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LSE updates AIM Rules for Companies

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12 Jun 2014

The London Stock Exchange (LSE) has updated the AIM Rules for Companies. Specifically, in the areas of financial reporting and corporate governance, Rule 11 ‘Disclosure of price sensitive information’ has been clarified, Rule 18 ‘Half Yearly Reports’ has been aligned more closely with IAS 34 ‘Interim Financial Reporting’ and Rule 26 ‘Company Information’, which requires certain information to be pulled together into one section of the company’s website, has been updated including the requirement to disclose information related to corporate governance. With the exception of Rule 26, these changes take effect from 14 May 2014. Rule 26 applies from 11 August 2014.

The changes which are largely administrative in nature are as follows:

Rule 11 Disclosure of price sensitive information

AIM Rule 11 implements the UK market abuse regime for companies admitted to trading on AIM (AIM companies). The rule and associated guidance have been amended as follows:

  • The rule has been changed to require disclosure of information which, if made public, would be likely to lead to a “significant” rather than a “substantive” movement in share price, aligning more closely with the wording of the Financial Services and Markets Act 2000. The Guidance Notes in part 2 of the AIM Rules make clear that this means information a reasonable investor would be likely to use as part of an investment decision. AIM Notice 39 explains that the LSE do not believe this changes the standard of disclosure.
  • The revised Rule 11 makes clear that the list of factors set out in Rule 11 are examples rather than a prescriptive list.
  • The Guidance Notes for Rule 11 continue to allow companies not to notify information about impending developments in certain circumstances, provided that this information is kept confidential. New guidance has been added setting out the expectation that companies choosing not to make such information public will have effective procedures and controls in place to ensure confidentiality and minimise the risks of a leak.

Rule 18 Half-yearly reports

AIM Rule 18 previously required a half-yearly financial report to include a comparative balance sheet as at the corresponding date in the preceding financial year. Adoption of IAS 34 by AIM companies is not mandatory, but an AIM company that chooses to do so must include both the comparative balance sheets as at the equivalent date in the preceding financial year (to satisfy Rule 18) and as at the preceding year end (to satisfy IAS 34). Rule 18 has now been updated to remove this problem by permitting companies to present the comparative balance sheet either as at the corresponding date in the preceding financial year or as at the last balance sheet date notified. Companies that wish to continue including both comparative balance sheets may continue to do so.

Rule 26 Company information

AIM Rule 26 requires AIM companies to bring key company information together in one place on the company’s website. Four key changes have been made:

  • Three years (or, if shorter, the period since admission to AIM) of annual reports must be kept on the website; previously only the most recent set had to be kept available.
  • Rule 26 continues to require information about the number of securities in issue, treasury shares, and significant shareholdings, updated at least every six months. This disclosure must now explicitly give the date on which it was last updated.
  • There is a new requirement to indicate within the Rule 26 disclosure whether the AIM company is subject to the UK City Code on Takeovers and Mergers (the Takeover Code), or any other such legislation or code in its country of incorporation or operation, or any other similar provisions it has voluntarily adopted.
  • Finally, there is a new requirement to give details of any corporate governance code that the company has decided to apply and how it complies with that code. If no code has been adopted, this fact should be stated together with details of the company’s current corporate governance arrangements.

AIM Notice 39, announcing the change in rules, can be found on the London Stock Exchange website here. The London Stock Exchange website also contains copies of the final AIM Rules for Companies and a marked-up version showing the changes.

Our 'Need to know' newsletter on the changes can be found here.

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