LSE: Shaping the future of AIM – Discussion Paper

On 7 April 2025, AIM published a discussion paper Shaping the Future of AIM (Discussion Paper) to give stakeholders the opportunity to provide feedback on the overall functioning and positioning of AIM and provide views on a number of potential areas of change to the AIM Rules. 

The deadline for responses is 16 June 2025 after which AIM will take time to consider feedback and engage with the market. Any proposed changes to the AIM Rules will then be put forward for consultation.

AIM seeks feedback on a number of areas (many of which it notes sit outside of the AIM rulebooks) to inform the prioritisation and focus of its work and the continued development of the AIM market. Questions relate to topics including fiscal incentives to support investment into AIM, initiatives that should be considered to enhance liquidity, the positioning and marketing of AIM, and how it should evolve in the future to ensure it retains a central position in the wider funding continuum both in the UK and internationally.
The Discussion Paper also sets out a range of more specific questions in connection with the regulatory design of AIM and development of the AIM Rules, including in relation to the following areas:

• Admission documents: AIM is seeking views on the content of AIM Admission Documents (AADs) including key areas of the current AAD that are valued by investors, any areas that are unnecessary or should be modified, and any changes that should be considered to streamline the contents and format/style (including incorporation by reference and use of pro forma/template sections where applicable). The Discussion Paper also asks whether companies should have the option of producing a simplified AAD (accompanied by clear labelling to signpost the increased level of risk comparative to a standard AAD) to give investors choice, depending on their risk appetite, and to address the cost burden that might be a barrier for some companies to seek admission.
• Working capital statements: The Discussion Paper notes that there is an opportunity for AIM to replicate the approach now taken in respect of Main Market companies and permit companies to list with qualified (rather than clean) working capital statements. However, it also seeks views on potential alternatives including (a) requiring a working capital statement in line with that currently required for AIM Designated Markets issuers (which involves a confirmation the directors have “no reason to believe” the group’s working capital will be insufficient) or (b) an entirely different approach under which there could be specific circumstances where no working capital statement would be required (e.g. in the case of investing companies, companies with financial statements for a number of consecutive years that include ‘clean’ audit reports with no emphasis of matter prepared on a going concern basis, and/or R&D or mining/oil and gas exploration companies where the requirements for funding are inherent in the nature of the business and, together with the timing for future funding, are disclosed). 
• Role of the Nominated Adviser: While AIM continues to view the Nominated Adviser (Nomad) as central to its distinctive regulatory framework and success, it welcomes views on how it should evolve the role. Specific areas on which questions are raised in the Discussion Paper include seeking feedback on key aspects of the role that continue to provide value to companies/confidence to investors and any which result in a disproportionate burden and/or are duplicative with the work of other advisers. 
• Reverse takeovers: Views are sought on how the reverse takeover rules might be developed, including whether (in certain circumstances) an alternative form of disclosure might be more appropriate than an AAD - for example, where the company is making an acquisition which is growing the business in line with existing operations within the same industry/sector or with the same strategic direction such that there is no fundamental change of business. The Discussion Paper also asks whether investors would still want the opportunity to vote on the transaction where it does not involve a fundamental change of business.
• Related party transactions: While the AIM Rules in this area are a key protection for shareholders and continue to operate effectively, AIM has identified certain areas where exceptions to the regime might be appropriate – for example, in the context of share schemes, for director indemnities as permitted under the Companies Act 2006, and in relation to directors’ remuneration. It is seeking views on these and any other similar areas where respondents consider exemptions could be introduced in light of other existing shareholder safeguards. 
• Class tests: AIM is seeking views on whether to increase the threshold for substantial transactions to 25% (consistent with the equivalent under the UK Listing Rules). The Discussion Paper also asks whether the profits test remains relevant, proposes certain changes to the operation of the gross capital test to introduce a pro-rated calculation where the company is only acquiring a minority stake, and asks if there are any other changes to the class tests that should be considered.
• Accounting standards: As an international market, AIM believes there is an opportunity to introduce greater flexibility by recognising a wider set of local accounting standards than those currently permitted under the AIM Rules, thereby reducing unnecessary complexity and expense and attracting international growth companies. Views are sought (among other things) on whether companies should be permitted to use any local accounting standard or whether these should be limited to a prescribed list based on equivalency to International Accounting Standards.
• Admission of further lines of securities: AIM considers there to be limited benefit, when weighed against the associated cost and administrative burden, in requiring the publication of an AAD for the admission of a second line of securities. It is seeking views on removing this obligation and on whether there are any further regulatory changes it should consider to make it easier for companies to admit second lines of securities to trading. 
• AIM Designated Markets (ADM) route: The ADM route was introduced to provide a fast-track and less onerous route to admission for relevant companies, but AIM recognises that market practice has developed such that the Nomad’s work is often equivalent to that undertaken for a standard AAD. The Discussion Paper asks whether there are areas of the Nomad’s work that can be dispensed with or reduced – for example, whether the Nomad could place reliance on the company’s existing public market disclosures to provide an understanding of the business and thereby limiting the level of due diligence undertaken. Views are also sought on other changes/developments that could be made to the ADM route including extending the list of eligible markets, changing the application of the £20m market capitalisation test and/or amending the period (currently 18 months) for which an applicant must have been admitted. 
• Dual-class share structures: Given they align with the founder-led nature of growth companies, AIM believes it is appropriate to allow the admission of dual-class shares. It seeks views on this, including details of any changes that respondents would recommend for AIM compared to the Main Market approach to dual-class structures.

