In February 2011, the AIM Regulation team published the third issue of Inside AIM, its periodic newsletter designed to keep the AIM adviser community updated on the key AIM policy and technical matters. The third edition covers a range of topics including those set out below.
Related party transactions (AIM Rule 13)
AIM Rule 13 (Related party transactions) requires companies to announce related party transactions without delay. The announcement must include a statement that, with the exception of any director who is involved in the transaction as a related party, the company's directors consider, having consulted with its nominated adviser, that the terms of the transaction are fair and reasonable as far as its shareholders are concerned. The AIM Regulation team explains in Inside AIM that it would not expect this statement to be amended or caveated in any way.
The AIM Regulation team also indicates that it frequently receives requests to derogate from the requirement to provide a fair and reasonable statement on the basis that the transaction cannot be said to be the best possible one for a company or because the Nomad feels unable to give such a statement. This issue has been flagged as particularly important for distressed companies. Inside AIM notes that where a related party transaction is made in a distressed scenario, shareholders arguably rely even more than usual on the confirmation that the transaction is fair and reasonable and that nomads must consider carefully all the reasonable options that are open to the company in the time available to it.
Where there are no independent directors to make the fair and reasonable statement, the Nomad should discuss alternatives with the AIM Regulation team. Inside AIM also states that that bonuses or options which are not part of a director's standard remuneration package will be caught within Rule 13 if they could be seen not to be within usual remuneration parameters.
Dealing with insiders (AIM Rules 10 and 11)
The AIM Regulation team points out that compliance with the general disclosure Rule 10 (Principles of disclosure) and Rule 11 (General disclosure of price sensitive information) is crucial to ensure the market is updated accurately and in a timely manner to avoid the risk of a disorderly or false market. Inside AIM notes that in Market Watch 37 the FSA commented on the need to prevent leaks of inside information. In addition to the market abuse regime, AIM companies are reminded that regulatory information should not be published elsewhere before it is notified in accordance with the AIM Rules. Companies are expected to keep confidential impending developments and matters in the course of negotiation and must ensure that they have in place effective systems and controls to ensure confidentiality of price sensitive information and prevent the risk of a leak. Nomads to companies with dual quotations should be particularly mindful of this requirement, given the two sets of rules that the companies must comply with. It is suggested that draft holding statements be prepared in advance in case a potential leak situation arises. Care also needs to be taken with progressive updates about a matter that is yet to be included to ensure that a misleading impression of the status of the matter is not given.
Suspension on announcement or leak of a reverse takeover (AIM Rule 14)
The AIM Regulation team confirms that it has not changed its approach towards suspending companies which are in the process of a reverse takeover that has leaked or been announced, despite changes to the UKLA's approach for listed companies as communicated in LIST! 25 (July 2010). The AIM Regulation Team explains that the different approach is justified by the different nature of most AIM companies from those on the Main Market.
The remaining topics covered by Inside AIM are:
- 10 day pre-admission announcement – a reminder of the AIM Regulation team's expectations regarding the role of Nomads in relation to Schedule Ones
- Investing policies – a reminder that companies which become investing companies pursuant to AIM Rule 15 (Disposals resulting in a fundamental change of business) must ensure that their investing policy complies with the AIM Rules
- Working capital statements – a reminder that the AIM Regulation team would not expect a working capital statement in an admission document to be amended or caveated
- Updates on recent AIM investigations / enforcement actions
- Updates on AIM policy regarding the Government's green paper "Financing a private sector recovery", amendments to the Prospectus Directive and the MiFID consultation
- Various frequently asked questions.
View Inside AIM (7 page pdf)