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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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Takeover Code Update

Monday 15th December 2014

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AIM High - Issue 6

Amendments to the Takeover Code

Following consultation by the Takeover Panel (the “Panel”), changes to the Takeover Code (the “Code”) are being made with effect from 1 January 2015. The full changes are found here, but they include:

  • Changing the deadline for a potential competing offeror to clarify its position, from a flexible Day 50 deadline prescribed by the Panel on an ad hoc basis to a firm date of:
    • In the case of an offer, the 53rd day after the publication of the first offeror's initial offer document; and

    • In the case of a scheme of arrangement, 5.00 pm on the seventh day prior to the date of the shareholder meetings (although the power of the Panel to allow this deadline not to be met in appropriate cases is being retained);
  • Removing the right of a potential competing offeror, which has made a no intention to bid statement but has subsequently acquired interests in shares in the offeree, to set aside that statement on the collapse of the initial offer;

  • Extending the restrictions that apply to a potential bidder who has “downed tools” and not been previously named pursuant to a dispensation granted by the Panel; and
  • Various changes relating to “no increase” and “no extension” statements made in respect of offers.
Panel Issues Practice Statement about Entering into Talks during Restricted Period

If a party issues a no intention to bid statement, it is, under the Code, subject to certain restrictions for six months after the date of such statement. A twelve month restriction applies to a party that has made or announced an offer that has subsequently been withdrawn or has lapsed. The Panel has issued a statement (the full text of which is found at here), which confirms, amongst other things, the following in respect of such restrictions:

  • An approach to the target during the restricted period would be in breach of the Code (although the Panel may grant a relaxation of this restriction in certain circumstances);
  • The restrictions will not apply, during the restricted period, for as long as the offeree board agrees to be in talks with the offeror;
  • In the case of a no intention to bid statement that is made after the announcement by a third party of a firm offer, the party that made the no intention to bid statement may only make a single confidential approach to the target board if the third party offer has been withdrawn or has lapsed;
  • If a potential offeror has been granted a dispensation from the requirement to make an announcement under rule 2.2 of the Code, the Panel will normally only consent to the same party making a single confidential approach to the offeree board in the second half of the six month restriction that subsequently applies; and
  • If talks between a potential offeror and an offeree board do start during a restricted period, any announcement in response to rumour/speculation or an untoward movement in the target’s share price need not include a put up or shut up deadline save that, where the talks are continuing at the end of the restricted period, an announcement must then be made with a put up or shut up deadline.

If you require more information about the amendments to the Takeover Code or for any AIM matters you may have please contact:

Andrew Millar

Partner, Corporate
Tel: 0161 836 8965
Email Andrew


Revised QCA Guide for Audit Committees

Monday 15th December 2014

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AIM High - Issue 6

In November the Quoted Companies Alliance (QCA) published its Audit Committee Guide for Small and Mid-Size Quoted Companies, replacing previous guidance issued in 2009. The QCA remains one of the most influential corporate governance bodies for AIM-listed companies, and members of audit committees of companies who adhere to the QCA’s corporate governance code are advised to read the guidance, which can be purchased from the QCA’s website.

New aspects of the guidance include the following:

  • More focus on the audit committee’s role in improving and maintaining shareholders’ trust and confidence in the company;
  • New advice to take heed of the Financial Reporting Council’s guidance on risk management, internal control and related financial and business reporting, as this will be the standard to which a company is held if it fails or if problems in those areas are exposed;
  • Recommendations as to what to include in an induction pack for a new member of an audit committee;
  • New guidance on anti-bribery and anti-corruption;
  • More detail regarding risk management and internal control; and
  • New guidance on audit tendering.

If you require more information about the revised QCA Guide for Small and Mid-Sized Quoted Companies or for any AIM matter you may have please contact:

Andrew Millar

Partner, Corporate
Tel: 0161 836 8965
Email Andrew



Financial Reporting Council Corporate Reporting Review

Monday 15th December 2014

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AIM High - Issue 6

The Financial Reporting Council (FRC) has published its annual corporate reporting review ("Review"), which covers the year to 31 March 2014. One of the main conclusions of the Review is that the FRC continues to see an increasing number of what it describes as “poor quality” accounts produced by AIM-listed (and smaller main market) companies.

As a result of this issue, in April of this year, the FRC launched a scheme aimed at improving the quality of financial reporting by smaller companies, and is actively looking into ways in which the FRC can itself provide support to achieve that aim.

