AIM company fined £75,000 for breach of Rule 31
In December 2016 the London Stock Exchange (LSE) reminded all AIM companies about the need to liaise closely with their nomad under AIM Rule 31. The LSE fined and privately censured an AIM company £75,000 for breaching Rule 31 and not providing necessary information to its nomad.
The fundamental purpose of AIM Rule 31 is to ensure that the nomad is kept fully aware of developments and can fulfil its regulatory role and responsibilities to the LSE, to advise and guide the AIM company. In this instance the LSE found that the Company failed to inform its nomad and seek advice regarding a series of business developments. The LSE held it was not appropriate for the company to decide whether or not the business developments were disclosable based solely on its own assessment of its obligations under the AIM Rules, without reference to its nomad.
The LSE also noted that:
- the obligations to inform the nomad and seek advice regarding business developments covered a wider range of developments than would be required to be announced under AIM Rule 11;
- it was not sufficient for the company to just send board agendas and minutes to the nomad without any context or discussion; and
- contractual obligations between an AIM company and its nomad do not override the Company's AIM Rules responsibilities.
The LSE noted it had "made clear, in a number of previous published disciplinary actions and guidance, that appropriate liaison between an AIM company and its nomad in accordance with AIM Rule 31 is a fundamental tenet of the AIM Rules" and indicated that it would continue to take formal disciplinary action where Rule 31 is breached.
Aim companies and their nomads should ensure they have clear channels of communication and regular dialogue on all developments affecting the AIM company.