New AIM Rules and Nominated Advisers Rules

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Summary: New AIM Rules for Companies (AIM Rules) and new AIM Rules for Nominated Advisers (Nomad Rules) and a consequential change to the AIM Disciplinary Procedures and Appeal Handbook come into effect yesterday following the London Stock Exchange’s previous consultation in January 2014.

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

20 Second summary

New AIM Rules for Companies (AIM Rules) and new AIM Rules for Nominated Advisers (Nomad Rules) and a consequential change to the AIM Disciplinary Procedures and Appeal Handbook come into effect yesterday following the London Stock Exchange’s previous consultation in January 2014 (see our earlier ebrief for further details).

AIM Rules

The Exchange has adopted the majority of its proposed changes. As a result of feedback, further changes have been made to certain rules:

  • Rule 11 (General disclosure of price sensitive information) – as proposed, this rule has been amended to clarify 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.  New guidance to Rule 11 confirms that the “reasonable investor” test, contained in FSMA, will be included in what AIM looks at when applying Rule 11.  This reflects general market practice and will help eliminate any potential ambiguity.
  • Rule 26 (Company Information Disclosure) – to enable companies time to comply with the new disclosure requirements on an AIM company’s website, these provisions will come into force on 11 August 2014.  Pursuant to the Finance Bill 2014, which will become on Royal Assent, the Finance Act 2014, stamp duty and stamp duty reserve tax is no longer chargeable on transactions in securities admitted to trading on a Recognised Growth Market i.e. AIM, provided the issuer is not also listed on a Recognised Stock Exchange. New guidance has been added to Rule 26 reminding AIM companies that Euroclear UK & Ireland Limited requires them to inform it of changes in its stamp duty status when the AIM company admits or ceases to be listed on a Recognised Stock Exchange.
  • Schedule 3 (Class tests) – original proposed changes to this rule clarified what has been the AIM Team’s practice when assessing profits (i.e. losses should be included and the negatives should be ignored). Feedback suggested that this was not helpful on the basis that the treatment of losses, in relation to the Profits Test, is considered on a case by case basis by AIM Regulation.  Accordingly, the Exchange has decided not to proceed with these changes.

Nomad Rules

  • Rule 2 (The Criteria) – the Exchange originally proposed changes enabling it to use its discretion to waive the two year track record and/or three relevant transactions requirement.  In light of feedback these changes are not included in the new rules.
  • Rule 4 (Qualified Executives) – the proposals for relaxation to the continuing eligibility criteria for QEs has been adopted.  The Exchange has confirmed that periods of maternity/paternity leave will not ordinarily prejudice a candidate’s continuous QE status and other periods of absence will be considered on a case by case basis.

The other key changes which have not been amended following the consultation and which have come into force are:

AIM RULES

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

NOMAD RULES

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.

 

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