3 - Alternatives to the MAIN Market Flashcards
What are the main advantages of the AIM admission process?
- Faster / less expensive because there are lower admission fees
- Rules are less restrictive because MM has to comply with listing / prospectus / DT rules
- AIM companies do not have to comply with all continuing obligations in the LRs/ DTRs
- AIM - no minimum market capitalisation requirement
- MM needs 25% in public hands
- AIM tax advantages for investors is unquoted
- AIM - can avoid the prospectus requriement because it is not a regulated market
What are the main disadvantages of the Main Market?
- Requires corporate governance code to comply with
- MM continuing obligations (LR) are more onerous compared to the AIM rules
- MM requires a 3 year trading history - LR 6.1.3 (tab) - no trading record is required for AIM companies
- MM needs appointment of a sponsor under Chapter 8 LR for the purposes of the admission process and then in relation to certain transactions after listing - LR 8.2
What are the disadvantages of the AIM market?
- Riskier
- Might have more cautious investors
What are the advantages of the MM over aim re liquidity?
- MM is more liquid
- Wider pool of investors
- Access to capital through a greater demand for shares, and an easier exit route
What are the advantages of MM re profile?
- MM gives a greater profile
- AIM companies generally have lower public profile
- MM = potential to become household names, and analysts and financial journalists are more interested in companies on the MM - but can also be a disadvantage for MM in difficult times
What are the rules of AIM re the production documents and compliance of rules?
- Have to comply with continuing obligations of AIM rules, but usually are less onerous
- Will need to produce AIM admission documents
- Does not require pre-vetting by FCA / LSE is not prospectus
Explain the disadvantage of AIM re the requirements of Nominated Advisers and Nominated brokers?
- More onerous requirements regarding the nominated advisers and nominated brokers
- Compared to the gentler LR for Sponsor
- For AIM, Nomad is required to confirm to LSE that the directors understand their obligations and responsibilities
- For AIM - Nominated broker acts as market maker
- AIM Rule 7 - and lock in requirement for new businesses
• Related parties and applicable employees have to dispose of any interests of its AIM securities for a period of 12 months after admission
• Ask about this
What are other factors to consider when tossing up between AIM and MAIN?
- Location of competitors, e.g. mainstream food and drinks companies would be on the AIM
What are the characteristics of a standard listing?
- Less regulation
- Cheaper
- Avoid cost of sponsor
- There are fewer continuing obligations
What are the characteristics of a premium listing?
- Best price
- Liquidity
- Profile
- In FTSE indices, institutional investors have to invest, so less risky
What will be used if the prospectus test fails?
- AIM admission document is used rather than a prospectus
- Test 1 - placing - fails
- Test 2 - not a regulated market as it is AIM - fails
- No prospectus is needed
- Under s 85 FSMA, AR 3
What are the contents requirements for an AIM admission document and where are they found?
TAB THESE IN ONE COLOUR
- Specific content requirement
- AIM Rule 3: Schedule 2
- Annexes 1/2/3 - PR Appendix 3
- General content requirement
- Schedule 2 paragraph (k)
- Schedule 2 paragraph (c) to (j)
Who decides whether a company is suitable applicant for admission to AIM?
- NOMAD
- Risk factors required in AIM admission document
- Appendix 3 Annex 1 Para 4 of PR
What will be contained in the AIM admission document?
- Contain shareholdings of significant shareholders post admission
- 3%+ is very large - have to make constant disclosures
- Want 25% for negative control
- Definition of control for a listed company is 30% - mandatory offer
Who does the responsibility for the AIM admission document lie with?
- The client
- Company and directors
- Need a paragraph from Schedule 2 paragraph (e) that states “AIM is a market designed primarily for….”
