A consultation document released by the London Stock Exchange (LSE) should strengthen the regulatory framework of AIM, notably by creating greater accountability and transparency for Nomads and issuers.
Proposed changes include the introduction of a new rulebook for Nomads, more rigorous disclosure requirements for companies, and amendments to the AIM disciplinary and appeals handbook.
Philip Secrett, a partner at Grant Thornton Corporate Finance, which has acted for over forty companies on AIM, comments: ‘The new AIM rules for Nominated Advisers will tighten market practices, getting everyone to conform and play by the same rules.
‘While the vast majority of Nomads already comply with these measures as a matter of course, some firms operating at the edges will probably have some work to do.’
Grant Thornton notes the proposed measures will increase due diligence requirements to be undertaken by the Nomad into an issuer and its board, and reinforce the Nomad’s responsibility to maintain regular contact with its clients and full awareness of a clients’ ongoing market activities
Secrett says: ‘What a standard rule book will also do is improve accountability and allow the Exchange to crack down, where and if necessary, but far more effectively, on those Nomads that do not abide by the code.’
According to Secrett, concerns about legislation deterring investment due to a meticulous, US Securities & Exchange Commission (SEC) style regulatory scrutiny, is unwarranted.
‘The expectation is not for AIM to turn into an SEC and pursue dozens of cases, but thanks to a formalised set of rules, the market will have clearly defined markers to ensure that best practice is applied by all,’ comments Secrett.
Responses to the LSE’s proposals are due by 1 December.