Some of the most common problem areas highlighted by the Review include strategic reports, pensions, treatment of exceptional and other similar items, policies (particularly relating to revenue), impairment, taxation and cash flow statements. The Review also makes the point that accounts often lack sufficient information to enable a sufficiently informed reader to understand the accounting policies and judgements adopted or made.

In the main, there are no immediate consequences of the Review for AIM-listed companies, although it is worth noting that the FRC did report one AIM-listed company to the London Stock Exchange this year. However, it is possible that shareholders, having read the Review, might highlight similar concerns, including at an AGM.

To see the full Review, please click here.

If you would like more information about the Annual Corporate Reporting Review or for any AIM matters you may have please contact:

Andrew Millar

Partner, Corporate
Tel: 0161 836 8965
Email Andrew



Damned Lies and Statistics - December Update

Monday 15th December 2014

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AIM High - Issue 6

Q3 saw continuing healthy levels of AIM activity, even if numbers have tailed off somewhat after a bumper second quarter, in part a function of uncertainty caused by the Scottish Referendum.

There were 17 IPOs in Q3, but the £269 million raised on IPO was down from the first and second quarters of 2014. Post IPO share price performance, whilst obviously varying from company to company, showed an overall upward trend, which is an encouraging sign. A further £614 million was raised on AIM by way of secondary issue in Q3.

Overall the number of IPOs during 2014 is set to exceed 100 and the amount raised on AIM, by way of IPO and secondary issue combined, is on course to exceed £5 billion.

Also of note is the number of trades of AIM-listed shares is set to be higher in 2014 than in any other year since AIM was launched. This is despite the number of companies on AIM being less than two thirds of the number of AIM-listed companies at its 2007 peak. Back then, 1,694 AIM-listed companies averaged roughly 2,458 trades per company; at the end of Q3 2014 there had been an average of roughly 4,599 trades per company. Hopefully this is a trend that will continue, and perhaps is evidence of change brought about by the inclusion of AIM shares in ISAs (and the increase in ISA allowances) and the removal of Stamp Duty on transfers of AIM shares.

If you would like to discuss any of the issues raised here or for any other AIM related matter please contact:

Andrew Millar

Partner, Corporate
Tel: 0161 836 8965
Email Andrew



Guidelines Update: IMA Share Capital Management Guidelines and ABI Transaction Guidelines

Wednesday 1st October 2014

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AIM High - Issue 5

The Investment Management Association merged with the investment affairs division of the ABI at the end of June (with the new body being renamed as the Investment Association with effect from the beginning of 2015). Before the merger, the ABI issued capital market transaction guidelines and subsequently the IMA issued guidelines in respect of share capital management. A summary of the main elements relevant to AIM companies is set out below.

These guidelines for listed companies and their management are not binding but shareholders, and particularly institutional shareholders, will often expect companies to abide by them (and might demand a “comply or explain” approach). Directors should keep up to date with the latest guidance.

Transaction Guidelines issued by the ABI


  • There remains a slight concern at the level and transparency of IPO fees. The prospectus/admission document should include as much disclosure about fees as possible, including details of any ranges where fees are dependent on the size of the offering.
  • Any incentive fees on an IPO should be determined and paid at the later of (a) the first quarterly results post-admission or (b) three months after listing, and the amount paid should be disclosed.
  • Specified criteria be considered for the award of an incentive fee, and it is suggested that there be a mechanism to allow investors, anonymously, to input as to the fee’s allocation.
  • Companies and advisers involved in an IPO are encouraged to produce a document that is more succinct and relevant to an investment decision, and more easily understood by retail investors.

Secondary Offerings

  • As concerns exist about the sub-underwriting market and the respective rights and arrangements between primary underwriters and sub-underwriters, a number of recommendations are made in this regard. For example, deep discounting of rights issues to reduce the level of under-writing fees is encouraged.
  • The ABI would like to see provision for an accelerated timetable for pre-emptive rights issues, partially by eradicating the need for physical distribution of documents.

Corporate Governance during Transactions

  • Non-executive directors should remain independent and be given:
    • Sufficient time and information to allow them to properly consider a transaction’s merits;
    • The opportunity to present their views on a corporate transaction to shareholders once those shareholders are brought inside; and
    • A “narrative description” of discussions with the other side (and that description should be disclosed in summary form in any shareholder circular), and have direct access to the company’s advisers.
  • Executive directors should inform non-executives of a proposed corporate transaction, for which shareholder approval is required, when an approach is received from a bidder or when management first actively considers the transaction.
  • The ABI encourages the practice of non-executive directors having discussions without the executive directors present. If thought necessary, they should seek independent advice on a fixed fee basis.
  • If there is a proposed management buy out, or where a conflict may otherwise arise, the board should establish an independent committee. The committee should always take independent legal and financial advice, and have a clear mandate (that is disclosed to shareholders).

