AIM Rules and Nominated Advisers Rules consultation

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Summary: The London Stock Exchange is proposing a number of changes to the AIM Rules for Companies and the AIM Rules for Nominated Advisers. Some of these are more substantive whereas the majority merely clarify previously published guidance.

This update will be relevant to companies whose securities are admitted to AIM and to Nominated Advisers (Nomads).

20 Second summary

The London Stock Exchange (Exchange) is proposing a number of changes to the AIM Rules for Companies (AIM Rules) and the AIM Rules for Nominated Advisers (Nomad Rules). Some of these are more substantive whereas the majority merely clarify previously published guidance, updating the rules which were last updated in February 2010 in the case of the AIM Rules and in February 2007, in the case of the Nomad Rules.

Of particular note for the Nomad community is the proposed relaxation of the rules governing the eligibility requirements of existing qualified executives (QEs). This is to ensure that firms can retain the experience and knowledge of those who have practised as QEs for a number of years and will help a number of Nomads who may not have had as many transactions given the recent economic conditions.

The consultation closes on 3 March 2014 and the new rules adopted following the consultation will come into force during 2014.

AIM RULES

The Exchange’s proposed amendments to the AIM Rules include:

Rule 3 (Admission Document) – replicating, in the AIM Rules, the existing standard imposed by Schedule Two for the Admission Document (i.e. the information is in accordance with the facts and contains no omission...);

Rule 11 (General disclosure of price sensitive information) – clarifying that an obligation to announce is triggered by any price sensitive information, even if it does not fall within one of the categories specified in this Rule.  In addition the word “substantial”, in relation to movement in price, will be replaced with “significant”, in accordance with the terminology in the DTRs;

Rule 21 (Restrictions on dealings) – clarifying that the Directors will not be considered to have dealt by undertaking to participate in a fundraising provided they do so on the same terms as other participants and the close period arises because of the fundraising, and not for any other reason;

Rule 26 (Company Information Disclosure) – proposing additions to the information to be disclosed on an AIM company’s website to include: the last 3 years accounts; details of compliance with the corporate governance code applied by the AIM Company, or a statement that no code has been adopted; and, whether the Company is subject to the UK City Code on Takeovers and Mergers, equivalent legislation or any other similar provisions which the AIM Company has adopted;

Rule 43 (Jurisdiction) – a new Rule clarifying that if an AIM company’s admission is cancelled, it will still be responsible for breaches which occurred prior to cancellation, previously discussed in Inside AIM Issue No. 2. A corresponding change is being proposed to Rule 22 in relation to access to information for the purposes of an investigation;

Rule 40 (Precautionary Suspension) – clarifying in the guidance the AIM Team’s approach to suspensions;

Schedule 3 (Class tests) – clarifying what has been the AIM Team’s practice when assessing profits (or losses) for the purposes of the class tests that losses should be included and the negatives should be ignored (e.g. a £100 loss would be treated the same as a £100 profit).

NOMAD RULES

The Exchange’s proposed amendments to the Nomad Rules include:

Rules 2 and 11 (The Criteria and Continuing eligibility) – additional drafting listing the circumstances, affecting a Nomad’s eligibility, which require notification to AIM Regulation.  These include a potential change of control. On a change of control, a new nominated adviser application will be required and a licence cannot be sold or transferred from one firm to another. In determining the eligibility of the Nomad firm, the Exchange will consider the new controller and its ability to satisfy the criteria in rule 2.

Rule 4 (Qualified Executives) – a relaxation of the continuing eligibility criteria for QEs: (i) they only need to have acted in a lead corporate finance capacity on three relevant transactions in the last five years (as opposed to three years); and (ii) individuals with over five years continuous experience as a QE and who are actively involved in a corporate finance advisory role, remain eligible if they have acted in a lead corporate finance role on one relevant transaction in the last five years.

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