Other points covered in the Discussion Paper include whether AIM Rule 11 continues to be helpful given the overlap with the UK Market Abuse Regulation and whether the current choice of corporate governance codes meets the needs of all companies or whether AIM should offer a simplified list of requirements for corporate governance as a further choice to existing codes. 

(LSE, Shaping the future of AIM – Discussion Paper, 07.04.2025)

Companies House: Further identity verification guidance

On 8 April 2025, Companies House published further guidance on identity verification. It is now possible for individuals to voluntarily undertake identity verification at Companies House, either directly or via an Authorised Corporate Services Provider (ACSP). 

With a press release, Companies House has published the following:

• Verify your identity for Companies House - Guidance – this explains what is needed to verify online with GOV.UK (which will require individuals to provide their current address and the year they moved in). It also explains how to verify if an individual does not have a biometric passport (from any country) or a UK photo driving licence (full or provisional), UK biometric residence permit, UK biometric residence card or UK Frontier Worker Permit. Provided an individual lives in the UK, they may be able to verify their identity in person at the Post Office or with bank or building society details but will need to provide their National Insurance number and answer some security questions.
• Tell Companies House you have verified someone's identity – Guidance – this is guidance for ACSPs who need to tell Companies House when they have verified someone’s identity for Companies House purposes. 

FCA and HM Treasury: Future regulation of AIFMs – Call for input and Consultation

On 7 April 2025, the Financial Conduct Authority (FCA) issued a Call for Input, Future regulation of alternative fund managers. The Call for Input accompanies a HM Treasury consultation paper on proposed changes to the legal framework for alternative investment fund managers (AIFMs).

The Call for Input follows a Discussion Paper that the FCA published in 2023, DP23/2: Updating and improving the UK regime for asset management. Among other things respondents to DP23/2 called on the FCA to make the rules for alternative investment fund managers (AIFMs) less complex, more proportionate and better tailored to the UK market. The goal is to create a more proportionate and streamlined regime for fund managers, enhancing the UK’s attractiveness as an asset management hub. Further information on the Call for Input can be found in our Global Regulation post here.

The HM Treasury consultation paper follows the commitment that the Prime Minister made in March 2025 to cut the administrative cost of regulation on business by a quarter. It sets out the Government’s proposed approach for a streamlined framework for the regulation of AIFMs, and the depositories they use. Further information on the consultation can be found in our Global Regulation post here.

DSIT: Cyber Governance Code of Practice – Policy Paper

On 8 April 2025, the Department for Science, Innovation and Technology published a Cyber Governance Code of Practice (Code). This has been co-designed with technical experts from the National Cyber Security Centre (NCSC) and a range of governance experts across industry, and it aims to support boards and directors in governing cyber security risks. 

The Code forms part of the Government’s free package of support on cyber governance and is underpinned by Cyber Governance Training, which helps boards and directors to strengthen their understanding of how to govern cyber security risks, and the Cyber Security Toolkit for Boards, which supports boards and directors in implementing the actions set out in the Code. 

The Code has been designed for boards and directors of both public-sector and private organisations and highlights to boards what their responsibilities are. It has been designed for medium and large organisations, but small organisations are also encouraged to seek to implement the Code’s principles. 

The Code covers the following areas and sets out actions to be taken in relation to each area:

• A: Risk management
• B: Strategy
• C: People
• D: Incident planning, response and recovery
• E: Assurance and oversight

A one page summary of the Code is here. The Government is monitoring uptake of the Code and is looking for feedback on it.

(DSIT, Cyber Governance Code of Practice – Policy Paper, 08.04.2025)

(DSIT, Cuber Governance Code of Practice, 08.04.2025)

IoD: Commission to explore the evolving role of non-executive directors in the UK launched

On 10 April 2025, the Institute of Directors (IoD) announced the launch of a Commission to address the unique challenges faced by non-executive directors (NEDs) and help them unlock their full potential.

The IoD comments that despite the prevalence of NEDs in both large listed companies and the not-for-profit sector, recent corporate scandals and collapses have raised concerns about their effectiveness. The Commission will investigate whether NEDs are truly delivering the anticipated benefits and how they can better contribute to value creation.
The Commission will run between February and July 2025 and report its findings in the Autumn.

The Chair of the Commission, Baroness Evans, states that the Commission’s plan is to “evaluate the current landscape and make recommendations that will enhance the deployment of non-executive directors. Our goal is to support boards and policy makers in fostering a culture of responsible risk taking and effective governance, ultimately enhancing societal trust in UK business”. 

(IoD, IoD launches Commission to explore the evolving role of non-executive directors in the UK, 10.04.2025)

FCA: Update on PISCES and pre-application support

On 10 April 2025, the Financial Conduct Authority (FCA) published a statement providing an update on the Private Intermittent Securities and Capital Exchange System (PISCES) and pre-application support. The FCA is issuing this statement to provide an early update following the closure of its consultation (CP24/29) on the PISCES sandbox in December 2024 so as to give firms sight of its thinking as they are working up their plans. Further information is here.