AIM Regulation and directors participating in a secondary fundraising

Market reCap

• Inside the wall
• FSA consultation on PDMR transactions – issues for brokers
• Significant changes to the listing regime
• The end of "no names" calls to the UKLA? And the first edition of Primary Market Bulletin
• AIM Regulation and directors participating in a secondary fundraising
• QCA remuneration committee guide for smaller quoted companies
• Kay Review of UK equity markets – interim report published

AIM Regulation is now advising Nomads that in certain circumstances directors of an AIM company should not be participating in a placing until such placing has been announced.

Previously, it was market practice for directors to be able to participate in the placing and be treated in the same way as any other investor. However, Nomads are frequently reporting that AIM Regulation regards a director's participation in the placing as a restricted dealing under rule 21 of the AIM Rules for Companies. This is on the basis that the directors are potentially deemed to be in a close period on account of having unpublished price sensitive information. The close period would end (and the director therefore be permitted to deal) when the price sensitive information has been published.

This means that there is a potential timing issue as directors would only be able to subscribe for shares after the announcement of the placing has been made. In practice, so that two announcements (one for the placing and one for the directors' dealings) are not required, the announcement of the placing should also include disclosure of the fact that the directors will participate in the placing. It should still be possible to arrange for admission of all of the placing shares to AIM (including any to be issued to directors) at the same time.

This appears to be a new position taken by AIM Regulation, which has yet to be announced in "Inside AIM".

Anthony Brockbank Partner and Edward Westhead Associate in the Corporate Group of Field Fisher Waterhouse LLP in London.