AIM Regulation have changed the format in which they publish their ‘Inside AIM’ technical guidance and have published two articles under Inside AIM in a revised format. Under the new format AIM Regulation will publish individual articles and updates rather than consolidating them into a combined newsletter.
The latest articles consider free float and systems, procedures and controls around financial policies and procedures, although both seem to be an affirmation of market practice.
Consideration of free float
Even though there is no specified level within the AIM Rules, AIM Regulation consider the free float an important factor which the nominated adviser (“Nomad”) should consider when bringing an applicant to the market. Guidance has been given as to the factors that AIM Regulation often discuss with AIM companies in this context which includes:
- how the securities are likely to trade once admitted including the spread and nature of the shareholders comprising the free float;
- failure to raise initial target funds may be indicative of more fundamental issues of appropriateness and is a matter which should be explored by the Nomad;
- limited free float should give rise to questions concerning the rationale for the applicant to seek admission; and
- where there are concentrated shareholdings e.g. due to family connections etc., undue influence, control and ongoing corporate governance arrangements should be considered in conjunction with the free float issue.
Given this guidance Nomads should be prepared to address these points when discussing new applicants.
Systems, procedures and controls – financial policies and procedures
When considering compliance with AIM Rule 31 (sufficient procedures, resources and controls to comply with the AIM Rules) AIM Regulation has stressed that this is an assessment which should take place prior to admission and that Nomads should, for example, review the financial policies and procedure documents prepared by the issuer, in conjunction with its reporting accountants, and assess whether those policies are capable of working in practice.