The third edition of the Inside AIM newsletter has been published by the Stock Exchange's AIM Regulation Team.

This edition focuses on Rule 13 which deals with related party transactions.

The following points are made:

Wording of fair and reasonable statements

The wording of the fair and reasonable statement as stated in Rule 13 should not be amended or caveated in any way, in either the same sentence or in surrounding paragraphs.

Rule 13 derogation requests

It was noted that the AIM Regulation Team frequently receives requests to derogate on the requirement to provide a fair and reasonable statement, particularly where the company is in a distressed situation.

The AIM Regulation Team considers that in circumstances where a related party transaction is being made in a distressed scenario or where few other options are available, shareholders rely even more than usual on the confirmation that the transaction is fair and reasonable.

Nomads are asked to consider carefully all of the reasonable options that are open to the company in the time available to it.

Lack of independent directors

In instances where there are no independent directors to provide the fair and reasonable statement, the nomad should contact AIM Regulation with a proposed alternative. Appropriate solutions can sometimes include the provision of a relevant statement by the nomad instead of the directors, or shareholder approval of the transaction.

Directors' remuneration

In circumstances where directors are granted bonuses or options which are not part of their standard remuneration package, or where the terms of their remuneration package are revised, such transactions are caught by Rule 13 if they are not within usual remuneration parameters. In addition, directors' participation should be aggregated in some situations, for example where there is a related option issued to directors.

The newsletter also briefly considers:

  • pre-admission statements.
  • AIM Rules 10 and 11, including monitoring the share price and dealing with leaks.
  • AIM Regulation's approach to suspension on the announcement or leak of a reverse takeover under AIM Rule 14.
  • Investment companies and investing policies (AIM Rule 15)
  • Working capital statements under AIM Rule 3.

For further information, see: