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AIM High

A regular update on AIM news and developments. AIM High is designed to provide useful information and advice to anyone who has an involvement with or an interest in AIM, including officers of AIM-listed companies, companies who may be considering listing on AIM, NOMADs and brokers and individuals looking for non-executive directorships.

Latest Issue

In the latest issue of AIM High we look at the current state of the IPO market and how ambitious companies considering an IPO can take a range of actions now to prepare themselves. We also look at the benefits of board diversity, the recent FPC Corporate Reporting Annual Review and our regular look at AIM market statistics. Finally, our tax expert Mark Whiteside, outlines the key tax changes for businesses that were announced in the Autumn Statement, which you can read here.

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Damned lies and statistics – 2015 H1 review

Tuesday 4th August 2015

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AIM High - Issue 9

Whilst there has been a fall in the number of IPOs in 2015 from the same period last year, the London Stock Exchange has reported that there was increased activity on AIM during Q2 from Q1. The number of IPOs increased by 44% from 9 to 13 and funds raised on IPO increased by 317%, which indicates that companies continue to regard AIM as a good platform on which to develop their business. Funds raised on further issues fell by 54%, potentially a sign of the balance sheet strength of the existing AIM constituents.

In terms of takeover activity, there were 10 firm offers announced in H1 2015 relating to AIM companies, as opposed to 12 in the same period in 2014. The slight majority of firm offers were by way of scheme of arrangement as opposed to an offer for the shares, notwithstanding the recent changes in legislation (see Takeovers and Stamp Duty, Issue 8). The majority of offers were worth less than £50m, while the only deal worth more than £100m was the takeover of Ashcourt Rowan plc by Towry Holdings Limited.

On the whole, these are positive figures when the period of the General Election is taken into account and bode well for the remainder of the year, even allowing for the usual seasonal slowdown over the summer. There is seemingly confidence in the market and various commentary suggesting that, the danger of months of wrangling over a coalition government having been avoided, public markets are set for a stronger performance in H2 of 2015 than in H1 (China permitting!).

Whether this becomes reality of course remains to be seen. Whilst further measures are already being put into place to address national debt and reduce the deficit, higher interest rates and the EU referendum are on the horizon, which may mean that there is a relatively short window now before another period of relative uncertainty in 2016.

If you would like to discuss any matters regarding the AIM market please contact either:

Andrew Millar

Partner, Corporate
Tel: 0161 836 8965


Voting Guidelines and Pre-Emption Update

Tuesday 19th May 2015

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AIM High - Issue 8

The Pensions Investment Research Consultants (PIRC) has published its 2015 UK shareholder voting guidelines whilst the Pre-Emption Group has published a revised statement of principles for the disapplication of pre-emption rights. In many ways it’s “as you were” for AIM-traded companies.

The PIRC guidelines are published annually and principally address resolutions usually proposed to AGMs; the guidelines are aimed at all UK listed companies but aren’t binding on AIM-traded companies. The main changes in this year’s guidelines, when compared to 2014, are:

  • in connection with auditor elections, non-audit work carried out by the auditor for the company and excessive tenure as a firm’s auditor may detract from an auditor’s independence;

  • a new recommendation that, before allocating capital within a company, directors consider whether it may be more appropriate to return that capital to shareholders;

  • the deletion of any statement setting an acceptable percentage of a company’s issued shares that will be the subject of a “market purchase of own shares” resolution (last year’s guidelines stated that up to 15% of a company’s issued shares would be acceptable). PIRC views buybacks negatively;

  • a new statement to say that there is an inherent conflict of interest in any executive director having a say in determining executive pay, both of the company in question and, given that companies benchmark pay against other companies, any other company whether or not he/she is a non-executive director at any other company.

The revised Pre-Emption Group principles, available in full here, have been re-issued for the first time since 2008. The main points of note include:

  • AIM companies, whether or not UK registered, are encouraged to adopt the principles;

  • no change to a lot of the suggested thresholds for pre-emption disapplication – the key ones remain as (a) issue no more than 5% of total issued ordinary share capital on a non-pre-emptive basis in any one year and (b) issue equity securities representing no more (subject to certain exceptions) than 7.5% of total issued ordinary share capital on a non-pre-emptive basis in any rolling three year period;

  • a new principle that it is acceptable to seek a pre-emption disapplication of an additional 5% (over the recommended standard 5%) if the notice of AGM confirms that that additional 5% is only intended for use in connection with an acquisition or specified capital investment;

  • companies are expected to disclose any discount at which any shares are issued on a non-pre-emptive basis.

