Revised AIM Rules confirmed

On 30 March, following a recent consultation by the London Stock Exchange (LSE), new versions of the AIM Rules for Companies and the AIM Rules for Nominated Advisers will be introduced. The outcome of the consultation has resulted in a number of amendments to both sets of rules.

AIM Rules for Companies

Early notification

A new requirement will be introduced requiring a company’s nominated adviser, or Nomad, to submit an early notification form containing key information relating to the proposed new applicant. This form should be submitted as soon as is reasonably practicable, but before the pre-admission announcement is submitted.

Nomads will be able to exercise a degree of discretion when deciding when to submit the new notification form but the LSE expects them to take into account whether sufficient information can be provided to allow for a meaningful discussion.

The early notification form can be accessed here.

Corporate governance

The amended rules will require details of the recognised corporate governance code the company has chosen to apply and details of how it complies with that code. If the company deviates from the code in any way an explanation as to why must be provided and published on the company’s website. A requirement to include this information in the company’s admission document will also be introduced.

Companies will have until 28 September 2018 to comply with these new provisions but the new admission document requirements will apply from the earlier date of 30 March 2018.

The LSE has chosen not to provide a list of recognised governance codes and appreciates that all AIM companies are different. Companies are likely to adopt either the UK Corporate Governance Code or the QCA Code, the first of which is expected to be updated later this year.

AIM Rules for Nomads

Appropriateness for admission

Amendments to the AIM Rules for Nomads will introduce a list of factors which could affect a company’s appropriateness for AIM. It is important for Nomads to have early discussions with the LSE where the circumstances of the applicant company could affect its appropriateness for submission. The factors included on the list can be of significant importance and each in their own right could mean that an applicant is not appropriate for AIM.

There are likely to be circumstances where one particular factor, which when considered on its own would not prevent an admission, could when considered alongside other factors lead to a conclusion that the applicant is not appropriate for admission.

Some of the matters that could potentially affect appropriateness include:

• questions as to the good character, skills, experience or previous history of a key shareholder, such as a director;
• the basis for seeking admission being unclear;
• prior formal criticism of the applicant company from other regulatory bodies;
• the applicant being denied admission to trading on another recognised exchange;
• the applicant having a vague business model; or
• the corporate structure of the applicant giving rise to concerns.

Updated versions of both sets of rules can be found on the London Stock Exchange website.

Any new applicants to AIM after 30 March 2018 will be required to comply with these new requirements. The later September deadline for compliance with the new corporate governance requirements has likely been driven by the imminent changes to the existing UK Corporate Governance Code, therefore giving affected companies more time to adjust to the new regime by tweaking internal processes.