The London Stock Exchange has now confirmed the new AIM rulebooks which will come into force on 30 March 2018.
The consultation round started last summer and draft amended rulebooks were published for comment in December 2017. Two key proposals from the July 2017 consultation document were not taken forward: (i) a mandatory minimum level of "free float" for AIM companies, as this was felt by many respondents to be incompatible with a flexible growth market, and (ii) a minimum fundraising threshold for new applicants to AIM, as on balance it was felt this might stop some otherwise suitable companies being admitted to AIM even though it might have given some greater comfort around a company's financial resources.
Under the revised AIM Rules, the nominated adviser to a company coming to the market will need to submit to AIM an "early notification" about the company in prescribed form, essentially giving certain information which may reveal, at an early stage, a reason why the company is not suitable for admission to trading on AIM. The "eligibility letter" has for some time been a feature of the UK's Main Market and in my view this new rule - a codification, in effect, of practice already seen in some cases - is to be welcomed, since if AIM has a fundamental objection at the outset to a company, its structure or a shareholder or director, it may be possible to pause the IPO process to remedy matters or, if necessary, stop the transaction completely without, in either case, incurring substantial advisory fees or generating publicity before the issue comes to light.
As a related matter, the new AIM Rules for Nominated Advisers will give some guidance as to what might affect a company's appropriateness for admission. Whilst the list doesn't really contain anything surprising, respondents to the July 2017 consultation overwhelmingly agreed that providing such guidance would be helpful and welcomed the increased certainty that would be created by providing a set of non-exhaustive examples.
AIM companies will also need to state on their AIM Rule 26 website details of a recognised corporate governance code that the board of directors of the company has decided to apply, how the company complies with that code and, where it departs from its chosen corporate governance code, an explanation of the reasons for doing so. This information should be reviewed annually and the website should include the date on which this information was last reviewed. The implementation of this requirement will take effect from 28 September 2018 but all new applicants from 30 March 2018 will be required to state which corporate governance code they intend to follow but otherwise will have until 28 September 2018 to comply. Whilst there has been an increased focus on corporate governance for AIM companies anyway in recent years with, for example, the publication and adoption of the QCA Code, this further requirement is nevertheless helpful given some of the concerns which have been expressed in the past about some AIM companies' corporate governance practices.