(5) Wholly owned subsidiary. An entity that is a wholly owned subsidiary changes ownership

andcontrol when its parent entity changes ownership and control as described in this section.

(6) Nonprofit institution. A nonprofit institution changes ownership and control when a change

takesplace that is described in paragraph (d) of this section.

(7) Public institution. The Secretary does not consider that a public institution undergoes a change 

in ownership that results in a change of control if there is a change in governance and the institution

afterthe change remains a public institution, provided -

(i) The new governing authority is in the same State as included in the institution's 

programparticipation agreement; and

(ii) The new governing authority has acknowledged the public institution's

continued responsibilities under its program participation agreement.

(d) Covered transactions. For the purposes of this section, a change in ownership of an institution

thatresults in a change of control may include, but is not limited to -

(1) The sale of the institution;

(2) The transfer of the controlling interest of stock of the institution or its parent corporation;

(3) The merger of two or more eligible institutions;

(4) The division of one institution into two or more institutions;

(5) The transfer of the liabilities of an institution to its parent corporation;
Changes of Ownership and Changes in Control 13

(6) A transfer of assets that comprise a substantial portion of the educational business of the

institution, except where the transfer consists exclusively in the granting of a security interest in those

assets; or

(7) A change in status as a for-profit, nonprofit, or public institution.

(e) Excluded transactions. A change in ownership and control reported under § 600.21 and 

otherwise subject to this section does not include a transfer of ownership and control of all or part 

of an owner's equity or partnership interest in an institution, the institution's parent corporation, or

other legal entitythat has signed the institution's Program Participation Agreement -

(1) From an owner to a “family member” of that owner as defined in § 600.21(f); or

(2) Upon the retirement or death of the owner; or

(3) Upon the resignation from the operation of the institution by an individual owner who has been

involved in the management of the institution for at least two years preceding the transfer and who

hasestablished and retained the ownership interest for at least two years prior to the transfer, to 

another individual owner person with a direct or indirect ownership interest in the institution who 

has been involved in the management of the institution for at least two years preceding the transfer

and who hasestablished and retained the ownership interest for at least two years prior to the

transfer.