New (and improved) AIM rules proposed

The Consultation Paper (available HERE together with a revised draft version of the AIM Rules HERE) follows on from the LSE's feedback statement to its previous AIM Discussion Paper "Shaping the Future of AIM" published late last year (see our briefing HERE) which it notes was widely supported by the market.

The Consultation Paper is a welcome step forward in refocusing AIM as the international growth market of choice. This is achieved by addressing a wide range of topics, including the removal of the working capital statement and the profits test (except in respect of related party transactions), focussing concerns around proxy advisors and discussion forums, improving international access and increasing the flexibility of governance and remuneration arrangements.

The LSE, in addition: (i) is consulting on amendments to the AIM Rules for Nominated Advisers under AIM Notice 63 which is not considered under this briefing, and (ii) is working to redesign, modernise, simplify and streamline the AIM admission document to make it more user friendly and proportionate for which there will be a separate consultation in due course.

The consultation closes on 2 July 2026.

Replacement of the working capital statement with specific financial disclosures (Proposed)

The Consultation Paper proposes to remove the requirement for directors to include a working capital statement in an AIM admission document. The LSE notes that a majority of market respondents considered the working capital statement to be of limited value relative to its cost of production and that this requirement may deter companies from seeking admission to AIM.

In its place, the LSE proposes to require an AIM company to focus on disclosure of (i) capital resources available; (ii) financial obligations; and (iii) proposed future fundraising needs over a 12-month horizon. The LSE also recognises that going concern statements from audited accounts would provide valuable information about the AIM company's financial track record and historic capital requirements.

This proposal is a significant change for AIM companies seeking an AIM admission reducing the complexity and cost of the financial workstreams on such a process. The LSE maintains that the proposed focus on disclosure is meaningful to investors as it provides them with qualitative data to enable them to make informed investment decisions.

Expanded accepted accounting standards (Current Policy)

AIM companies incorporated in the United Kingdom may now use UK GAAP (FRS 102) instead of International Financial Reporting Standards ("IFRS"). Other local GAAPs may also be permitted where IFRS equivalency is demonstrated. This change addresses concerns about the cost and complexity of converting financial information into IFRS and the actual value of this exercise to investors.

Incorporation by reference (Current Policy)

AIM companies will be permitted to incorporate information by reference into their AIM admission documents, subject to new guidance which will be contained in the guidance notes to the relevant AIM Rule. This change is intended to reduce the cost and length of AIM admission documents.

Lock-in arrangements — AIM Rule 7 (Current Policy)

The LSE has clarified what the LSE calls a misunderstanding of how AIM Rule 7 lock-in arrangements operate. The guidance notes to AIM Rule 7 lock-in arrangements will state that such arrangements are contractual in nature as between the AIM company and relevant parties and that the LSE has no remit to enforce these arrangements.

The LSE is also reflecting its current policy in its amendments the AIM Rule 7 guidance notes to permit sell-downs within the first 12 months post-admission in three limited circumstances: (i) transfers between spouses or into a pension plan; (ii) intra-group transfers; and (iii) financial hardship.

The LSE proposes to introduce a new mechanism, to be known as the "Capital Access Window", to enable an AIM company undertaking an equity fundraise to voluntarily request a temporary suspension of its securities.

The Capital Access Window is intended to assist AIM companies in managing the fundraising process, including approaching retail investors, while reducing market volatility during that process. Requests will be assessed on a case-by-case basis, and no fixed duration is proposed, though the LSE notes that it will be in the interests of both the AIM company and investors to restore trading as soon as practicable.

Whilst other jurisdictions such as New York, Hong Kong and Australia have introduced mandatory and/or voluntary trading halts, the proposed Capital Access Window does seem to be a genuinely innovative mechanism to facilitate fundraising and retail participation. It will be interesting to see how the market reacts to the LSE's proposal to try to competitively differentiate AIM to attract growth companies.