In practice we think it unlikely that the revised principles will greatly affect what AIM companies propose to their AGMs. Whilst many AIM companies do only seek a 5% pre-emption disapplication at each year’s AGM it is not uncommon to see a 10% disapplication. We’d always recommend that, if an AIM company is seeking a disapplication of more than 5% at its AGM, the AGM notice includes a clear explanation of the rationale behind the extent of authority that is sought.

If you would like to discuss any matters regarding the AIM market please contact:

Andrew Millar
Partner, Corporate
Tel: 0161 836 8965
Email Andrew


Institute of Chartered Secretaries and Administrators Releases Annual Report Guidance

Tuesday 19th May 2015

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AIM High - Issue 8

The Institute of Chartered Secretaries and Administrators (“ICSA”) has published a couple of useful guides relating to annual reports. The first, here, is a contents list for an annual report and the second, here, is more detailed guidance as to good practice in compiling annual reports.

The contents list reflects not only legal requirements, but also market guidance; it therefore includes items that go beyond what is absolutely required. AIM companies will obviously have their own view in each year as to what they want to include, but should take advice and guidance from their auditors, Nomads and lawyers, and should remain alive to shareholder expectation in this regard.

The fuller guidance as to good practice highlights features contained in what ICSA regards as the “best” annual reports, including:

  • a demonstration of understanding of the links between governance, shareholder value creation and the avoidance of value destruction;

  • using the annual report as an opportunity for communication rather than merely compliance with obligation;

  • explanations of how the board and board committees are run and make decisions;

  • governance reports that demonstrate a real desire to use governance to enhance the business;

  • discussion as to the principal risks to the company’s strategy and how those risks are being managed;

  • a demonstration of directors’ compliance with statutory duties;

  • recognition and balancing of the needs and expectations of different shareholder priorities.

If you would like to discuss any matters regarding the AIM market please contact:

Andrew Millar

Partner, Corporate
Tel: 0161 836 8965
Email Andrew



Notice of Company General Meetings - Takeovers and Stamp Duty

Tuesday 19th May 2015

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AIM High - Issue 8

Notice of Company General Meetings

As AGM season starts to gather pace, public companies should be aware of recent guidance from the Institute of Chartered Secretaries and Administrators (“ICSA”) that is of particular relevance to those companies intending to comply with the UK Corporate Governance Code (the “Code”).

ICSA have clarified, that in accordance with the best practice guidance for giving notice of general meetings (under Provision E.2.4 of the Code), notice for AGMs should be at least 20 working days and for other general meetings should be at least 14 working days. This extends the notice period in each case, by 6 days and 3 days respectively, from the minimum legal periods provided by the Companies Act 2006 (21 and 14 clear days, respectively).

It will be interesting to see if AIM companies (which are not required to comply with the Code) take account of this guidance.

Takeovers and Stamp Duty

As previously reported, the government has closed the “loop-hole” (by amendment to the Companies Act) that enabled stamp duty to be saved on takeovers that were structured as schemes of arrangement (other than in limited cases amount to a restructuring).

This development is likely to be of greater relevance to proposed takeovers of companies on the Main Market rather than on AIM. Since the abolition of the payment of stamp duty on the transfer of shares in companies traded on AIM in 2014, the ability to save stamp duty had ceased to be a consideration in the structuring of takeovers of AIM companies.

Going forward the choice of how to structure all takeovers to which The City Code on Takeovers and Mergers applies will focus primarily on the bidder’s ability to achieve what it determines is the appropriate level of support from the target’s shareholders. Notwithstanding the additional cost associated with a scheme of arrangement, where a bidder is not confident of receiving 90% acceptances a scheme may continue to be the most appropriate structure.

