AIM Rules Review - Consultation Paper

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Summary: The London Stock Exchange has published a consultation paper proposing an early notification process for admissions and compliance with a recognised corporate governance code.

We reported earlier in the year on the London Stock Exchange’s (the “Exchange”) proposals to make a number of amendments to the AIM Rules for Companies.  Having considered the feedback, the Exchange has decided to take forward three of the original proposals:

  • Early notification: nominated advisers (“nomads”) should submit an early notification form to the Exchange, prior to submission of the Schedule One form, setting out key information on the company and its proposed admission.  The rationale behind this new requirement is to enable earlier discussions between the nomad and the Exchange so any issues can be identified at this stage.  The Exchange must also be kept informed of any material new information or any change of circumstances to the applicant;
  • AIM Rule 9 powers: provide nomads with a non-exhaustive list of factors, set out in Schedule Three to the AIM Rules for Nominated Advisers, which they should consider in their assessment of appropriateness; and
  • Corporate Governance: feedback from the discussion paper favoured a requirement for AIM companies to comply or explain against a recognised industry code.  As a result, AIM companies must provide details on their website of the recognised industry code that the company has decided to apply, how it complies with that code and where it departs from this, an explanation of the reasons for doing so. However, there will be no requirement to provide an annual update on its corporate governance approach but the information must be kept up to date and the last date on which it was updated should be included (AIM Rule 26). The changes to Rule 26 will take effect from 30 June 2018 to allow companies and nomads time to prepare for the change.

Comments are requested by 29 January 2018.

The Exchange has also published AIM Notice 48 concerning AIM’s application as a SME Growth Market, arising from MiFID II, with effect from 3 January 2018.  As a result, minor consequential changes to the AIM Rules will come into force on this date requiring certain regulatory information (a prospectus, annual financial reports and half-yearly financial reports and all inside information disclosed pursuant to the EU Market Abuse Regulation (“MAR”)) to be available for five years on a website.  These changes will not apply retrospectively.

It is also worth noting that MAR, Article 18(6), contains an exemption from the requirement to maintain an insider list for companies admitted to trading on an SME Growth Market provided that:

  • the issuer takes all reasonable steps to ensure that any person with access to inside information acknowledges the legal and regulatory duties entailed and is aware of the sanction for insider dealing and unlawful disclosure; and
  • the issuer is able to provide the FCA, upon request, with an insider list.

On the basis that there is still an obligation for issuers to draw up a list when requested by the regulator, it may be prudent for companies on AIM to continue to maintain an insider list.

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