Revised approach to reverse takeovers — AIM Rule 14 (Current Policy)

Under the previous approach, an acquisition that exceeded 100% on any of the class tests would automatically be classified as a reverse takeover, regardless of whether it fundamentally altered the AIM company's business. The LSE is now proposing to incorporate into the rules its current policy that an acquisition will not be classified as a reverse takeover solely by reason of exceeding 100% in any of the class tests, where there is no fundamental change to the AIM company's business, board, and/or voting control. Such transactions will instead be classified as substantial transactions under AIM Rule 12.  The AIM Rules will be amended to reflect that substantial transactions may require shareholder approval.

No automatic suspension on notification of a reverse takeover in contemplation (Current Policy)

Where the Nomad is satisfied that appropriate alternative disclosure can be made, it may request that trading in the shares of an AIM company are not suspended upon announcing a reverse takeover in contemplation. This is intended to preserve market orderliness through disclosure rather than automatic suspension.

Delay in completion of a reverse takeover – no supplementary admission document required (Proposed)

Where there is a delay between shareholder approval of a reverse takeover and completion, the LSE proposes to clarify that a supplementary AIM admission document will not be required unless there is a significant new factor, material mistake or material inaccuracy. Key developments during the delay period must still be notified to the market. It is intended that supplementary admission documents are used proportionately.

Changes to class tests (Current Policy)

The class tests contained in Schedule Three to the AIM Rules will be amended to reflect the LSE's current policy:

• Gross Capital Test:  This class test may be pro-rated for investing companies undertaking an acquisition in line with their investing policy where the acquisition does not result in control or consolidation.
  
  
• Profits test:  This class test will only need to be calculated for the purpose of AIM Rule 13 (related party transactions).

In addition, the guidance notes to Schedule Three to the AIM Rules will provide that where both the numerator and denominator of a class test are zero, the results of that class test may be disregarded.

Substantial transactions — increased class test threshold (Proposed)

The LSE proposes to increase the class test threshold for determining whether a transaction constitutes a substantial transaction under AIM Rule 12 from 10% to 25%, so as to align AIM with the Main Market.

This is a significant change for AIM companies engaged in acquisition activity, as it reduces the number of transactions that will require substantial transaction disclosures.

Non-standard director remuneration — AIM Rule 13 (Current Policy)

Nomads will no longer be required to provide a fair and reasonable opinion on non-standard director remuneration where they are satisfied that contractual terms provide reasonable commercial protections for the AIM company. However, where there is uncertainty, the matter should be resolved by putting the transaction to a shareholder vote.

Special voting shares (Current Policy)

Special voting shares (i.e. shares in dual class share structures) will be permitted on admission to AIM, enabling founders to retain control of their companies. This is based on the Main Market's experience with such structures and is intended to remove a key barrier to admission for founder-led businesses.

Corporate governance disclosure — AIM Rule 26 (Proposed)

The LSE proposes to amend AIM Rule 26 to clarify that AIM companies are not required to adopt or comply-or-explain against a particular corporate governance code. Instead, a recognised code may be used as a framework for a company's consideration of its governance approach.

To support investors understanding of an AIM company's approach to corporate governance, five key areas for governance disclosure are proposed: (i) board composition; (ii) directors' roles and responsibilities; (iii) remuneration and performance; (iv) risk and controls framework; and (v) approach to investor relations.

The QCA has already raised concerns as to the drafting of the new AIM Rule 26 and whilst it applauds the LSE's attempt at flexibility and proportionality, it notes that the new rule could "lead to a loss of confidence among investors".

Proxy advisor engagement (Proposed)

The LSE proposes to amend AIM Rule 26 to give AIM companies the opportunity to voluntarily disclose details of their engagement with proxy advisors, including disclosing factual inaccuracies in proxy advisors statements and the responsiveness of proxy advisors to proxy advisor engagement, together with an express invitation for feedback as to whether the framework should be made mandatory.

In our opinion, discussions in the City around the influence of proxy advisors on AIM companies has markedly increased in recent history and, whilst the LSE notes it has no remit over proxy advisors (unlike, for example, the SEC in the United States), the Consultation Paper suggests that there was a strong demand for the LSE to take action. It will be interesting to observe whether the empowerment of issuers with disclosure and response rights will impact the effect of the proxy advisors and whether the market does indeed push for a mandatory framework.

