Following its consultation at the end of 2017, London Stock Exchange (the Exchange) has adopted new Aim Rules substantially in the form proposed. The new rules take effect from 30 March 2018 although the rules applying to the reporting by companies on which corporate governance code they observe will not take full effect until 28 September 2018 to allow AIM companies time to comply.
Corporate governance reporting
AIM-listed companies must disclose, from 28 September 2018, on their website under AIM Rule 26, which corporate governance code the company applies, how it complies with that code and why it does not comply with any provisions of that code. There is no prescribed corporate governance code, only that it must be a “recognised” one. We expect that many AIM companies, as now, will choose to report against the Corporate Governance Guidelines for Small and Mid-Size Quoted Companies published by the Quoted Companies Alliance. Larger AIM companies may choose to report against the full UK Corporate Governance Code. For most AIM companies, much of the disclosure will largely replicate what is in their annual report and the obligation is on companies to update the disclosure on an annual basis (including the date of the last update on the website).
As expected, the Exchange has adopted an ‘early notification’ procedure for consulting with the Exchange on new IPOs. A new form, available on the Exchange’s website, should be submitted before the Schedule 1 form as soon as the requisite information is available.
The new rules also make it clear that the Exchange has absolute discretion to refuse admission and that it is more likely to do so if it considers the admission of a company may be detrimental to the orderly operation, reputation and/or integrity of AIM. The Exchange has also confirmed its proposed guidance on factors which it considers likely to affect the appropriateness of a company. Nominated advisers should note that the guidance is applied in the assessment of new directors in the context of the Ongoing Requirements in the Rules for Nominated Advisers. These factors include:
- Reputation and history of directors, key managers, senior executives, consultants and major shareholders
- Rationale for listing on AIM
- Formal criticism of the issuer or its directors
- Denial of admission to other exchanges
- Vague or ill-defined business model or operations
- Questions over the legality of the applicant’s business/business model or where it has failed to obtain all the assets or licences it requires to operate
- Where the applicant does not own all of its business/assets itself but relies on contractual arrangements with a third party (particularly where they may be issues regarding enforcing those arrangements).