On 8 March 2018 the London Stock Exchange ("LSE") announced an amendment to the AIM Rules for Companies with the introduction of a requirement obliging all AIM listed companies to not only disclose the recognised corporate governance code they have chosen to apply, but to also explain how they comply with that code. Incorporating the "comply or explain" principle, AIM listed companies must additionally give reasons for any departure in practice from their chosen corporate governance code. All AIM listed companies must be in compliance with this new requirement from 28 September 2018.
This significantly amends current practice as previously AIM listed companies could voluntarily disclose the corporate governance code which they applied and where no corporate governance code applied they merely had to state their corporate governance arrangements.
The LSE does not prescribe a list of recognised codes for AIM listed companies, however, it refers to established benchmarks such as the UK Corporate Governance Code and the Quoted Company Alliance Corporate Governance Code. Where AIM listed companies have a dual listing, a corporate governance code from their home state may be applied.
Disclosure should be made in the company's annual report or, if this was not published prior to 28 September 2018, it should be posted on the company's website in accordance with AIM Rule 26. This rule states that AIM listed companies must publish their corporate governance statement on their website and the LSE has indicated that the disclosure should be clearly presented and easily accessible. The corporate governance disclosures must be reviewed annually, and the company website should also include the date at which compliance with the company's chosen code was last reviewed. AIM listed companies are reminded to ensure that they stay up to date with all relevant changes to their applicable codes.
This new disclosure requirement will enable shareholders to evaluate the corporate governance approach of AIM listed companies and is intended to provide further information to investors to enhance engagement between them and the board of AIM listed companies.