Third-party commentary and right of reply (Proposed)

The LSE proposes to introduce a voluntary right of reply for AIM companies to respond to third-party commentary, speculation or criticism (including on bulletin boards and social media). It is emphasised that a failure to exercise this right should not be construed as acceptance of such commentary. The LSE proposes to highlight in the introduction to the AIM Rules that an AIM company's notification is subject to legal and regulatory liability and remedies. In this way the LSE considers investors should appreciate the risks of relying on information on bulletin boards and the like.

The LSE has also noted feedback from investors that more detailed trading updates — including factual performance data rather than statements that performance is "in line with expectations" — would reduce the opportunity for misleading external commentary. AIM companies and their Nomads should have regard to this feedback when drafting notifications and trading updates.

Express applicant admission route (Proposed)

The LSE proposes to replace the current AIM Designated Market Route with a new Express Market route. The key features of the proposed route are:

• expanded eligibility to include companies from a broader range of jurisdictions operating in regulated markets comparable to the principles of the International Organisation of Securities Commissions;
  
  
• streamlined admission process where the current Schedule One Announcement period is reduced to three clear business days. In addition AIM Rule 7 lock-ins will not apply.
  
  
• Main Market applicants will have an accelerated admission process and will not be required to submit a draft Schedule One Announcement.

Dual market applicant admission route (Proposed)

A dual market applicant route is also proposed for companies seeking an IPO simultaneous admission to an Express Market and to AIM, allowing such companies to rely on documents prepared for their Express Market admission for the purposes of their AIM admission, subject to limited specific content requirements. However, a dual market applicant must raise at least £6 million (or equivalent) as part of an initial public offer.

Removal and replacement of AIM Rule 11 (Proposed)

The LSE proposes to remove the current AIM Rule 11 disclosure obligation on the basis that, given all LSE markets are subject to the UK's version of the Market Abuse Regulation ("UK MAR"), the rule is duplicative. A new AIM Rule 11 is proposed, which will focus on the role of the Nomad applying its specialist public market corporate finance experience in assisting AIM companies to understand the potential market impact of developments in their business and supporting compliance with UK MAR obligations. One could argue that this creates a clearer standard against which a Nomad may be judged when giving such an opinion as well as an evidential framework for possible action where there is insufficient engagement by a Nomad with an AIM company in connection with the publication of inside information.

Whilst we expect the alignment of the AIM Rules to UK MAR will be widely welcomed, Nomads may need to carefully consider their approach to their own records, systems, controls and liability in light of AIM companies having to "seek and have due regard to the view of its nominated adviser regarding whether any changes and developments to its business and/or prospects is likely to have a market impact and take that view into account when considering its disclosure obligations under MAR".

The LSE proposes to add explicit language to the introduction to the AIM Rules setting out the nature of AIM's buyer-beware model, reflecting that investors must consider the risk profile of specific investments and take responsibility for their investment decisions. Additionally, an AIM admission document will require a prominent bold disclosure on its first page stating (amongst other things) that "AIM is a buyer beware market".

In addition, the LSE is proposing additional changes or is in the course of implementing changes. The more material of these changes are as follows:

• Disciplinary records: AIM companies will be required to maintain records of any findings or disciplinary action by the LSE for a minimum of five years, to facilitate smoother transitions between Nomads.
  
  
• Replacement Nomad appointment period: The period to appoint a replacement Nomad is proposed to be extended from one month to six weeks.
  
  
• Share buybacks — AIM Rule 17: The notification requirements for share buybacks will be clarified, including confirmation that compliance with the relevant UK Listing Rules disclosure requirements will satisfy the AIM Rule 17 notification expectation.
  
  
• Directorship disclosure:  The disclosure of directorships in Schedule Two, Part One to the AIM Rules will clarify that directorships held within subsidiaries and/or group companies are excluded.
  
  
• Block admissions: The requirement for a six-monthly return for block admissions is proposed to be removed, aligning this with the approach of the Main Market.