AIM v LSE

Question 1

Advantages of floating on LSE

Answer 1

• Greater access to capital to fund growth or reduce debt
• Public profile and prestige
• Initial share prices may be higher as MM has greater demand than IM
• Easier to attract institutional investors, seen as a safer form of investment due to heavy regulation
• Don’t need nominated advisor or broker

Question 2

Disadvantages of floating on LSE

Answer 2

• Three- year accounting history needed – LR 6
• Sponsor needed, LR 8
• Minimum market threshold and public hands

Question 3

Advantages for floating on AIM

Answer 3

Easier to be exempt from prospectus requirements - AIM companies may find it easier to fall within an exemption from the requirements to produce a full prospectus under the PRs. This is because s. 85(2) FSMA only applies to a company which is seeking admission of its shares to trading on a regulated market (and AIM is not a regulated market). On admission to AIM, an admission document will be required if a prospectus is not needed but, significantly, the admission document does not have to be approved by the FCA. Note that, where there is no exemption available for the purposes of s. 85(1) FSMA (securities being offered to the public), an AIM company will still be required to produce a full FCA approved prospectus

• Generally less regulated than LSE, AIM Rules less onerous than LPDT rules

LR don’t apply (so, for instance, no need for three year accounting history under LR 6.2.1R, no sponsor needed under LR8.2.1, no capital threshold under 2.2.7 and no minimum 25% shares in public hands under LR 6.14.1R - 6.14.3R) whilst MAR and DTRs 2, 3 and 5 apply to AIM, the remaining DTRs do not apply to companies traded on AIM because AIM is not a regulated market

• Quicker and cheaper
• There are tax reliefs which may be beneficial for investors, no Stamp Duty on AIM

Question 4

Disadvantages AIM

Answer 4

a Nominated Advisor (referred to as a “Nomad”) and a broker must be appointed by an AIM company and retained at all times (in contrast to a company listed on the Main Market which is only obliged to appoint a sponsor at specific times).