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Directors' know how is a monthly article, which highlights key rule changes, proposed changes and market updates so that you know what is coming down the track.

AIM Notice 44

AIM Regulation has issued a consultation on proposed changes to the AIM Rules in advance of the application of the Market Abuse Regulation (MAR), which comes into effect on 3 July 2016. AIM Regulation proposes to:

  • Retain AIM Rule 11 on disclosure of price sensitive information: AIM Regulation proposes to retain Rule 11 in order to maintain a fair and orderly market and to amend the guidance notes to make signpost an AIM company’s separate obligation to also comply with Article 17 of MAR. AIM Regulation explains that Rule 11 is not intended to replicate MAR disclosure obligations and that compliance with MAR does not mean that an AIM company will have satisfied its obligations under the AIM Rules and vice versa;
  • No longer retain the Rule 17 requirement to disclose directors’ dealings: Article 19 of MAR provides an appropriate level of transparency and it is expected that AIM companies through their existing compliance with Rule 17 should be able to transition to the new obligation under MAR;
  • Remove the provisions of AIM Rule 21 – Restrictions on dealings – and the associated definitions of “deal” and ”unpublished price sensitive information”: MAR will provide a legal prohibition on trading during close periods and exemptions to those prohibitions;
  • Abstain from amending the AIM Rules or issuing further guidance with regards to preliminary statements of annual accounts and close periods until ESMA has issued further guidance;
  • Make consequential changes to the AIM Rules for Nominated Advisers and the Note for Investing Companies to synchronise with the changes proposed in AIM Rules 17 and 21; and
  • Clarify the guidance to Rule 41 on the circumstances where shareholder consent in a general meeting to cancel the trading of AIM securities is not required.

FRC Guidance on the Going Concern of Accounting and Reporting on Solvency and Liquidity Risks

The FRC has published its ‘Guidance on the Going Concern Basis of Accounting and Reporting on Solvency and Liquidity Risks’. The guidance aims to serve as a proportionate and practical guide for directors of companies that do not apply the UK Corporate Governance Code. It brings together the requirements of company law, accounting standards, auditing standards, other regulation and existing FRC guidance relating to reporting on the going concern basis of accounting, and solvency and liquidity risks.

The Guidance incorporates recent developments in the corporate reporting framework, and includes:

  • Factors to consider when determining whether the going concern basis of accounting is appropriate and making an assessment of the solvency and liquidity risks facing a company that might constitute principal risks for disclosure in the strategic report;
  • Guidance on the assessment periods for the going concern basis of accounting and those risks;
  • Guidance on the assessment process; and
  • Summaries of related reporting requirements.

With this guidance, the FRC:

  • encourages directors to take a broader view, over the longer term, of the risks and uncertainties that go beyond the specific requirements in accounting standards;
  • acknowledges that companies will have risk management and control processes in place that will underpin the assessment and that the degree of formality of this process will depend on the size, complexity and the particular circumstances of the company; and
  • uses the term ‘going concern’ only in the context of referring to the going concern basis of accounting for the preparation of financial statements.

This guidance replaces the FRC’s Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009 and An Update for Directors of Companies that Adopt the Financial Reporting Standard for Smaller Entities (FRSSE): Going Concern and Financial Reporting.

Share dematerialisation survey

The Department for Business, Innovation and Skills (BIS) has requested the help of the Quoted Companies Alliance’s members in gathering evidence regarding the costs and benefits to small and mid-size quoted companies of the abolition of paper share certificates (otherwise known as ‘dematerialisation’).

Our members will have received an email asking them to complete a short questionnaire. Responses will guide BIS's work on how best to implement dematerialisation and may help reduce administrative burdens and costs for issuers regarding their paper shares.

You can find the survey here. Responses are due by Friday 29 April 2016. If you have any questions regarding the survey, please contact Callum Anderson, Policy Adviser (

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