If you would like to discuss any matters regarding the AIM market please contact:

Andrew Millar

Partner, Corporate
Tel: 0161 836 8965
Email Andrew



Damned Lies and Statistics - May Update

Tuesday 19th May 2015

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AIM High - Issue 8

After a strong finish to 2014, the AIM admission market has cooled off somewhat in Q1 2015. Only 16 companies have joined, or been re-admitted to, the market in Q1, giving an overall run rate of a little over 50% of that in 2014.

There is a similar pattern in terms of the amount raised on new issues, with just over £162 million raised in Q1. However, January is a traditionally quiet month for IPOs and some companies may have chosen to wait for the outcome of the general election before announcing their intention to float, so these numbers aren’t necessarily the best indicator of what remains in store for the rest of 2015.

In terms of secondary issues, just over £750 million was raised by AIM companies in Q1 2015, and interestingly far more in January than in either February or March. If that trend continued for the remainder of the year then 2015 would see less (around 8% less) raised by way of secondary issue than in 2014.

The liquidity of AIM-traded shares remains strong, if again not as strong as 2014. In Q1 there were approximately 1.5 million bargains of AIM-traded shares, equating to 1,703 trades per AIM company, for an aggregate value of just over £8 billion, and perhaps this might prove the most accurate indicator of the health of the market.

We await with interest to see if Q2 produces a change in any of these trends, and indeed if there’s an indication of whether pre-election uncertainty was a factor in AIM’s performance at the start of 2015.

If you would like to discuss any matters regarding the AIM market please contact:

Andrew Millar

Partner, Corporate
Tel: 0161 836 8965
Email Andrew


Damned Lies and Statistics Special: 2014 Review

Monday 9th February 2015

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AIM High - Issue 7

In many ways 2014 was the best year that AIM has had in some time and, whilst the market is still some way off its pre-recession peak, it is good to see that most of the coverage of AIM is positive – long may that continue. Below is a summary of some of the more eye-catching statistics from 2014.


More money, approximately £2.6 billion, was raised on AIM IPOs in 2014 than in the three previous years combined (during which approximately £1.9 billion was raised). Further, the money raised in 2014 was raised from just 45% of the aggregate number of IPOs that took place during 2011, 2012 and 2013. It seems that the appeal of AIM to larger companies looking to float, such as Boohoo and Market Tech, continues to grow, which can only be good for the market’s profile.

In terms of sector spread, the financial and consumer services sectors accounted for over a third of the 118 admissions during 2014, and the latter comfortably the most in terms of amount raised.

For the first time since 2007, 2014 saw a year end with more companies on AIM than at the start of the year, the number having increased from 1,087 to 1,104. Whilst there was coverage to suggest that the IPO market cooled somewhat from the first half of 2014, December actually saw more IPOs than any other month of the year. Whether the forthcoming election will cause companies to wait before coming to the market in 2015 remains to be seen.

Secondary Issues

There was also improvement for secondary issues when compared to 2012 and 2013, with more than £3.2 billion raised. As with IPOs, the amount raised by way of secondary issues in H2 was lower than H1 (although again December was a productive month).

Oil and gas saw the most money raised (£713 million) in the secondary market, closely followed by financials (£687 million).

Whilst the amount raised by way of secondary issue is not as headline-grabbing as that raised by IPOs, it is clear that in 2014 AIM continued to provide a good platform for companies seeking funds for growth.

Market Capitalisation

Given the above it is somewhat surprising to see that there are fewer companies on AIM that, as at the end of 2014, have a market capitalisation of £1 billion or more (three as opposed to seven in 2013 and six in 2012). Those three companies, Songbird Estates, Asos (despite its reported troubles) and New Europe Property Investments, represented 8.8% of AIM’s total value as at the end of 2014.

Mid and small cap companies still make up the majority of the market. As at the end of the year, over half of AIM-listed companies had a market capitalisation of less than £25 million, and nearly 68% had a market capitalisation of less than £50 million.


Twenty-four firm offers for AIM-listed companies were announced in 2014, down from thirty in 2013. There was no real sector trend, with there being one or more offers across most sectors. Of the twenty-four, seven were take private/private equity backed bids (as opposed to four in 2013), six of which had a deal value of over £100 million.

