Listing New Securities

Eligibility for Admission to Trading on AIM

AIM is not a “regulated market”, and as such, it is not subject to the regulatory regime brought in by the Prospectus Directive and the Transparency Directive. In addition, unlike with the Main Market, there are limited restrictions on the ability of an applicant to seek to have its shares admitted to trading on AIM. There is no requirement for a minimum historical trading record, there is no requirement that a minimum number of the shares of the company should be in public hands, and there is no minimum market capitalisation. The overriding requirement for a company seeking admission to AIM is that it be “appropriate” for the market. This judgment is made by the company’s nominated adviser. (See Chapter 6 for further details of the role and responsibilities of the nominated adviser.)

There are also some specific conditions that need to be satisfied in order to facilitate the admission of an issuer to trading on AIM:

i. Nominated Adviser and Broker (AR 1 and AR 35) +

An AIM company must appoint and retain a nominated adviser and broker at all times. In February 2007, the London Stock Exchange introduced the AIM Rules for Nominated Advisers, with which all nominated advisers must comply. These Rules codify nominated advisers’ responsibilities on admission, on taking on a new nominated-adviser role in relation to an existing AIM company and on an ongoing basis. (See Chapter 6 for further details.)

ii. Admission Document (AR 3) +
An applicant must produce an admission document (see section A of Chapter 6 for further details) unless the company is using the AIM Designated Market (fast-track) admission procedure. (See section D of Chapter 6 for further details.)

iii. Lock-Ins for New Businesses (AR 7) +
Where the issuer’s main activity is a business that has not been independent and earning revenue for at least two years, the AIM Rules require all directors, substantial shareholders holding an interest (directly or indirectly) in 10 percent or more of the shares or voting rights in the company, and employees holding an interest (directly or indirectly) 0.5 percent or more of a class of the shares in the company to enter into lock-in arrangements such that they will not dispose of shares in the company for a period of at least one year following admission, save in limited circumstances.
iv. Transferability of Shares (AR 32) +
All AIM companies must ensure that their shares are freely transferable except where a jurisdiction, statute or regulation places restrictions upon transferability or where the company is seeking to limit the number of shareholders domiciled in a particular country to ensure that it does not become subject to statute or regulation. This carve-out caters, inter alia, for US companies (or non-US companies that are treated as “Category 3” issuers for the purpose of US securities laws) which may need to adhere to US regulations imposing restrictions on transfer and also enables companies to manage their shareholder bases to ensure that they do not become subject to certain US regulations. The equivalent requirement under the Listing Rules for Main Market issuers is not subject to this carve-out.

v. Entire Class Admitted (AR 33) +
In order to be eligible for admission, the company must seek admission for the entire class of securities being admitted.

vi. Settlement (AR 36) +
All AIM companies must ensure that appropriate settlement arrangements are in place. In particular, their securities must be eligible for electronic settlement. Previously, the London Stock Exchange had been willing to waive the requirement for securities to be eligible for electronic settlement where this was prohibited by applicable law or regulation. However, this rule was changed on 1 September 2015 as a result of Article 3(2) of the CSD Regulation, which requires transactions in transferable securities that take place on a trading venue (such as the AIM) to be settled electronically and recorded in book entry form in a Central Securities Depository.

AIM Regulation40 has published guidance on the "Category 3" issuers referred to in (iv) above. The guidance notes that the London Stock Exchange expects all existing "Category 3" issuers to be eligible for electronic settlement no later than 1 September 2015.

vii. Special Conditions (AR 9) +
The London Stock Exchange has a residual ability to require compliance with special conditions as a prerequisite to admission, although in practice this power is rarely used.

viii. Investing Companies (AR 8 and the AIM Note for Investing Companies) +
The AIM Rules provide that:

  • an investing company must have a precise and detailed investing policy (as opposed to the previous requirement simply to have an investment strategy) so that the company’s parameters for investment are clear to investors. The “investing policy” must comply with certain minimum requirements;
  • an investing company must raise at least £3 million in cash via an equity fundraising on or immediately before admission;
  • the prior consent of the investing company’s shareholders in general meeting is required for any material change to its investing policy; and
  • where an investing company has not substantially implemented its investing policy41 within 18 months of admission, it should seek the consent of its shareholders for its investing policy at its next annual general meeting and on an annual basis thereafter until such time that its investing policy has been substantially implemented.
The AIM Note for Investing Companies clarifies the types of investing companies that the London Stock Exchange considers appropriate for admission to AIM. Broadly, investing companies seeking admission should have straightforward structures, securities and investing policies. Typically, the London Stock Exchange would expect an investing company to be a closed-ended entity of a nature similar to that of a UK public limited company, thus not requiring a restricted investor base. The AIM Note for Investing Companies also contains provisions regarding the need for independence between the board, the nominated adviser and any investment manager, to ensure that both the investment manager and the board are appropriate for AIM and have sufficient experience.

Furthermore, an investment manager and its key employees who are responsible for making investment decisions in relation to the investing company will be considered directors for the purposes of ARs 7 (lock-ins), 13 (related party transactions), 21 (restrictions on deals) and 17 (disclosure of deals).

There are also specific disclosure requirements for investment managers of externally managed investing companies that both reflect the key role that managers perform and recognise that the managers are currently not directly covered by the AIM Rules.

The London Stock Exchange has recently updated the AIM Note for Investing Companies to clarify that cash proceeds arising from a fundamental disposal under AR 15 (Fundamental changes of business) shall count towards the £6 million minimum funding to be raised by investing companies.

ix. Resource Companies (AIM Guidance Note for Mineral, Oil and Gas Companies: June 2009) +
In response to a growing perception in the market that some resource companies being admitted to trading on AIM were too speculative, in March 2006, the London Stock Exchange issued guidance setting out its minimum expectations for resource companies. The guidance was updated in June 2009. This guidance includes recommendations that, for each admission of a resource company, a competent person’s report on the company’s assets and liabilities should be prepared no more than six months prior to the date of the admission document, issued by a suitably qualified person, and should include an up-to-date “no material change” statement. It also recommends that nominated advisers should conduct full due diligence on the company and its assets prior to admission, including undertaking site visits and, where the assets are outside the UK, obtaining legal opinions as to the title to and ownership of the relevant assets.

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