EQUITY FINANCE REVISION NOTES AIM ⢠AIM is an Exchange ...
EQUITY FINANCE REVISION NOTES AIM
AIM is an Exchange Regulated market (it is on a Recognised Investment Exchange), and is a prescribed market, but is not a regulated market (for the purposes of s.85 FSMA).
AIM vs Main Market
Advantages
Disadvantages
o
AIM No minimum market capitalization (although not really that important) Less onerous disclosure requirements (only need to comply with DTR 5) Assuming Admission Document is used, PRs will not apply (and more likely to fall within exemption to produce a prospectus) LRs will not apply; AIM Rules are more succinct and cost of compliance is significantly lower! Slight timesaving (34 months as opposed to 6 months) Nomad in charge of process as opposed to getting approval from FCA – Nomad must be satisfied that the company is suitable for AIM, but Nomad has much more interest in guiding company through process! 1 QCA Guidelines in place of Corporate Governance Code – similar principles, although simpler, but more importantly no ‘comply or explain’ rule! Burden of constant justification goes away. No SH approval needed for ‘class’ transactions (called ‘substantial transactions’ in AIM Rule 12) – just need to disclose! Tax benefits for investors of AIM companies (because they are ‘unquoted’ for the tax act, and more likely to be able to claim ER) Although do not need three years trading history, need lock
Main Market Bigger pool of investors to raise capital from; certain investors will only invest in listed companies. Retail investors as well. Liquidity of shares; share price will go up Easier for subsequent share issues as well as shareholders to exit Public profile
oRequirement for 25% of shares to be in public hands (LR 6.1.19R)
1 Initial stage based on very similar principles to a Main Market listing; still need to produce a significant document (admission document), still have oversight in the form of Nomad (as opposed to FCA), still need to conduct due diligence…However, it gets much easier in the later stages!!
1
AIM is an Exchange Regulated market (it is on a Recognised Investment Exchange), and is a prescribed market, but is not a regulated market (for the purposes of s.85 FSMA).
AIM vs Main Market
Advantages
Disadvantages
o
AIM No minimum market capitalization (although not really that important) Less onerous disclosure requirements (only need to comply with DTR 5) Assuming Admission Document is used, PRs will not apply (and more likely to fall within exemption to produce a prospectus) LRs will not apply; AIM Rules are more succinct and cost of compliance is significantly lower! Slight timesaving (34 months as opposed to 6 months) Nomad in charge of process as opposed to getting approval from FCA – Nomad must be satisfied that the company is suitable for AIM, but Nomad has much more interest in guiding company through process! 1 QCA Guidelines in place of Corporate Governance Code – similar principles, although simpler, but more importantly no ‘comply or explain’ rule! Burden of constant justification goes away. No SH approval needed for ‘class’ transactions (called ‘substantial transactions’ in AIM Rule 12) – just need to disclose! Tax benefits for investors of AIM companies (because they are ‘unquoted’ for the tax act, and more likely to be able to claim ER) Although do not need three years trading history, need lock
Main Market Bigger pool of investors to raise capital from; certain investors will only invest in listed companies. Retail investors as well. Liquidity of shares; share price will go up Easier for subsequent share issues as well as shareholders to exit Public profile
oRequirement for 25% of shares to be in public hands (LR 6.1.19R)
1 Initial stage based on very similar principles to a Main Market listing; still need to produce a significant document (admission document), still have oversight in the form of Nomad (as opposed to FCA), still need to conduct due diligence…However, it gets much easier in the later stages!!
1
