Proposed changes to the AIM Rules – AIMed at making AIM stronger and more competitive

The LSE has indicated that there will be a separate consultation on the contents of an AIM admission document with a view to modernising, simplifying and streamlining the admission process, to make it more user friendly and proportionate. The ambition is to be much admired.

The consultation proposes a number of targeted changes, including:

• the removal of the requirement for a working capital statement, replaced by enhanced disclosure of capital resources, financial obligations and anticipated funding requirements;
• allowing UK incorporated companies to adopt UK GAAP (FRS 102) rather than IFRS, with other local GAAPs permitted where IFRS equivalence can be demonstrated;
• the ability to incorporate information by reference in admission documents to reduce duplication and cost; and
• clarifying that the LSE has no power to enforce lock-in arrangements, which remain contractual, and that limited sell downs will be permitted in the first 12 months post-admission in specified circumstances, including transfers between spouses or into a pension plan, intra-group transfers and in cases of financial hardship.

The consultation also proposes the following other welcome changes:

1. Capital Access Window

To help improve access to capital, the LSE proposes the introduction of a “Capital Access Window”. This would allow an AIM company to request a temporary suspension of trading during an equity fundraising. Such requests would be considered by the LSE on a case-by-case basis. This is intended to provide issuers with greater control over the fundraising process and facilitate engagement with a broader investor base, including retail investors. A pragmatic proposal likely to improve fundraising execution and investor engagement.

2. Reverse Takeovers

To support growth and acquisition activity, the LSE proposes amendments to the reverse takeover regime so that acquisitions are not classified as reverse takeovers solely by reference to exceeding the 100% class test threshold where there is no fundamental change in the AIM company’s business, board and/or voting control. If there is no such fundamental change, the transaction would instead be classified as a substantial transaction (under AIM Rule 12) and subject to more proportionate disclosure requirements. In addition, nominated advisers would be permitted to request that an AIM company is not suspended upon announcing a reverse takeover in contemplation where appropriate disclosure can be made to the market. A sensible proposal that should reduce unnecessary disruption to acquisitive growth.

3. Approach to Corporate Governance

The LSE has reiterated its view that a “one size fits all” approach to corporate governance is not appropriate for AIM companies or their investors. The consultation therefore proposes a more flexible disclosure-based model under AIM Rule 26, moving away from the current comply-or-explain model in favour of disclosure focused on key governance areas: board composition, directors’ roles and responsibilities, remuneration and performance, risk and controls and investor relations. An excellent proposal.

4. Attracting International Issuers

Measures are proposed to enhance AIM’s attractiveness to international issuers, including the introduction of a new “Express Market” admission route to replace the current Designated Market route, providing a more tailored and accelerated pathway to AIM for companies already listed on recognised international markets. This would make AIM more accessible to a broader range of international jurisdictions, reduce the Schedule One announcement period to three clear business days and remove the requirement for AIM Rule 7 lock-ins. Main Market applicants would also benefit from a streamlined AIM admission process, including the removal of the requirement to submit a draft Schedule One Announcement. This will be a significant step.

5. Dual Market Admission

In addition, a new dual market admission route is proposed, allowing companies seeking simultaneous admission to AIM and an Express Market to rely primarily on the documentation prepared for the other market, subject to limited AIM-specific requirements. Such applicants would be required to raise at least £6 million (or equivalent) as part of an IPO, submit an Early Notification Form and a Schedule One Announcement, and AIM Rule 7 would continue to apply. An attractive route that should reduce enhance AIM’s competitiveness for cross-border listings.

These are only proposals subject to consultation.

This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.

Meet the team:

1. 

   • Mark Tasker

   • Partner
   • Corporate

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2. 

   • Stephen Callender

   • Partner
   • Corporate

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3. 

   • Enea Aniaj

   • Solicitor
   • Corporate

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