Changes to the AIM rules
On 20 February 2007 the London Stock Exchange (LSE) published a new rulebook for Nominated Advisers (Nomads) as a codification of Nomad best practice. Although intended to reflect existing market practice it will inevitably require Nomads to tighten up their processes and record keeping. There is now a prescriptive list of measures the Nomad should take in assessing whether a company is appropriate for AIM. To take a few examples:
- the Nomad should visit the applicant’s operating premises
- conduct third party checks on directors’ CVs where appropriate to do so
- oversee and be actively involved in the drafting of the sections of the admission document that relate to the applicant’s business.
If the Nomad decides that any of the minimum requirements is not applicable it must ensure that a proper record of the decision is made. Nomads will also be required to submit an annual return in respect of work performed during the year.
Changes to the AIM Rules for companies include new wording for the front of the admission document. The front page must state that each AIM company is required to have a Nomad and that the Nomad is required to make a declaration in the form found in schedule 2 of the new Nomad rulebook (which includes confirmation that the Nomad is satisfied that the company and its securities are appropriate for AIM). The wording has been changed from that proposed in the original consultation following fears that Nomads may be exposed to claims from shareholders by extending the Nomad’s responsibilities to individual investors and so beyond its duties to its client, the company. Other less significant changes include that AIM companies must have a website on which key financial and other information must be disclosed. AIM companies have six months in which to implement the new website requirements.
Changes have also been made to the AIM Disciplinary Procedures and Appeals Handbook including:
- the use of a ‘warning notice’ to be issued in the event of a breach of the AIM Rules
- increasing the cap on fines for breaches of the AIM Rule to £50,000 per breach.
There are concerns that by increasing the record keeping burden on Nomads other consequences may be to engender a box ticking approach (with Nomads being unprepared to deviate from the list of requirements even where there may be a good reason to do so) and/or Nomads may give insufficient thought to other requirements that might be relevant. However, on the whole, the changes have been positively welcomed and are seen as an evolutionary step in the continued growth and internationalisation of the market.
For more information, please contact tom.shaw@speechlys.com or andrew.collins@speechlys.com or your usual Speechly Bircham contact.