The London Stock Exchange has issued Inside AIM Issue 5, the publication which AIM has said it will consider as augmenting and in effect comprising further content to the AIM Rules for Companies and the AIM Rules for Nominated Advisers.
One of the topics which the current issue of Inside AIM addresses is the participation of directors of an AIM company in a fundraising by the AIM company concerned. Rule 21 of the AIM Rules for Companies would prohibit directors and applicable employees from participating in a company’s fundraising as they are deemed to be in a “close period” for the purposes of the AIM Rules, where the existence and details of the fundraise constitutes unpublished price sensitive information in relation to the company. It is possible however to obtain a derogation from the requirements of Rule 21, enabling such participations to occur, provided certain conditions are met. AIM Regulation grants such derogations on a regular basis following an application by the nomad.
It seems to me cumbersome and counter intuitive for AIM Regulation to act as the final arbiter of the participation of directors in fundraisings, where the nomad has made a full and reasoned submission on the point to AIM Regulation, in circumstances where nomads are vested with considerable (albeit regulated) discretion in respect of other corporate transactions which are themselves governed by and the subject of the AIM Rules. For example, nomads are not required to consult with AIM Regulation in circumstances of a related party transaction under Rule 13. I wonder whether we will see regulatory creep extend to AIM becoming more involved in the nature and governance of related party transactions or whether nomads will eventually be given full discretion to apply or to disapply Rule 21 in any given circumstance. On the face of it there is a regulatory imbalance here, and query which way, if any, the scales will tip.