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BLP Market Update: AIM Disciplinary Notice 16

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Summary: AIM has publicly censored and fined a company £125,000 for not including certain information in its announcements and for not consulting with or keeping its nomad informed. It stresses the importance of clear announcements, and the implications of information announced. This action highlights to AIM companies, including those based outside the UK, the importance of internal reporting and controls and maintaining a constructive nomad relationship.

Background

The case arose from the company’s actions around the time of a proposed acquisition which it proposed to finance through a debt facility arrangement.  Following announcement of the transaction and publication of the AIM Admission Document (as it constituted a reverse takeover), certain of the company’s management grew concerned that the debt facility would not be forthcoming, in part owing to issues in getting in contact with the proposed debt provider.  This information was not provided to the Finance Director or the nomad, although it was discussed with its lawyers and other overseas professional advisers.  In addition, during the process, the company announced that the final condition of the acquisition would soon be met – the release of security, and that completion was expected to take place on or around a particular date.  However, this announcement failed to note any of the transaction risks created by the uncertainty of the debt financing arrangements, implying that completion was only dependent on release of the security.  Ultimately the funding was never provided and the acquisition did not proceed.

The AIM Disciplinary Committee found the company to have broken the following AIM rules:

  • AIM Rule 10 – the requirement to make sure all information notified is not misleading, false or deceptive: by failing to include in its notifications the fact that it was aware of difficulties in obtaining funds from the entity that was financing the acquisition;
  • AIM Rule 31 – the requirement to seek advice from the nomad: by failing to keep its nomad informed of the difficulties it was having in obtaining these funds and failing to seek the nomad’s advice on the AIM Rules implications; and
  • AIM Rule 22 – the requirement to provide the Exchange with information on request: as the board (as comprised at the time of the events and not the current board) did not fully co-operate with the Exchange during its investigation into these breaches.

This action serves as a reminder to all companies as to the importance of being clear in announcements and including all relevant material information, particularly as to the implications of information announced as required by AIM Rule 10. 

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