Changes to the AIM Rules disclosure requirements

by Dentons


Minor changes to the ongoing disclosure requirements in AIM Rule 26 have come into force, following AIM's designation as an SME Growth Market at the start of 2018. More significant changes relating to corporate governance disclosure, on which the London Stock Exchange (LSE) has been consulting, are likely to take place in June 2018.

MiFID II changes

The SME Growth Market designation was developed by the EU Commission as part of its capital markets union plan, which aims to develop more integrated capital markets within the EU. It is an eligibility requirement for SME Growth Markets that certain regulatory information remains available for five years once published.

In practice this means that an AIM company must have the following available on its website for a period of five years from publication:

  • annual financial reports published pursuant to Rule 19;
  • half-yearly, quarterly or similar reports published pursuant to Rule 18;
  • any inside information which it must disclose publicly under the Market Abuse Regulation; and
  • any prospectus. 

This extended reporting time only applies to information published on or after 3 January 2018.

Corporate governance changes

The LSE has announced in its most recent Feedback Statement and Consultation Paper that it is proposing to introduce a requirement in AIM Rule 26 for AIM companies to comply with or explain against a recognised corporate governance code. 

The LSE believes that the comply or explain approach is a helpful approach to yield the long-term benefits that can be gained from good corporate governance.

It is proposing to implement this requirement from 30 June 2018. Although final implementation is subject to the results of the consultation, this proposal has already received positive feedback from a majority of the respondents to the LSE's July 2017 Discussion Paper. It is therefore unlikely that there will be material changes to the proposal. 

In practice, this means that, from 30 June 2018, the position is likely to be as follows:

  • An AIM company will no longer be able to state that it has not adopted a corporate governance code. 
  • The company will need to provide details on its website of:
    • the recognised corporate governance code that the board 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. 
  • There will be flexibility around which governance code an AIM company may choose, as the LSE considers it preferable for AIM companies to have a range of options to suit their specific stage of development and size. The proposed rule change only requires that the chosen code is a "recognised" one. 

Well-established benchmarks for AIM companies include the Quoted Companies Alliance Corporate Governance Code for Small and Mid-Size Quoted Companies and the UK Corporate Governance Code. However, for some companies, for example a company admitted to another market, it may be more appropriate to report using its home jurisdiction standards.

  • The LSE will expect AIM companies to ensure that meaningful information is provided to investors for them to be able to understand an AIM company's approach to governance.  

Now that the consultation has closed, the LSE plans to publish the final rules as soon as practicable. AIM companies and their nominated advisers should then start considering what steps they should be taking to comply with the new requirements.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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