Public Company

AIM Rule changes - market abuse regime

The London Stock Exchange (“LSE”) is consulting on proposed changes to the AIM Rules in advance of the market abuse regulation (“MAR”) coming into effect on 3 July 2016. 

The LSE states (in AIM Notice 44) that it does not expect there to be any “significant change to the approach of an AIM company and its nominated adviser to considering an AIM company’s disclosure obligations under the AIM Rules”. There will however be some changes to the AIM Rules. It proposes to:

  • retain rule 11 (General disclosure of price-sensitive information) but to amend the guidance notes to signpost an AIM company’s separate obligation to also comply with Article 17 of MAR (Public disclosure of inside information). The proposed guidance also makes clear that rule 11 is not intended to replicate MAR’s disclosure obligations and that compliance with MAR does not mean that an AIM company will have satisfied its obligations under the AIM Rules and vice versa;
  • delete the requirement in rule 17 (Directors’ dealings) that companies disclose directors’ dealings. Instead guidance will be added to rule 17 to signpost an AIM company’s obligations under Article 19 of MAR (Managers’ transactions); and
  • delete rule 21 (Restrictions on dealings) as MAR will provide a legal prohibition on trading during close periods. Instead a new rule will be introduced requiring an AIM company to have a dealing policy. The content of the policy will not be prescribed but will detail minimum provisions that are expected to be included. Proposed guidance highlights that compliance with rule 21 will not mean that Article 19 of MAR is satisfied.

A copy of the proposed changes is available here.

Impact – retaining rule 11 will, as the LSE acknowledges, require AIM companies to effectively comply with two regimes, the LSE’s AIM Rules and MAR (the competent authority for which is the FCA). The LSE notes that it intends to work closely with the FCA to coordinate its approach and to minimise duplication. It also intends to maintain a frequently asked questions section on its website.

OTHER ITEMS

  • Prospectuses: ESMA has published revised Q&A including two new questions. The first deals with the circumstances when a prospectus can include an additional column to reflect recent or future material changes to the capitalisation and indebtedness statements required in the prospectus. The second question confirms that it is possible for an offer to continue beyond the validity of a base prospectus in certain circumstances.
  • BIS has re-published its guidance for entities required to keep a PSC register and those who are considered to be persons with significant control. The changes are largely clarificatory (e.g. amending wording for inclusion in the register to more closely reflect the regulations).
  • The FCA has published:
    • a discussion paper on the availability of information in the IPO process. It considers that the prospectus should play a central role within the IPO process. The FCA notes that, based on its market study, only one transaction featured unconnected research published during the IPO process, resulting in connected research being the only source of information provided to investors during the initial marketing period, aside from any media coverage; and
    • an interim report of its investment and corporate banking market study. Amongst other things, the FCA noted and called for an end to, the widespread use of contractual clauses purporting to limit banks’ clients choice of providers on future transactions. It also announced it will undertake supervisory work to better understand how potential conflicts of interest are managed.

Further consultation papers will be published in due course if the FCA decides to take forward any specific policy proposals.