The London Stock Exchange’s latest consultation on proposed changes to the AIM Rules for Companies and AIM Rules for Nominated Advisers closed on Friday, 8th September.
The introduction to the consultation document included a timely reminder of AIM’s important role in the UK economy, with UK incorporated AIM companies alone providing a direct £15 billion annual contribution to GDP and around 430,000 jobs. By the beginning of 2017, over £100 billion had been raised for AIM companies since AIM’s launch.
Arguably the most significant issue addressed by the consultation is the lack of a formal procedure for identifying and addressing issues that may be of concern to the London Stock Exchange in relation to a company which is applying to be admitted to trading on AIM. Currently, a company’s intention to join AIM is usually first brought to the London Stock Exchange’s attention when it submits its “Schedule One” or “10 Day” pre-admission announcement, which is at the final stage of what is often a lengthy admission process. If any issues concerning the company or its management are identified at this stage, the admission to AIM could be delayed or put in doubt.
The consultation proposes that the AIM Rules would be amended to provide for the Nominated Adviser to enter into confidential discussions with the London Stock Exchange at an early stage of the admission process to consider key information about the company. The consultation identifies the types of information that would be relevant and also proposes that the AIM Rules for Nominated Advisers should be amended to include a non-exhaustive list of factors about an applicant company which may lead the Exchange to consider that its admission is detrimental to the orderly operation or reputation of AIM.
This is an extension of the current requirement, albeit not embodied in the AIM Rules, for a Nominated Adviser to approach the London Stock Exchange, at an early stage of the application process, to discuss any features of an applicant company that the Nominated Adviser has identified as being of potential concern to the Exchange.
A “front-end” approach for all applicant companies would bring AIM in line with the application process for the Official List and would mean that any problems with an applicant company could be identified and hopefully resolved at an early stage before significant time and money has been incurred on the application. This is likely to be welcomed by market participants generally.
Other proposals for companies applying for an AIM listing include the introduction of a formal minimum “shares in public hands” (or “free float”) requirement and minimum fundraising requirement for companies other than investment companies. The London Stock Exchange also invited views on: whether the current approach to corporate governance standards and disclosure is appropriate, whether there are further ways the London Stock Exchange can helpfully educate market participants and whether there should be automatic fines for explicit breaches of the AIM Rules for Companies.
The consultation indicates that the London Stock Exchange is taking a progressive approach to the operation of AIM, in response to concerns that have been raised by market participants, and in particular the proposal for a formal consideration of AIM companies at an early stage of the admission process is to be applauded. We wait with interest to see the proposed changes to the AIM Rules.
If you would like further information on this, or any other related matter, please contact Nick Williams and the Corporate team using the information below.