AIM Rules for Nominated Advisers – consultation paper
Following the revised AIM Rules for Companies, the London Stock Exchange (the ‘Exchange’) has published a consultation paper proposing a number of amendments to the AIM Rules for Nominated Advisers.
- Nominated adviser eligibility criteria (Rule 2): to be approved as a nominated adviser (‘nomad’) and on a continuing basis, an applicant will need to meet various criteria. The proposals would introduce new criteria: (i) being capable of being effectively supervised by the Exchange; (ii) having appropriate financial and non-financial resources; (iii) being able to comply with rules 23 to 25 (procedures, staff and records); and (iv) having in place adequate risk management systems to ensure that it can identify, assess, manage, monitor and control risk appropriately;
- Continuing eligibility and notification requirements: the notification requirements (now rule 12) have been extended and set out more clearly the types of information that a firm is required to provide to the Exchange. This includes notifying, as soon as possible, notice of resignation of a Qualified Executive (‘QE’), Head of Corporate Finance or relevant compliance officer. In addition, if a QE ceases to work in the corporate finance team, the nomad must inform the Exchange (rule 13);
- Supervision of nomads (new Rule 27): in furtherance of the Exchange’s power to restrict or limit the services a nomad provides, the changes would allow the Exchange to (i) require remedial action to be taken e.g. direct the nomad to employ additional staff; (ii) impose restrictions or limitations on the services a nomad can provide where there are concerns around expertise and experience (the Exchange has stated that it does not envisage using this option often); and (iii) require certain actions or restrictions in relation to a QE if it is concerned about their conduct, competency and/or suitability. This is in addition to the existing right to remove QEs; and
- Moratorium on acting for further AIM companies: this seeks to provide further clarity on the Exchange’s right to prevent a nomad from acting for further AIM companies until such time as it considers appropriate.
Comments are requested by 25 May 2018. The AIM Notice 51 can be read here.
QCA Corporate Governance Code 2018
Coinciding with the recent changes to the AIM Rules for Companies*, the QCA has published a revised Corporate Governance Code. The Head of AIM "welcomes the Quoted Companies Alliance’s review and update of its corporate governance code as part of its support for both private and public companies as they grow and seek to build trust with their key stakeholders through good governance."
Previously entitled a code for ‘small and mid-size quoted companies’, the revised QCA Corporate Governance Code envisages that it can be adapted for use by private companies and for those that plan an IPO in the future, combining ‘key elements of good governance and applying them in a manner which is workable for the different needs of growing companies’.
The substance of the revised code is not materially different but key changes include:
- construction around 10 broad principles (previously 12); principles 1-9 help ensure that good governance practices are in place and the 10th reinforces the principle of building trust by maintaining a dialogue with shareholders and other stakeholders;
- merging the principles with recommended locations for disclosure requirements i.e. website or annual report & accounts;
- NEDs – new drafting on what NEDs should expect i.e. access to executive directors, the company secretary and the company’s advisers; receipt of high-quality information in a timely manner; and be able to call upon independent professional advice at the company’s expense; and
- shareholders – companies with a dominant shareholder should consider relationship agreements or similar arrangements to protect minority shareholders.
Copies of the QCA Corporate Governance Code are available for purchase from the QCA website.
*Under the new rules, AIM companies must provide details on their website of the ‘recognised corporate governance code’ that the company has decided to apply and must ‘comply or explain’ against this code. The changes apply from 28 September 2018 but all new applicants to AIM from 30 March 2018 will be required to state which corporate governance code they intend to follow from 28 September.