We responded to London Stock Exchange's discussion paper reviewing the AIM Rules.
We agreed that the proposed extension and codification of the existing early notification process would be beneficial. We commented that formalising an early discussion on the appropriateness of a prospective applicant would avoid situations where obstacles to admission are not identified until after a prospective applicant has incurred significant costs relating to the proposed admission.
We agreed that that the current approach to free float strikes the right balance, highlighting that our 2017 Small and Mid-Cap Investors Survey found that the majority of institutional investors believed there should not be any kind of enforced minimum free float, either by value of company or size of shareholding floated, as it is unnecessary and burdensome.
We commented that extending minimum fundraising criteria to all AIM companies would be unnecessary as the benefits were uncertain and would make introductions (where no funds are raised) to AIM more challenging. We remarked that setting a general fundraising requirement would inhibit established, well-funded companies with existing diverse shareholder bases from seeking admission.
We warned that a £6m threshold would seriously damage AIM’s future prospects, as it would disincentivise ambitious, entrepreneurial growth companies from seeking capital on public markets. We also noted that if a £6m minimum fundraise requirement had been in place since 1 January 2015, 38% of the admissions to AIM would not have been able to take place.
We commented that the current corporate governance requirements had contributed to improving the standard of corporate governance on AIM. However, we commented that the standard of disclosure needs to be raised so that investors can understand what measures companies are taking to maintain trust with investors and other stakeholders. Nonetheless, we emphasised that any revised corporate governance requirements should allow AIM companies to apply arrangements that are tailored to their individual needs.
We agreed that AIM companies should be required to report annually against a corporate governance code as this allows investors and other stakeholders to be better able to benchmark a company’s corporate governance arrangements. We added that this would enhance the overall integrity of the market if done responsibly.
We commented that this would be best achieved by requiring an AIM company to either follow a code, such as the QCA Code, or explaining its corporate governance principles and practices in sufficient detail to allow meaningful reporting against them.