WELCOME TO CHARLES RUSSELL SPEECHLYS.
We would like to place strictly necessary cookies and performance cookies on your computer to improve our website service.
Otherwise, we'll assume you are OK to continue. Please close this message
In our PLC Update of January 2013 we reported on AIM Notice 38 which consulted on proposed changes to the AIM Rules for Companies (AIM Rules) and the AIM Rules for Nominated Advisers (Nomad Rules).
On 13 May 2014, London Stock Exchange plc (the Exchange) published feedback on AIM Notice 38 and confirmed the changes to be made to the AIM Rules and the Nomad Rules, as well as ancillary amendments to be made to the AIM Disciplinary Procedures and Appeals Handbook which were not included in AIM Notice 38 (to reflect the changes to new rule 43 of the AIM Rules).
All confirmed changes were implemented with immediate effect, save for the new requirements of rule 26 of the AIM Rules (regarding website disclosure), which must be implemented by all AIM companies by 11 August 2014.
Marked up versions of the new rulebooks can be found on the AIM Notices webpage of the Exchange’s website.
Other than the proposed changes to Schedule 3 and AIM Rule 9 (see below), all of the changes proposed in the consultation have been confirmed, subject to some minor modifications and clarifications. Most notably:
Many respondents commented that given the Exchange’s stated intention was to bring the rule in line with the terminology used in the Financial Services and Markets Act 2000, the Exchange should clarify that the “reasonable investor” test will apply to AIM Rule 11 considerations, to eliminate any ambiguity and reflect market practice.
Accordingly, the following insertion is to be made to the Guidance to AIM Rule 11:
“(b) Information that would be likely to lead to a significant movement in the price of its AIM securities includes but is not limited to information which is of a kind which a reasonable investor would be likely to use as part of the basis of his or her investment decisions”.
Respondents showed strong support regarding the proposed change to provide more visibility to investors on a company’s corporate governance arrangements. In a tweak to what was originally proposed, in circumstances where no corporate governance code is adopted, an explanation of the company’s corporate governance arrangements should be provided.
A small number of respondents were concerned about the practical difficulties that nomads may incur if they are required to act as a liaison contact between a cancelled company and the Exchange, in respect of an Exchange investigation. Accordingly, the Exchange has confirmed that ordinarily they will not expect nomads to be a point of liaison with a cancelled company during any such investigation.
The revised guidance has been tweaked to remove the proposed reference to “a spread of investment risk” and replaced instead with a reference to a “range of investments” on the basis this is a clearer explanation of the Exchange’s intention. The Exchange would usually consider implementation of an investing policy to include the AIM company having made a range of investments to ensure that investment is not concentrated into only one or a very small selection of securities, businesses or assets.
The amendment to the profits test and reference to “annual consolidated accounts”. Respondents queried the helpfulness of the change to the profit test (relating to the treatment of losses) on the grounds that this alternative test is already considered on a case by case basis by AIM Regulation when considering derogation requests.
As a result, the Exchange is not going to make the change and has reverted to referring to “annual consolidated accounts” in Schedule 3.
Respondents did not support the change to AIM Rule 9 on the basis that AIM already has jurisdiction to refuse admission of an applicant under the rule as currently drafted.
All of the changes proposed in the consultation have been confirmed, subject to some minor modifications and clarifications. Most notably:
The Exchange accepts that a requirement to notify of any “potential” change of control is too wide and creates uncertainty. The requirement has therefore been changed to “any change of control which is reasonably likely”.
Some respondents suggested inclusion of a definition of change of control, but the Exchange has resisted this on the basis AIM is a principles-based market and therefore any definition would not be meaningful,
The insertion of reference to a team transfer “as part of a management buyout”, as an example of where the Exchange may use its discretion to waive the two year track record and/or three relevant transactions requirements, was not well received by respondents and so the insertion has not been taken forward.
The meaning of being a QE on a “continuous basis” was queried by respondents. In light of that, the Exchange confirms that periods of garden leave and/or maternity/paternity leave will not ordinarily prejudice a candidate’s continuous QE status.
As to what happens when a QE ceases to be an employee of a nomad firm, the proposed revision to Rule 4 has been dropped on the basis that Rule 12 already adequately explains the process to be followed and the Exchange’s position.
For more information please contact Mark Howard on +44 (0)20 7203 8902 or at firstname.lastname@example.org