Deal values on the whole were higher. In 2013 there was no firm offer for an AIM-listed company over £300 million; in 2014 there were four, of which one (for Songbird Estates) was over £1 billion. Unlike most offers for AIM-listed companies, the Songbird offer (the offer document for which was published on 30 December 2014) has not been recommended by the company’s board, and we await with interest how that transaction develops over the coming weeks.

In terms of offer structure, the split between schemes of arrangement and offers was fairly evenly split - thirteen and eleven respectively. Some expected the proportion of offers to increase given that, since the abolition of Stamp Duty on transfers of AIM-listed shares, using a scheme no longer gave a Stamp Duty saving. It seems, however, that the certainty that using a scheme of arrangement can give remains appealing to offerors.


There were more trades of AIM-listed shares in 2014, and more AIM-listed shares traded, than in any other year since AIM was launched, even though there are far fewer companies listed on AIM than there were during the pre-recession years. We reported in our December issue that there had been, to the end of Q3 2014, roughly 4,599 trades per company; the annual figure ended up at roughly 6,093 per company.

The aggregate value of trades of AIM-listed shares in 2014 was £42.86 billion, which is more than any year since 2008 (and 44.6% more than the value of trades in 2013), although some way off the 2007 peak of £75.03 billion.

One of the main criticisms of AIM in the past has been the relative lack of liquidity in shares listed on it; while there are still of course a fair few companies with relatively static stock, that criticism is seemingly less justified than it has been in the past.


According to the London Stock Exchange’s data, the top 10 investors on AIM in 2014 are:

  • Invesco Asset Management

  • Hargreave Hale

  • Henderson Global Investors

  • Schroder Investment Management

  • BlackRock Investment Management (UK)

  • Standard Life Investments

  • M&G Investment Management

  • Barclays Bank Plc (Private Banking)

  • Liontrust Investment Partners

  • Woodford Investment Management

If you would like to discuss any matters regarding the AIM market please contact either:

Andrew Millar

Partner, Corporate
Tel: 0161 836 8965
Email Andrew


Voting Guidelines Update

Monday 9th February 2015

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AIM HIgh - Issue 7

Each of the National Association of Pension Funds (“NAPF”) and Institutional Shareholder Services (“ISS”) have published voting guidelines in recent months. We take a look at those elements relevant to AIM-listed companies.

NAPF Voting Guidelines 2014/2015

There are a number of changes from the previous version of the guidelines, published in 2013, including:

  • no longer advocating abstention (combined with explanation to the company of the reasons for the abstention) as an effective way of demonstrating dissatisfaction;
  • greater emphasis on individual responsibility for directors;
  • the need to align executive pay policy with company pay policies as a whole; and
  • greater emphasis on shareholder engagement.

By way of reminder, the NAPF’s voting guidelines on the resolutions most commonly proposed by AIM-listed companies can be summarised as follows:

Adoption of accounts:

  • limited disclosure about matters such as corporate governance standards, business model and strategy, and risk may lead to a vote against this resolution;
  • extreme circumstances relating to corporate governance disclosure may lead to a vote against the re-election of the chairperson;

Re-election of chairperson:

  • the role of chairperson and chief executive being combined, without sufficient explanation, may lead to a vote against re-election of the individual concerned;
  • lack of shareholder engagement, lack of independence in choosing successor to the role, absence of diversity policy and insufficient evaluation of performance can also lead to votes against the resolution;

Re-election of other directors:

  • votes against re-election of a director may be triggered by lack of shareholder engagement, poor performance, lack of a supporting statement from the board and poor attendance record;

Appointment and determination of the remuneration of the auditor:

  • these matters should be covered by separate resolutions;
  • the first step against an auditor having been in office too long without a tender process, or concerns with the audit process, is a vote against the re-election of the chair of the audit committee, but if that does not provoke action there may be a vote against the re-election of the auditor;
  • if non-audit fees exceed 100% of the audit fees, or £500,000, in consecutive years, the position of the chair of the audit committee and/or the resolution approving the remuneration of the auditors will be under threat;
  • deficiencies in the auditor’s report may lead to a vote against auditor appointment/remuneration;

Approval of final dividend:

  • investors are encouraged to form an opinion as to the sustainability and appropriateness of the dividend;
  • investors may vote against the dividend if no cash dividend is available;
  • if approval of a final dividend is not sought then there may be a vote against adoption of the report and accounts;

