From 28 September 2018, new corporate governance requirements will apply to Alternative Investment Market (AIM) companies. Under the new regime, AIM companies must:
- provide details of a recognised corporate governance code that the board of directors of the company has decided to apply
- explain how the company complies with that code, and where it departs from its chosen corporate governance code provide an explanation of the reasons for doing so
- review the company’s corporate governance disclosures annually and also state the date on which these disclosures were last reviewed.
Inside AIM guidance
The latest Inside AIM (PDF) update, published by AIM Regulation, gives guidance on certain aspects of the new corporate governance requirements for AIM companies, in response to common questions raised by nominated advisers. Issues covered include:
Where to make disclosure
AIM Rule 26 requires an AIM company’s corporate governance statement to be published on its website. The disclosure should be clearly presented and easily accessible from the AIM Rule 26 landing page. The statement may include cross-reference to other material (for example, a clearly delineated corporate governance section of the annual report) if that material is freely available and it is clearly indicated where it can be read or a copy obtained. If a company has not yet made disclosure against a recognised code in its annual report, the corporate governance statement must be disclosed on its website by 28 September 2018, in accordance with AIM Rule 26.
Timing of disclosure
In most cases, it is expected that a company will review its corporate governance disclosures at the same time as the company prepares its annual report and accounts. An AIM company’s website should include the date when it last reviewed its compliance with its chosen code. In conjunction with this review, the company should update its AIM Rule 26 disclosures to remain accurate.
There is no prescribed list of recognised codes – AIM companies should be able to select a code from a range of options which suits their stage of development, size and sector. The guidance does however refer to ‘established benchmarks’ for AIM company codes such as the QCA Corporate Governance Code and the UK Corporate Governance Code (both of which have been reviewed and updated recently). AIM companies with a dual listing in their home state may report using an appropriate standard in that jurisdiction. AIM companies are reminded to keep informed of changes to the recognised code they choose to apply.
Good corporate governance and investor engagement
Disclosure is essential to enhance the engagement between investors and the board. It is for investors to decide whether the corporate governance policies, practices and any reasons for non-compliance with the chosen code are appropriate for the AIM company, taking into account relevant factors such as stage of development, size and sector. The guidance also emphasises that good corporate governance requires more than applying and disclosing against a code, and involves a positive culture, strong leadership, robust systems and risk management.