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AIM Notice 50 – confirmation of changes to the AIM Rules and Nomad Rules

AIM Notice 50 – confirmation of changes to the AIM Rules and Nomad Rules

  • United Kingdom
  • Financial institutions

12-03-2018

Introduction

On 11 December 2017, London Stock Exchange (”Exchange”) issued AIM Notice 49 (see our briefing here), which included a consultation on proposed changes to the AIM Rules for Companies (“AIM Rules”) and the AIM Rules for Nominated Advisers (“Nomad Rules”).

On 8 March, 2018, the Exchange published AIM Notice 50, which provides feedback on the consultation and sets out the resulting rule changes.

Rule changes

The rule changes that were proposed in AIM Notice 49 are being adopted in full with only minor changes with effect from 30 March 2018.

The changes that will take place are outlined below.

Formalising an early notification process for Nomads

AIM Rule 2 and Schedule 3 to the Nomad Rules are modified to require the Nomad to submit an early notification to the Exchange. The timing will be left to the Nomad’s discretion, but this must be submitted as soon as reasonably practicable and prior to the submission of any information required by Schedule 1 of the AIM Rules.

The early notification must be submitted in the template form here

The Exchange comments that respondents to  the consultation were supportive of formalising the early notification process. In the recent feedback statement, the Exchange offers some guidance as to how the process will work in practice, noting that their consideration of the early notification information will be in a similar manner to the current Schedule 1 information. It is also noted that whilst a Nomad may state that certain of the information required in the early notification form is not yet available, consideration should be given as to the timing of the early notification, as the Exchange will expect sufficient information to be provided to enable meaningful discussion. The Guidance Notes to the AIM Rules make clear that there may be a delay where an early notification form is submitted that  does not allow adequate time for discussion.

Guidance to Nomads on considering appropriateness and the Exchange’s Rule 9 powers

Schedule 3 of the Nomad Rules is amended to set out guidance on admission responsibilities. Nomads will be expected to have early discussions with the Exchange where the circumstances of the applicant could affect its appropriateness for AIM. There is a non-exhaustive list of factors to consider when assessing an applicant’s appropriateness for admission to AIM, including:

  • where the rationale for seeking admission is unclear;
  • formal criticism of the applicant or any of its directors by a regulator, government or other bodies;
  • the applicant not yet having secured key licences, rights or approvals; and
  • applicants which hold a material part of their assets or business operations through a “risky contractual arrangement” (eg those that are potentially unenforceable or difficult to enforce), rather than owning them itself or through a subsidiary.

These factors either on their own or when combined with other factors may make an applicant not appropriate for admission to AIM.

AIM Rule 9 is also modified to emphasise that the Exchange may refuse admission at its discretion.

Corporate governance requirements

The key change for existing AIM companies is that AIM Rule 26 is modified so that an AIM company is required to maintain on its website details of a recognised corporate governance code that it has decided to apply, how it complies with its chosen code and an explanation of why where it departs from its chosen code. The information will need to be reviewed annually and the website should include the date on which the information was last reviewed. The Exchange expects that in most cases, this will be done at the same time as the Annual Report and Accounts are prepared.

The implementation of this requirement will be from 28 September 2018 to give companies time to comply. However, all new applicants to AIM are required to state from 30 March which corporate governance code they will follow.

The Exchange decided against defining a ‘recognised corporate governance code’ (as requested by some respondents), preferring that AIM companies have a range of options to suit their stage of development, sector and size. Options will include the QCA Corporate Governance Code and the UK Corporate Governance Code (which is currently undergoing a period of revision), or for non-UK AIM companies, possibly an appropriate standard in their home jurisdiction.

The Exchange has also noted that a principles based approach to corporate governance should be followed, so AIM companies should give a meaningful explanation of their practices against the principles of the code, rather than simply identifying areas of non-compliance.

Useful links

AIM notice 50

AIM Rules for Companies March 2018 (mark up)

AIM Rules for Nominated Advisers March 2018 (mark up)

Early notification form

 

For more information contact

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