Skip to main content

AIM Notice 39 – update on directors participating in a fundraising


United Kingdom

We provide feedback on the responses to AIM Notice 38 and confirm that the majority of the proposed changes to the AIM Rules for Companies and the AIM Rules for Nominated Advisers have been adopted.

Market reCap September 2014 edition 


 On 13 May 2014, the London Stock Exchange published AIM Notice 39.  This provides some feedback on the responses to AIM Notice 38 and confirms that the majority of the proposed changes to the AIM Rules for Companies and the AIM Rules for Nominated Advisers have been adopted.

In particular, the proposed changes to the guidance note on Rule 21 (Restrictions on deals) of the AIM Rules for Companies were confirmed.  Some respondents to AIM Notice 38 had requested that those additional circumstances listed in Inside AIM (Issue 5) also be included as carve-outs to Rule 21, but they were not ultimately included in the new rules.

Guidance set out in Inside AIM (Issue 5)

Inside AIM (Issue 5), published in October 2012, discussed some of the issues which may arise with Rule 21 where directors participate in a fundraising.

It stated that, where a forthcoming fundraising itself constitutes unpublished price sensitive information, the company will be in a close period and Rule 21 will apply.  This would prevent directors and applicable employees from dealing in the company's securities during the close period and thereby prevent them from participating in the fundraising.  In such instances, the company's nomad may seek a derogation from Rule 21 in advance in order to enable directors and applicable employees to participate in the fundraising should they wish to do so.

Inside AIM (Issue 5) stated that AIM Regulation routinely grants derogations from Rule 21 in the following circumstances:

  • where the close period only exists due to the fundraising itself;

  • where the company is in a close period for accounts, provided that those accounts do not contain any unpublished price sensitive information; or

  • where the company is in a close period in connection with a transaction which is inextricably linked to the fundraising (such as an acquisition for which the fundraising is being undertaken) provided that the announcement of all matters (such as the fundraising, the acquisition and any dealings by directors or applicable employees) takes place at the same time. 

Notwithstanding the above routine derogations, it stated that AIM Regulation will consider each submission on a case by case basis.

The proposals for change set out in AIM Notice 38

AIM Notice 38 was published in order to consult on proposed changes to the AIM Rules. One such change was to the guidance note on Rule 21, where it was proposed that the following wording be added:

"The following dealings are not subject to rule 21:

  • the circumstances set out in the definition of “deal” (c) (i) – (v)
  • undertakings by a director or applicable employee to participate in a fundraising of AIM securities of the AIM company where the only close period arises due to this fundraising itself being unpublished price sensitive information and where the restricted person's participation is on exactly the same terms as all other investors in that fundraising."

This change effectively means that there would no longer be a need for the nomad to ask AIM Regulation for a derogation from Rule 21 where directors are participating in a fundraising on the terms set out above.  However, it does not apply to those additional circumstances which are discussed in Inside AIM (Issue 5) where AIM Regulation is said to routinely grant derogations.

The current position following AIM Notice 39

AIM Notice 39 provided some feedback to the consultation process and stated that respondents showed strong support for the proposed change to the guidance note on Rule 21.

It was noted that some respondents had requested that the carve-out to Rule 21 be extended to cover those other elements referred to in Inside AIM (Issue 5) and the Model Code.  However, it was decided that the guidance should be limited to the particular circumstances consulted with in AIM Notice 38 and nomads should continue to approach AIM Regulation for derogations in respect of any situations not within the new guidance.

The London Stock Exchange will continue to keep this area under consideration when it undertakes future reviews of the AIM Rules for Companies.


Ed Westhead is a Senior Associate in Fieldfisher's Corporate Group in London.

Sign up to our email digest

Click to subscribe or manage your email preferences.