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Inside AIM


United Kingdom

AIM Regulation have introduced a new format for Inside AIM and given guidance on free float requirements and financial policies and procedures

A new format for Inside Aim

AIM Regulation will no longer be publishing "Inside AIM" in the format we all know and love. Instead they have announced they will be publishing individual updates and articles on policy directly to the AIM section of the London Stock Exchange's website on an ad-hoc basis, rather than consolidating them all into the Inside AIM newsletter.

The latest update (together with the old issues of Inside AIM) can be found here.

In this, their first update in the new format, they issue guidance on an AIM company's free float requirements and the requirement for companies to have sufficient systems, procedures and controls in place (and in particular, financial policies and procedures) in order for them to comply with the AIM Rules.

Free float requirements

AIM Regulation emphasises that an issuer's free float is an important qualitative assessment, which can have a significant impact on the ability of the company to attract investors and the functioning of the market. Sufficient free float is fundamental to the orderly trading and liquidity of the securities once admitted to AIM, which is linked to the company’s appropriateness to be admitted to AIM.

Unlike the main market of the London Stock Exchange, AIM Regulation does not prescribe levels of free float. However it is something that AIM Regulation considers to be an important factor in the work a nominated adviser undertakes when bringing an applicant to market.

Nominated advisers will be aware that AIM Regulation often requires them to provide details of the factors which they have considered in relation to free float for new issuers. Accordingly, AIM Regulation thought it would be helpful to clarify some of the factors which it often discusses with nominated advisers:

  • Consideration should be given to how the securities are likely to trade when admitted to AIM, following discussion with the company’s broker(s) and potential market makers. AIM Regulation would expect consideration to be given to the spread and nature of the shareholders comprising the free float.
  • A failure to raise initial target funds (which in itself might give rise to free float questions) may be indicative of more fundamental issues of appropriateness and is a matter that should be properly explored by the nominated adviser.
  • A limited free float should give rise to questions about the rationale for the applicant to seek admission to AIM.
  • Where there are concentrated shareholdings (e.g. due to family, business or other interests/ connections) free float issues should be considered in conjunction with issues of undue influence, control and ongoing corporate governance arrangements within the company.

Systems, procedures and controls – financial policies and procedures

AIM Rule 31 requires AIM companies to have in place sufficient systems, procedures and controls to enable them to comply with the AIM Rules.

A nominated adviser should assess whether this is the case or not. AIM Regulation has stated that any such assessment should also include a review of the financial policies and procedures documentation prepared by the company (in conjunction with its reporting accountants). AIM Regulation stresses that nominated advisers should approach this issue in a meaningful way, which would go beyond merely a review of the relevant documents to include an assessment of whether those policies are capable of working in practice, taking into account the nominated adviser’s knowledge of the company and its management.

Finally, AIM Regulation clarifies that these systems, procedures and controls should be in place as at Admission and no later.


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