Allotment authority and pre-emption dis-application:

  • one-third general allotment authority is the norm, with excess only recommended for fully pre-emptive rights issues;
  • pre-emption dis-application of more than 5%, and 7.5% over a three year period, are against the “pre-emption principles” (although in practice many AIM-listed companies seek, and obtain, pre-emption dis-application of 10%);

Market purchases of shares:

  • generally supported unless they are not supported by cashflows or introduce “excessive and unsustainable leverage”;

Changes to the articles of association:

  • changes to articles should be explained and should not be bundled into one resolution if “non-routine” changes are being made;
  • material increases to, or the removal of, the limit on borrowing powers prescribed by the articles may lead to a vote against the resolution.

Full text of the guidelines is here. Directors of all AIM-listed companies would be well served to read (or remind themselves of) these before the finalisation of the annual report and AGM.

ISS Voting Guidelines 2015

These are the first standalone guidelines of this kind issued by the ISS, as until June 2014 the ISS had a formal relationship with the NAPF and adopted the NAPF’s guidelines. For AIM-listed companies, the ISS continues to adopt the approach set out in the NAPF guidelines, with the following additions:

  • a vote against the adoption of accounts may be recommended where there is nothing proposed to the meeting to target an investor’s specific concern;

  • non-executive directors will be considered as non-independent if their shareholding exceeds 3%;

  • the chairperson may sit on all board committees provided that he/she is independent;

  • the audit and remuneration committees should comprise a majority of independent non-executive directors (for nomination committees, if there is one, it is half);

  • pre-emption dis-application up to 10% of the issued share capital is acceptable;

  • there are a number of reasons why a vote as to director remuneration, if there is one, would be opposed, including there being no service contract, fixed terms of more than 12 months, the re-pricing of options or performance-related pay for non-executives.

The full text of the ISS guidelines is here; chapter 6 is the policy for “smaller companies” (including AIM-listed companies).

If you would like to discuss any matters regarding Voting Guidelines or the AIM market please contact either:

If you would like to discuss any matters regarding Voting Guidelines or the AIM market please contact:

Andrew Millar

Partner, Corporate
Tel: 0161 836 8965
Email Andrew



Financial Reporting Council Report on Corporate Governance in 2014

Monday 9th February 2015

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AIM High - Issue 7

The Financial Reporting Council (“FRC”) has published a report on corporate governance and stewardship in 2014. The report, the full version of which is here, is aimed primarily at companies that adhere to the UK Corporate Governance Code (the “Code”) and does not contain any AIM-specific focus, but still provides an interesting insight into recent trends and expectations for the coming year. Some of the themes of the report relevant to AIM companies are discussed below.

While there is increased compliance with some or all of the Code amongst listed companies (particularly among larger companies), it is noted that a lot of companies are not providing sufficient explanations for non-compliance under the “comply or explain” approach. Companies are reminded that, pursuant to EU recommendations, if they do not comply with a particular aspect of corporate governance that they have adopted, they should clearly state which provisions they have departed from, report on why and how the decision was made, and include any mitigating measures. The FRC points out that companies too often simply state that the governance arrangements adopted are appropriate for the circumstances, without any further explanation.

Another trend highlighted was increased female board membership amongst FTSE companies, although the number of women in executive positions has fallen outside of the FTSE 100. Whilst the FRC’s report does not extend to AIM-listed companies in this regard, data published in November 2014 suggests that women comprised only 7% of non-executive board appointments to AIM-listed companies over the prior three years. AIM companies can expect to come under increasing pressure to mirror the trend of increasing gender diversity at board level.

The report highlights that a significant number of companies do not include, in notices of annual general meetings, as much detail about the directors that are up for re-election as the Code requires, and that often just the name of the director is given. It will be interesting to see if shareholders of AIM-listed companies increasingly demand additional information, such as confirmation of effective performance and justification for re-election, in the coming years.

Whilst the Code, and other corporate governance standards such as the QCA guidelines, remain non-binding on AIM-listed companies, the report highlights a number of key corporate governance issues that may well be relevant for a lot of AIM-listed companies, especially those with a broad institutional shareholder base or who adhere to some or all of the Code. As a reminder, changes have been made to AIM Rule 26, effective from August 2014, requiring companies to disclose on their website details of the corporate governance code that is applied and how the company complies with it.

