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LSE proposals for Corporate Governance reporting by AIM companies

12 January 2018

The London Stock Exchange is consulting on proposed rule changes that would require AIM-listed companies to comply or explain reasons for non-compliance against a recognised corporate governance code. Disclosures would be made on the company website not in the annual report.

The proposed changes to AIM Rule 26 would require disclosure on a company’s website to include:

“details of a recognised corporate governance code that the board of directors of the AIM company has decided to apply, how the AIM company complies with that code, and where it departs from its chosen corporate governance code an explanation of the reasons for doing so”.

There is no explicit requirement for this to be an annual statement. However, all AIM Rule 26 information should be kept up-to-date and the last date on which it was updated should be included. The proposals do not require disclosures regarding a recognised corporate governance code in the annual report, although many recognised governance codes do require some annual report disclosure.

The proposals do not specify which ‘recognised corporate governance code’ should be applied. As now, it will be possible for AIM companies to report against the Corporate Governance Code for Small and Mid-Size Quoted Companies published by the Quoted Companies Alliance (QCA) as well as the UK Corporate Governance Code published by the Financial Reporting Council (FRC).

Other rule changes being consulted on include formalising an early notification process for nominated advisers and providing guidance to nominated advisers on appropriateness considerations.

All these proposed changes are set out in AIM Notice 49.The consultation is open until 29 January 2018 and the changes are intended to take effect from 30 June 2018.


Record keeping change

In addition, a change to AIM Rule 26 on records takes effect from 3 January 2018. This extends the requirement to keep copies of various documents, including annual reports, half-yearly, quarterly or similar reports, for at least five years (previously three years) for those published on or after 3 January 2018. This is as a consequence of AIM being registered as an SME Growth Market from 3 January 2018 (See AIM notice 48).


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