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AIM-listed companies required to adopt a recognised corporate governance code

10 April 2018

Changes to the AIM Rules mean that, from 28 September 2018, all AIM-listed companies must adopt a recognised code of corporate governance and include on their websites details of how they have complied with it, together with reasons for any non-compliance.

The London Stock Exchange has announced a number of amendments to its AIM Rules for Companies. The principal change that will affect companies that are already listed on AIM will require them to adopt a “recognised code of corporate governance” with effect from 28 September 2018.

The change to AIM Rule 26 requires an AIM-listed company to include on its website details of a recognised corporate governance code that the board of directors of that company has decided to apply, how the company complies with that code and, where it departs from it, an explanation of the reasons for doing so. This information should be reviewed annually and the website should include the date on which this information was last reviewed.

While the AIM Rules themselves do not specify explicitly what a “recognised corporate governance code” is, AIM Notice 50 (in which this rule change was announced) makes clear that there is some flexibility. It indicates that an AIM company should comply or explain against a code of corporate governance that is “appropriate for a company admitted to a public market” and includes examples of existing codes such as the Quoted Companies’ Alliance’s Corporate Governance Code (the QCA Code) and the Financial Reporting Council’s UK Corporate Governance Code (the FRC Code). It goes on to suggest that overseas companies with an AIM listing, or companies with a second listing on an overseas market, may consider it more appropriate to report using an appropriate standard from this foreign jurisdiction.

While the AIM rule requires this new information to be included on the company’s website, it should be noted that both the FRC Code and the QCA Code require some disclosures to be included in the annual report. This factor will be particularly relevant to companies publishing their financial statements on or after the effective date of this rule change.

Finally, remember that both the QCA Code and the FRC Code are currently being revised, with new versions expected to be finalised and published by summer 2018.

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