The full transaction guidelines issued by the ABI can be found here.

Share Capital Management Guidelines, issued by the Investment Management Association

General Power to allot shares granted by general meeting

  • Recommended extent of authority to remain as one third of the issued share capital, with an additional one third on a fully pre-emptive rights issue. In calculating issued share capital, treasury shares to be disregarded.
  • Authority should last until the next AGM.

Authority to undertake own share purchases and treasury shares

  • Dividends remain the preferred method of returning surplus funds to shareholders but share buybacks are acceptable.
  • General buyback authority should be renewed annually.
  • Authority only expected to be exercised if it is in the best interests of shareholders and it would result in an increase in EPS. Any exercise should be justified in the next annual report.
  • General authority up to 10% of issued share capital is considered acceptable. Treasury shares are disregarded for the purpose of that calculation.
  • The price for own share market purchases should not exceed the higher of (a) 5% above average market value in the five previous days or (b) the higher of the price of the last independent trade or the last independent bid on the market.
  • Off-market own share purchases are not favoured unless there is transparency as to terms and pricing.
  • No more than 10% of a company’s issued share capital should be held in treasury.

Scrip dividends

  • There is concern about their dilutive effect. It is preferred to source scrip dividend shares from own share market purchases than from newly issued shares.
  • Any authority to offer a scrip dividend using new shares should be renewed at least every three years.
  • Number of shares to be allocated should be determined by the mid-market price from the five previous days.

The full Share Capital Management guidelines issued by the Investment Management Association can be found here.


Continued Good News - AIM Activity in H1 2014

Wednesday 1st October 2014

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AIM High - Issue 5

Also featured in Corporate Matters Issue 6 - November 2014

The performance of capital markets continued to rise in the first half of 2014, and AIM has not been an exception.


The AIM IPO market has gone from strength to strength in the first half of 2014, with the number of IPOs being more than twice that in the same period in 2013 (43 compared to 21), and the amount raised from IPOs having increased by an even wider margin (over $3 billion as opposed to just over $350 million). In fact, the amount raised from AIM IPOs in H1 of 2014 was almost as much as the amount raised from AIM IPOs in the whole of 2012 and 2013 combined. Most encouragingly, 2014 has already seen more new money raised from IPOs than in the whole of any year since 2007.

Given those numbers it is not surprising to see a continuing trend of larger companies choosing AIM as the market on which to list. Notable examples of this include online fashion retailer plc, which floated in March with a market capitalisation of approximately £560 million, and SafeCharge International Group Limited, which floated in April with a market capitalisation of approximately £242.6 million. That is not to say that AIM is no longer a market for smaller cap companies, but rather it is perhaps more an indication that AIM is now seen as an option by a broader range of companies than has been the case in recent years. Ultimately the appeal of less regulation with access to funds on the secondary market will apply regardless of a company’s starting market capitalisation.

We reported in May that AIM IPOs in Q1 had been dominated by technology and consumer companies – that trend continued in Q2 (and similarly the number of AIM IPOs in the oil and gas sectors remained low).

Secondary Issues

There is also growth in the secondary issues market, although not as pronounced as for IPOs. Nearly £2 billion was raised on AIM via secondary issues in H1 2014, and if that rate continues AIM companies will have raised more by way of secondary issue in 2014 than in any year since 2010. It is clear that funds continue to be available to AIM-listed companies to fund their future growth.


As was widely reported, Stamp Duty on the transfer of AIM-listed shares was abolished with effect from 28 April. It is slightly surprising, therefore, to see that the number of bargains of AIM-listed shares fell in May.

Despite this, 2014 has highlighted a wider trend of growth in the number of trades on AIM in 2014. This is perhaps an indication that, of the government’s steps to include AIM shares in ISA wrappers (which took effect from August 2013) and abolish Stamp Duty on transfer of AIM-listed shares, it is the former measure that has had a greater effect. Either way it is good news for shareholders, as 2014 looks set to be the most “liquid” year for AIM-listed shares since 2007.

M&A Activity

Please see our Damned Lies and Statistics article from this edition, which looks at AIM M&A activity in H1 2014.

