Changes To The AIM Rules For Nomads

Following a review of the AIM Rules for Companies and AIM Rules for Nominated Advisers by the London Stock Exchange plc (the "LSE"), the LSE has issued a consultation proposing various amendments to these rulebooks.

Though the proposed changes to the AIM Rules for Nominated Advisers are largely administrative in nature or aimed at aiding clarity, there are a number of substantive amendments which we have sought to bring to your attention in this article.

For further information on the proposed changes to the AIM Rules for Companies, please click here.

1. Eligibility rules on change of control

   The LSE proposes to clarify that upon a change of control of a Nomad, a new nominated adviser application is required to be made to the LSE. In the LSE's view, Nomad status should not be regarded as a licence that can be sold or transferred, instead it is granted specifically to a firm in its current form. It is proposed that Nomad Rule 11 be amended to clarify that the LSE will consider the identity of the new controller when determining the eligibility of the Nomad firm in relation to its new nominated adviser application. The LSE has stated that, in particular, it will consider the ability of the new controller to satisfy the requirements set out in Nomad Rules 1-3 in its own right.

   In addition, it is proposed that Nomad Rule 11 be amended so as to include details of the matters which a Nomad must notify to the LSE where such matters may affect it continuing to be a Nomad. For the avoidance of doubt, this includes a change of control of the Nomad.

2. Continued eligibility for Qualified Executives

   In order to receive and retain a nominated adviser's licence, the Nomad firm is required to retain adequate staff and, in particular, a minimum requirement of four Qualified Executives ("QEs"). This requirement helps to ensure that the Nomad firm has sufficiently experienced staff with an appropriate knowledge base. One of the criteria for retaining QE status ties to the number of relevant transactions lead by the QE within a set time period. Deal flow has slowed down in recent years and in this context these requirements have become increasingly challenging to meet.

   The LSE has noted that it recognises "it is important to retain the experience and knowledge of those who have practised as a QE for a number of years and are actively involved in providing corporate finance advice to AIM companies".

   With this in mind, the LSE has proposed to amend Nomad Rule 4...