If you would like to discuss any matters regarding the FRC Report or the AIM market please contact:

Andrew Millar

Partner, Corporate
Tel: 0161 836 8965
Email Andrew



Changes to the Takeover Code Regarding Post-Offer Undertakings and Intention Statements

Monday 9th February 2015

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AIM High - Issue 7

The Takeover Code (the “Code”) has been amended, with effect from 12 January 2015, introducing a distinction between “post-offer undertakings” and “post-offer intention statements” made by any party to the offer (including the offeror and target company). The new/amended rules will only apply to undertakings or statements given or made from 12 January 2015 onwards.

In terms of post-offer undertakings, new rule 19.7 of the Code requires a party to comply with any post-offer undertakings that it gives (subject to any conditions in that undertaking), but also to consult with the Panel in advance of either giving such undertaking or not complying with an undertaking due to one of its conditions being unfulfilled. There are also requirements in the new rule as to the content and distribution of any such undertakings, and for written reports to be submitted to the Panel in the post-offer period to enable the Panel to take pre-emptive action if required.

New rule 19.8 of the Code provides that post-offer intention statements must be an accurate reflection of the party’s intention at the time and must be made on reasonable grounds. Consultation with the Panel is required if the relevant party chooses to act contrary to the post-offer intention statement in the 12 months following the end of the offer period.

A blackline showing the amendments made to the Code is here.

In a separate response statement, the Code Committee has confirmed that:

  • pre-offer period undertakings or statements will not be subject to the new rules 19.7 and 19.8 provided that such undertaking or statement was not repeated as such in any document, announcement or other information relating to the offer; and

  • the Panel Executive may require clarification or withdrawal of oral statements that are seemingly post-offer undertakings.

If you would like to discuss any matters regarding The Takeover Code or the AIM market please contact:

Andrew Millar

Partner, Corporate
Tel: 0161 836 8965
Email Andrew



Revised IMA Remuneration Principles Released

Monday 15th December 2014

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AIM High - Issue 6

The Investment Management Association (IMA) has released a revised set of remuneration principles (“Principles”), to replace the ABI Remuneration Principles issued in 2013. The investment affairs division of the ABI has now merged with the IMA and it will release future guidance such as this under the IMA banner from now.

The full text of the revised Principles is here. Whilst the Principles are not binding on AIM-listed companies, they are adhered to by many, and AIM-listed companies may well find that their Nomad or shareholders expect them to comply with the Principles, or at least explain any non-compliance.

The revised Principles only contain one substantive change, being to state that the use of “allowances” as fixed pay is not generally supported, and should only be used where clearly justified and explained within the context of the overall remuneration package.

Additional points are, however, raised in the covering letter addressed to remuneration committee chairmen from the IMA and released at the same time as the Principles (the text of which is here). That letter serves as a useful reminder of the issues that members of the IMA regard as key in this area, and also highlights some ongoing concerns about general practice. Specific areas of concern include:

  • Variable pay, particularly (a) basic salary increases exceeding either inflation or the level of increase for the general workforce, and (b) increasing remuneration as much as a variable pay mechanic allows without an explanation;
  • The amounts payable under threshold performance measures (even if the amount paid is only a relatively low proportion of the maximum amount potentially payable);
  • Vesting periods for long term incentives (the Principles recommend that these should be three years or longer);
  • Retrospective amendments to performance conditions (particularly to account for variations in exchange rates);
  • Informing shareholders of remuneration-related decisions already taken, but labelling it as “consultation”;
  • Not consulting with shareholders early or fully enough about remuneration proposals; and
  • Failing to retrospectively disclose annual bonus targets under the general umbrella of “commercial sensitivity”.

Board remuneration remains, and looks set to be for the foreseeable future, towards the top of institutional investors’ concerns when it comes to their investments in listed companies. All board members, and particularly those on remuneration committees, should remind themselves of the Principles and bear them in mind when attending meetings and formulating remuneration policy.

If you require more information about the revised IMA Remuneration Principles that have been released or for any other AIM matter you may have please contact:

Andrew Millar

Partner, Corporate
Tel: 0161 836 8965
Email Andrew