Revised UK Corporate Governance Code effective for financial years beginning on or after 1 October 2014

Wednesday 1st October 2014

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AIM High - Issue 5

Following consultation by the Financial Reporting Council (the “FRC”) on proposed amendments to the UK Corporate Governance Code (the “Code”), an updated Code has been implemented, effective for financial years beginning on or after 1 October 2014. The Code of course is not binding on AIM-listed companies, but is adhered to in whole or in part by many on a comply or explain basis.

The updated Code in full can be found here. This is not in redline, however, so does not show the amendments made. For a detailed summary of the amendments, please refer to the appendix of the FRC’s feedback statement starting on page 6, which can be viewed here.

Key points include:

  • A company’s annual report should contain information necessary for shareholders to assess a company’s position as well as its performance. The audit committee’s advice obligation in this regard has been similarly extended.

  • A company’s annual and half-yearly financial statements should, instead of simply stating that the business is a going concern, state whether the directors considered it appropriate to adopt the going concern basis of accounting, highlighting any material uncertainties as to the company’s ability to carry on as a going concern for at least the next 12 months.

  • There are significantly more robust requirements as to what the annual report should include in respect of assessment of risk and prospects, with more clarity as to the ongoing monitoring requirements in these areas.

  • The basic principle concerning directors’ remuneration has been replaced, and now states that “executive directors’ remuneration should be designed to promote the long-term success of the company”, and any performance-related elements should be “transparent, stretching and rigorously applied”.

  • There is further clarification to make clear that directors’ remuneration should only increase if there is improved “corporate and individual performance”, as opposed to just “performance”.

  • It is now recommended that performance-related remuneration schemes include provision to enable companies to recover sums paid and to withhold payments, specifying the circumstances in which such action would be appropriate.

  • Changes have been made to the provisions setting out how the remuneration committee should assess directors’ bonus and incentive entitlements.

  • Principle E2, which used just to apply to the constructive use of annual general meetings, now applies to all general meetings.

  • If a “significant proportion of votes have been cast against a resolution at any general meeting”, then the company should, when announcing the result of the votes at the meeting, explain what action it intends to take to understand the reason behind the result.

The changes in many ways reflect the tone of recent coverage of the public markets – it is no surprise to see that executive remuneration and risk management have been the main focus of the FRC’s attention. Given increasing levels of public scrutiny, any clarification and strengthening of the Code in respect of those areas is to be welcomed.

Reminder: Changes to AIM Rule 26 were effective from 11 August 2014

Wednesday 1st October 2014

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AIM High - Issue 5

Changes, announced by the Stock Exchange in May, to AIM Rule 26 (which governs what information an AIM-listed company must set out on its website) became effective from 11 August 2014.

A redline showing the changes, and also the changes to certain other AIM Rules made earlier in the year, can be found here, but to summarise the changes to Rule 26:

  • Companies are now obliged to include the date on which they last updated the information as to the number of shares, the percentage of shares not in public hands and significant shareholders.
  • Accounts for the last three years (or since admission if that is a shorter period) are now required to be included (until the change only the most recent accounts were required).
  • Details of the corporate governance code that the company has decided to apply (or, if none, a statement to that effect) are now required, as well as details of how the company complies with that code and the current corporate governance arrangements.
  • It is now a requirement to include a statement of whether or not the company is subject to the Takeover Code, or any similar legislation/code in its country of operation or incorporation, or indeed any other similar provisions that the company has voluntarily adopted.

If you haven’t updated your website to account for these changes then you should do so as soon as possible.


Damned Lies and Statistics - October Update

Wednesday 1st October 2014

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AIM High - Issue 5

A lot of the recent media attention about AIM has focussed on the re-emergence of the IPO market. Less attention has been paid to the mergers and acquisitions landscape for AIM-listed companies. Noteworthy statistics from Takeover Code transactions in the first half of 2014 include:

  • Twelve announcements of a firm intention to make an offer (as opposed to fourteen in the same period in 2013).
  • A scheme of arrangement was the deal structure for seven of the firm offers; an offer was used for the other five.
  • Two of the firm offers were mandatory offers triggered by Rule 9 of the Code (although one of these subsequently developed into a recommended offer). None of the offers were hostile.
  • None of the firm offers were made pursuant to a competing bid situation.
  • Only one of the firm offers was a take-private – this follows a recent trend of a decline in the number of take-privates of AIM-listed companies.
  • One firm offer (that of AnaCap FP GP II Limited for Brightside Group plc) was for over £100 million; the others ranged from £786,000 to £87.8 million, with only three of those offers being for more than £50 million.


AIM High - Issue 4 May 2014

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