To encourage smaller growing companies that already trade on other markets to be listed on AIM, AIM offers the AIM Designated Market route (formerly called the Fast Track route), which is a streamlined admission process available to companies that have had their securities traded on an AIM Designated Market ("ADM") for at least 18 months prior to the date of admission to AIM.
We believe the ADM route may be overlooked by companies who qualify for its use. At 30 November 2011 there were 1,150 companies admitted to trading on AIM, of which about 20% were non-UK companies. Several companies are dual-listed on AIM and another stock exchange, including many which are listed on the Toronto Stock Exchange and on AIM.
Natural resource companies feature prominently amongst the dual-listed companies on AIM which highlights the potential of utilising the best aspects of different exchanges. Institutional investors in London are knowledgeable about the natural resources sector: over 30 of the dual listed companies on AIM are in mining or oil & gas sector. They also have a track record of making significant investments in natural resource companies (both on IPOs and secondary fundraisings). However, the lack of comparable support by UK retail investors has impacted liquidity in the UK.
The life-blood of a resource sector company is its working capital, so any prudent company will be considering if it can access further capital in a cost-efficient manner, particularly in the kind of markets we experienced in 2011. AIM should therefore be of particular interest to natural resource companies. Approximately 50% of the 50 largest AIM companies (by market capitalisation) are companies in the natural resource sector. Also, in the first 11 months of 2011 more money was raised for natural resource companies than for any other sector: even in the difficult markets experienced in 2011, approximately £2 billion was raised on AIM for natural resource companies. The appetite of the London investment community for companies in sectors which are well understood by the London market (particularly natural resource companies), together with AIM's established track record of floating non-UK companies and the relatively light-touch regulatory regime on AIM all combine to mean that non-UK companies should give serious consideration to an AIM admission. If a non-UK company is already listed on an AIM Designated Market then it could potentially make use of the ADM route and any perceived lack of liquidity on AIM will be mitigated by the liquidity on its home market.
Of the 20 Canadian companies traded on AIM, only five used the ADM route, so there is scope for its benefits to be demonstrated more effectively to other potential users. The ADM route is available to companies with an 18 month trading record on the 10 AIM Designated Markets i.e.: the Australian Stock Exchange, the NYSE, Euronext, the Deutsche Borse, the Johannesburg Stock Exchange, Nasdaq, NYSE, NASDAQ OMX Stockholm, the Swiss Exchange, the Toronto Stock Exchange, and the UKLA Official List. A company seeking admission via the ADM route must have been listed on the top tier / main board of one of these exchanges, for example, the TSX or the JSE, not the TSX-V or Alt-X.
Instead of an AIM admission document, companies are required to make a detailed pre-admission announcement which has to be made at least 20 clear business days prior to the date of admission. This announcement must include, among other things:
- the size of any capital raising in conjunction with the application for admission to AIM;
- details of the business of the company and its intended strategy following admission;
- a description of significant changes in the financial or trading position of the company since the date to which the last audited accounts were prepared;
- a statement that the directors have no reason to believe that the company's working capital will be insufficient for at least 12 months from the date of its admission to AIM;
- any other information which has not been made public which would otherwise be required of an AIM applicant; and
- the address of a website containing the company's latest published annual report and accounts (prepared in accordance with accounting standards currently acceptable under the AIM rules) which must have a financial year end not more than nine months prior to admission (otherwise interim accounts will be required).
All other AIM rules apply as for any AIM applicant. In the case of a natural resource company, the AIM Rules will also require the inclusion of a competent person's report in respect of the company's main assets. However, it is fair to say that if, for example, a TSX listed company has a technical report which complies with the requirements of NI 43-101, it is difficult to conceive of a situation where that technical report will not also satisfy the AIM requirements for a CPR.
Being listed on two exchanges has certain implications. Care will need to be taken to ensure that the rules of both markets are observed. The most difficult rule to comply with will probably be that unpublished price-sensitive information will have to be announced as soon as possible and synchronised on all the markets on which the shares are traded to ensure a level playing field for investors (i.e. that there is no arbitrage between the two markets).
That said, the process can be managed by choosing experienced advisers, and by timing the listing on AIM to ensure that such things as accounts and competent person's reports are up to date at the time of admission. By obtaining an AIM listing a company will be able to tap into the deep pools of capital in London and will often be able to use its AIM listing to access capital elsewhere in Europe.