1.      Introduction

On 8 March 2018, London Stock Exchange plc (the “Exchange”) issued AIM Notice 50 confirming changes to be made to the AIM Rules for Companies (the “AIM Rules”) and to the AIM Rules for Nominated Advisers.  The revised AIM Rules came into effect on 30 March 2018.

Other than the formalisation of an early notification process for nominated advisers prior to admission of companies to AIM, the principal amend to the AIM Rules relates to the corporate governance requirements of AIM companies, as set out in further detail below.

 

2.      New corporate governance requirements for AIM companies

Pursuant to the revised AIM Rules, AIM companies must provide details on their website of the ‘recognised corporate governance code’ that the company has decided to apply, how it complies with that code and where it departs from this, an explanation of the reasons for doing so.  This information should be reviewed annually and the website should include the date on which this information was last reviewed. 

There is purposefully no prescribed list of “recognised corporate governance codes” as the Exchange believes that AIM companies should have a range of options to suit their specific stage of development, sector and size.

The Exchange considers that the “UK Corporate Governance Code” (which applies to all companies with a Premium listing of shares on the Main Market) serves as a standard to which public companies should aspire, but full adherence should not necessarily be the expectation for all AIM companies.  The Exchange, does, however, also support the use of “The QCA Corporate Governance Code” published by the Quoted Companies Alliance (the “QCA Code”).  Please note that the QCA Code was revised on 25 April 2018 and replaces the previous “Corporate Governance Code for Small and Mid-Size Quoted Companies 2013”.

From a sample of admission documents of companies whose shares were admitted to trading on AIM during 2017 with a market capitalisation of £25 million or above, 16 follow the QCA Code only, 8 intend to try and comply with both the QCA Code and the UK Corporate Governance Code so far as is practicable for a company of its size. Four companies have opted to comply solely with the UK Corporate Governance Code instead of the QCA Code and one company applies the AIC corporate governance code for Guernsey companies. These results show that a significant majority of the companies are choosing to follow the QCA Code to some degree, although there is growing commitment to achieving the principles of good corporate governance set out in the UK Corporate Governance Code.

 

3.      Timing

The implementation of the new corporate governance requirements will apply from 28 September 2018.  All new applicants to AIM from 30 March 2018 will be required to state which corporate governance code they intend to follow but they will have until 28 September to fully comply with the new requirements. 

 

4.      Summary of key provisions of the UK Corporate Governance Code and the QCA Code

The table in Appendix 1 to this note sets out the specific requirements for disclosure that must be provided in order to comply with the UK Corporate Governance Code.  The table in Appendix 2 sets out the minimum disclosures that a company must make in order to be deemed compliant with the revised QCA Code.  

The UK Corporate Governance Code and the QCA Code are not the only recognised corporate governance codes for AIM Companies.  The following corporate governance codes also apply:

  •  The Corporate Governance and Voting Guidelines for Smaller Quoted Companies published by the Pensions and Lifetime Savings Association (PLSA) in December 2012
  • The ISS UKI Proxy Voting Guidelines and any updates
  • The European Corporate Governance Guidelines produced by the QCA together with MiddleNext, a French association that represents listed SMEs and mid-cap companies, and Deutsches Atkieninstitut, a German association that represents listed companies, published in May 2011

Given that the overwhelming majority of AIM companies apply the UK Corporate Governance Code or the QCA Code, we have not set out summaries of the additional codes listed above in the appendices to this note.  Please do let us know if you would like any further information on these additional codes or on any other topic that this note.

 

Appendix 1: Requirements for disclosure – UK Corporate Governance Code
Appendix 2: Requirements for disclosure – QCA Code 

FOR QUESTIONS OR MORE INFORMATION, PLEASE CONTACT:

Lena Hodge

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Mark A. Dorff

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Sophie C. McGrath

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Thomas J. Braiden

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Marie J. Fong Sing

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