Summary: The London Stock Exchange has published a discussion paper seeking feedback on a broad range of proposals “to support AIM’s future development”.
Proposals for the AIM Rules for Companies and AIM Rules for Nominated Advisers include an early notification process for admissions; guidance to help assess appropriateness for AIM; whether the introduction of free float requirements/minimum fundraising requirements for all companies would be beneficial; and the appropriateness of current corporate governance requirements. Views are sought by 8 September 2017.
Key Proposals for Discussion
The London Stock Exchange (the Exchange) has published a Discussion Paper (DP) seeking views on a number of proposals including:
- Early notification: whether nominated advisers (nomads) should be required to submit an early notification letter to the Exchange setting out key information on the company and its proposed admission. For example, details of the shares not in public hands; significant shareholders pre and post-admission. This would enable the Exchange to identify and raise issues earlier on in the process and could potentially reduce any uncertainty regarding admission;
- Rule 9 powers: introducing a non-exhaustive list of factors, as guidance to nomads, about the types of issues that nomads should take into account when assessing the appropriateness of an AIM Company. These areas may give rise to concerns and lead to the Exchange exercising its power to refuse admission or impose conditions, should issues identified remain unaddressed. For example, concerns as to good character, skills, experience, a directors’ previous history; criticisms of the applicant/its directors;
- Free float: should the Exchange introduce a minimum free float and if yes, what should this be? The Exchange has and still values a qualitative as opposed to a quantitative approach regarding the minimum threshold. However, as the market has developed, it is seeking views on whether the current entry criteria is adequate and appropriate. The DP notes that the QCA/RSM report “Small and Mid-cap investors survey 2017” concluded that there shouldn’t be any prescribed minimum;
- Minimum fundraising: should there be a minimum fundraising threshold for new applicants and should it apply to both revenue and non-revenue generating companies? What should the minimum be - £2m, £3m, £6m or another amount? The Exchange believes that a fundraising could ensure an extra level of scrutiny over the business and the company’s valuation on admission, enabling a better quality of trading in the secondary market; and
- Corporate Governance: are the current corporate governance requirements appropriate or should they be revised? Should companies be required to comply against a corporate governance code?
The Exchange also intends to review its supervisory powers and sanctions policy and plans to issue a consultation paper, later in the year, on proposed changed to the AIM Disciplinary Procedures and Appeals Handbook.