On 11 July 2017, the London Stock Exchange ("LSE") issued AIM Notice 46 to announce that it is consulting on proposed changes to the AIM Rules for companies and the AIM Rules for Nominated Advisers ("NOMADs").

The proposals set out in the discussion paper relate to: admission criteria; providing early clarity for applicants and Nominated Advisers in the admission process; ensuring consistency of approach across the nominated adviser community in respect of appropriateness considerations;

and outlining appropriate levels of corporate governance. Proposals on which the LSE seeks views include:

  • The proposal to formalise the early notification process: the nominated adviser ("Nominated Adviser") would be required to enter into confidential discussions with the LSE, setting out key information regarding the company and its proposed admission to AIM, at an earlier stage in the admission process.
  • The proposal to issue guidance on when the LSE may exercise its AIM Rule 9 powers: the LSE has discretion to refuse or impose conditions on an admission should there be any outstanding issues. The proposed guidance would seek to provide further certainty about the LSE's expectations about what the Nominated Adviser should take into account when meeting their obligations by introducing a non-exhaustive list of factors to consider.
  • The proposal to insert a minimum free float requirement: The LSE currently does not consider it appropriate to set a numerical or percentage threshold for free float once companies are admitted to AIM. However, the LSE recognises that a qualitative approach is more meaningful, taking into account the guidance currently available (accessible here: http://www.londonstockexchange.com/companies-and-advisors/aim/advisers/inside-aim-newsletter/consideration-of-free-float.pdf) and the promotion of early discussions with Nominated Advisers to strike a balance between supporting liquidity in the secondary market and supporting innovation and emerging growth in companies.
  • The proposal to introduce a threshold that a company must raise in cash via an equity fundraising on, or immediately before, admission: AIM Rule 8 currently requires that an investment company must raise at least £6 million in cash via an equity fundraising on, or immediately before, admission. The discussion paper seeks views on, firstly, if this threshold should extend to all companies, and, if so, at what threshold should it be set.
  • The proposal to amend the corporate governance requirements for AIM companies: The discussion paper questions whether the existing requirement for Nominated Advisers to assess the efficacy of a board at admission is effective. It also considers whether the existing corporate governance disclosure requirement in AIM Rule 26 is adequate or if the LSE should make it mandatory for AIM companies to comply and explain against an industry code of their choosing.
  • What more the LSE can do to educate market participants: the LSE asks what else it can and cannot do in respect of its remit, beyond the information already available on its website.
  • The proposal to introduce automatic fines for explicit breaches of the AIM Rules: The discussion paper asks whether automatic fines should be introduced, and, if so, what the level of those fines should be and the scope of the breaches to be covered.

The LSE invited responses to the discussion paper on or before 8 September 2017.

The full discussion paper can be accessed here:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.