In December 2017, AIM published AIM Notice 49 asking for views on its proposed changes to the AIM Rules.
For companies who are already admitted to trading on AIM, the key point arising in the consultation is the proposal to amend AIM Rule 26 with regard to corporate governance disclosures with effect from 30 June 2018. In order to be able to comply when the rule changes become effective, we recommend that companies review their corporate governance arrangements and potential disclosures now.
At present, AIM companies are required to state details of the corporate governance code that they have decided to apply, how the company complies with that code, or if no code has been adopted a statement to this effect, together with its current corporate governance arrangements.
Assuming the proposed rule changes are adopted, all companies will be expected to choose a recognised corporate governance code, disclose which one it is, how the company complies with it, and how and why it does not comply with the chosen code. This will require an audit against the chosen governance code to identify any compliance issues, deviations, remedial work and appropriate disclosures and explanations (on the website and in the annual report).
There is no proposed requirement to revise the AIM Rule 26 corporate governance website section annually under the AIM Rules, but the website will need to be updated if there are any changes (with the date of the update provided) and will need to keep up with any website disclosure requirements of the selected governance code (a particular feature of the QCA Corporate Governance Code).
In terms of recognised codes, the two obvious choices are the FRC’S UK Corporate Governance Code (with which fully listed companies are required to “comply or explain” and which is itself under consultation for major revision this year) and the QCA Corporate Governance Code which has been drafted with SMEs in mind.
What to do
If an AIM company has adopted a corporate governance code, it should review its corporate governance arrangements and disclosures against the standards of their chosen corporate governance code with a view to being able to comply or explain (and update their website disclosures) by 30 June 2018.
AIM companies who do not follow a corporate governance code should consider which is best suited to them and seek to implement any necessary changes in order to be able to comply or explain (and update their website disclosures) by 30 June 2018.
ONE Advisory can help AIM Companies decide which corporate governance code to adopt and work towards compliance with it (and disclosure of non-compliance where appropriate). Please contact Laura Nuttall (firstname.lastname@example.org) or Liam O’Donoghue (email@example.com) for further information.