UK Capital Markets: Navigating the Future of AIM

The London Stock Exchange issued its discussion paper on Shaping the Future of AIM on 7 April 2025, requesting feedback from stakeholders on the overall functioning and positioning of AIM and on its regulatory framework.  The discussion paper includes proposals for changes to the AIM Rules for Companies.

The discussion paper seeks to engender debate on the evolution of AIM as part of the UK's capital markets reform and is open for responses until 16 June 2025.

Key questions covered in the discussion paper include:

• Incentives: Questions about the effectiveness of government initiatives to encourage investment in equities and the incentives available to investors, such as business property relief and the exemption from stamp duty.
• Role of NOMADs: Questions on the role of nominated advisers (NOMADs) with a focus on cost reduction, avoiding duplication of work by professional advisers and eliminating any disproportionate burdens on NOMADs and/or issuers.
• Corporate Governance: Questions on whether AIM should provide simplified governance requirements in lieu of issuers adopting a standard corporate governance code.

The discussion paper also sets out options for the reform of the AIM Rules with a view to addressing friction and costs without undermining investor confidence. Changes considered include:

• content requirements for admission documents and options for simplified admission documents;
• alternatives to the working capital statement requirement in admission documents;
• admission of issuers with dual share classes (similar to the Main Market);
• increasing the threshold for substantial transactions from 10% to 25%;
• additional exemptions from disclosure for related party transactions; and
• relaxing reverse takeover rules where the transaction does not result in a ‘fundamental change of business’.

The discussion paper underlines the need for the AIM regulatory framework to evolve and better support growing companies and investors. By seeking to address certain fundamental questions and proposing practical changes, the discussion paper aims to promote a forward-thinking regulatory environment for AIM as a growth market in a challenging environment.