In January 2014, the Edwin Coe corporate team reported on the proposed changes to the AIM and Nomad Rules (read blog) and now provide an update…
AIM Companies and Nominated Advisers must be aware of the Rule changes including a requirement to update company websites.
On 13 May 2014 The London Stock Exchange issued an AIM Notice (No. 39) that it had implemented changes to the AIM Rules for Companies (AIM Rules) and the AIM Rules for Nominated Advisers (Nomad Rules) as well as a consequential change to the AIM Disciplinary Procedures and Appeals Handbook.
The Notice and amendments to the rules and handbook can be found at http://www.londonstockexchange.com/companies-and-advisors/aim/advisers/aim-notices/aim-notices.htm
The Exchange received 28 responses to its consultation on the changes which were proposed in January 2014 and has commented that the objectives of the proposed changes were positively welcomed.
The changes came into immediate effect, except for the new requirements for AIM company websites under Rule 26 of the AIM Rules, which must be implemented by 11 August 2014.
Changes to the AIM Rules for Nominated Advisers
The changes to the Nomad Rules include the following, reflecting the continuing restructuring of nominated adviser firms and the reduced frequency of transactions over recent years.
Emphasising that nominated adviser status should not be regarded as a licence that can be sold or transferred, rules 2 and 11 of the Nomad Rules have been amended so that a nominated adviser is required to inform the Exchange as soon as possible of any potential material change to its structure or organisation or any change of control which is reasonably likely. Following a change of control, a new application for nominated adviser status is required, for which the Exchange will consider in particular the new controller and its ability to satisfy in its own right the requirements set out in rules 1-3 of the Nomad Rules (criteria for eligibility as a nomad and preservation of the reputation and integrity of AIM).
A key factor in achieving or maintaining nominated adviser status is the requirement for a firm to have a minimum of 4 Qualifying Executives. Whereas no changes have been made to the criteria for new Qualified Executive applicants, some latitude has been introduced so that under rule 4 existing Qualified Executives will remain eligible:
- if they have acted in a lead corporate finance capacity on three relevant transactions in the last five years rather than the current three year period, and
- if they have over five years’ continuous experience as a Qualified Executive and are actively involved in a corporate finance advisory role, in relation to AIM in particular, provided they have acted in a lead corporate finance role on one relevant transaction in the last five years.
Changes to the AIM Rules for Companies
The changes to the AIM Rules are mainly of an administrative and clarificatory nature, although the Exchange has highlighted two substantive amendments:
- clarification that when an AIM company de-lists, the Exchange retains jurisdiction over it for the purpose of investigating and taking disciplinary action in relation to actual or suspected AIM Rule breaches; and
- rule 11 (general disclosure of price sensitive information) has been amended so as to clarify that the new developments requiring disclosure that are referred to (changes in: financial condition, sphere of activity, performance of business or expectation of performance) are by way of example only.
Changes to the Guidance Notes (which form part of the AIM Rules) reflect (amongst other matters) technical guidance previously given in the Exchange’s Inside AIM publication.
AIM companies should review their websites to ensure they comply by 11 August 2014 with the changes to Rule 26 of the AIM Rules, requiring additional information to be displayed.
Edwin Coe’s corporate group has significant experience in advising on AIM regulation and legal issues arising from an application for admission to trading on AIM, the continuing obligations for AIM companies and AIM market transactions.