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The capital markets are in a state of unprecedented volatility, with major losses in equities reflecting fears about the impact of the COVID-19 coronavirus, as well as a result of the sharp slump in oil prices. Despite concerted action by governments and central banks in various jurisdictions, circuit breakers have been hit several times over the past ten days as stock markets across the world fall far and fast.
Amongst many moves being initiated in different markets, AIM Regulation set out certain temporary measures it is implementing to support AIM companies and nominated advisers in an attempt to afford market players some latitude during the pandemic crisis.
AIM Regulation has stated it will be applying ‘discretion’ to the application of some of the junior market’s rules until further notice. This is in respect of both the AIM Rules for Companies and the AIM Rules for Nominated Advisers (the “AIM Rules”).
AIM companies should continue to meet their disclosure obligations without delay. Nominated advisers should assist by understanding how their AIM company clients are planning for and responding to events as they unfold, thereby helping ensure the companies meet their obligations in accordance with the AIM Rules.
All companies will currently be experiencing some level of uncertainty at present, and many will be suffering considerable turmoil. Where AIM companies are facing material new developments as a result of the constraints and difficulties arising from the coronavirus pandemic and require more time to make a fully-compliant notification that would usually be the case, the nominated adviser is encouraged to approach AIM Regulation to discuss whether a temporary suspension might be necessary. Such a suspension would be at the discretion of AIM Regulation and for a limited time, to enable the AIM company to make a fully-compliant notification. Since timely disclosure is a key requirement under the AIM Rules, the nominated adviser will need to explain fully why a suspension would be appropriate.
In normal circumstances, when an AIM company has had its securities suspended from the market for more than six months, they will be cancelled under the AIM Rules. Given the current adverse business environment, AIM Regulation will be extending this period, also on a discretionary basis, to 12 months to allow such companies more time to resolve the underlying reason for suspension. This applies to AIM companies suspended between 30 September 2019 and 1 July 2020.
Nominated advisers are typically required to undertake a site visit to an AIM company’s key base of operations, as part of its due diligence when taking on a new client, as well as meeting key personnel. Given the current restrictions on travel and interpersonal contact, it will be extremely difficult to fulfil this obligation. AIM Regulation has therefore temporarily suspended this obligation, with the provisos that (i) the nominated adviser uses alternative methods (e.g., virtual meetings) for the time being, and (ii) the nominated adviser undertakes a site visit once restrictions are lifted.
Under the AIM Rules, AIM companies are required to publish their annual audited accounts within six months of the end of their financial year. In light of the unprecedented events of recent weeks, AIM Regulation will allow AIM companies to apply for a three month extension to the reporting deadline in AIM Rule 19. The extension is available to AIM companies with financial years ending between 30 September 2019 and 30 June 2020, and may be applied for from today (26 March 2020). The guidance reflects contemporaneous measures announced by Companies House for all companies in respect of filing accounts.
For further information please contact your usual Dechert contact, or a member of the International Capital Markets team.