The London Stock Exchange (LSE) recently published a Feedback Statement following its April 2025 discussion paper, "Shaping the Future of AIM". The Feedback Statement outlines several changes to the AIM Rules that are effective immediately, implemented via derogations and guidance pending formal rule changes which will take several months to implement. The document also provides an overview of the LSE’s plans for the development of the AIM Market and details future areas of focus, including a redesign of the Admission Document.
Our previous briefing note on the discussion paper is here: The Future of AIM | Knowledge | Fasken.
New rule changes (effective immediately via submissions for derogations)
- Reverse takeovers that do not result in a fundamental change of business will be treated as substantial transactions under Rule 12 and so will not be subject to the readmission process under Rule 14.
- A reduced disclosure regime will apply if both parties to a reverse acquisition are companies whose shares are publicly traded on any stock exchange.
- Trading of an AIM company’s securities will not automatically be suspended following notification of a reverse acquisition if alternative disclosure can be made.
- Dual class structures that satisfy the current LSE Main Market requirements will also be permitted for prospective AIM companies.
- A more streamlined AIM Designated Route will be introduced to ensure a fast-track route to AIM from other markets. The list of eligible markets will also be expanded.
- No admission document will be required to admit new classes of securities to trading on AIM.
- Nominated advisers will no longer be required to give a fair and reasonable view on directors’ remuneration (outside of their base package), subject to reasonable protections (such as good and bad leaver terms) being in place for the AIM company.
- Historical financial information may be prepared under UK GAAP (FRS 102) and incorporated by reference.
- Other accounting standards equivalent to IFRS will be considered.
Other key messages emerging from the Feedback Statement
- AIM should be regulated to enable growth, not eliminate risk.
- Investors must therefore understand the risks associated with growth capital and assume greater responsibility for their stock selections.
- AIM should support founder-led and entrepreneurial companies as a viable alternative to private equity.
- The nominated adviser’s role is to be recalibrated with greater emphasis on corporate finance activities to drive growth and add strategic value, and less on compliance.
- The Financial Reporting Council (FRC) has confirmed that AIM companies are not Public Interest Entities (PIEs), unless they are credit institutions or insurance companies. This will significantly reduce the cost of the audit process for many AIM companies which until now have been brought within the scope of the FRC’s Annual Quality Review.
- A balanced approach to sustainability reporting is desirable for AIM companies given that many do not have the resources to comply with an overly prescriptive or complex sustainability regime.
- Certainty around fiscal incentives is needed to underpin investment into risk capital.
Admission Document
The Feedback Statement also flags that the LSE will redesign the Admission Document to make it more appropriate for early-stage companies, being principally shorter in length and less time consuming to prepare. The requirement for a working capital statement may also be removed given the time and financial cost to include the statement and its perceived limited value to investors.
Conclusion
The changes to the AIM Rules follow hot on the heels of the changes to the UK Listing Rules implemented in July 2024 which introduced a more permissive regime to the LSE’s Main Market. They therefore define AIM’s role against the backdrop of reforms to the Main Market and the launch of PISCES, which has introduced platforms catering for trading in private companies.
The rule changes will ease the cost and regulatory burden for AIM companies and nominated advisers which will be welcomed. The changes will also reorientate AIM towards supporting founder led businesses, the purpose for which it was originally conceived, with the accommodation of dual class share structures and a more benign regime for setting director remuneration.
The Feedback Statement however acknowledges that there are many factors beyond the control of the LSE that will ultimately determine the success of AIM. These principally include the need for:
- government support to marshal pension fund allocations into AIM companies and generally increase capital flow into the junior market, as envisaged by the Mansion House Accord;
- government support to reassure investors about the availability of tax incentives when investing in AIM companies, especially following the curtailment last year of Business Property Relief and the reduction of income tax relief for investors into VCT funds from up to 30% to up to 20%; and
- regulatory support, principally from the FRC by publishing new guidance to ensure that the approach of audit practices is aligned with the needs of the AIM market and Public Interest Entities (PIEs) are correctly identified.
AIM has laid the foundation for growth. The question now is whether policymakers will move quickly and boldly enough to turn vision into reality.
