Changes to the AIM Rules came into force on 20 February 2007. The changes follow a strategic review of the operation of AIM, including an assessment of AIM's regulatory structure. The changes are intended to address concerns that the previous regime was insufficiently robust and that there had been a deterioration in the quality of companies being admitted to AIM.
The principal changes to the rules concern the codification and amplification of the duties of Nominated Advisers1 but the new rules also require AIM companies to disclose certain information on their websites, so that investors and potential investors can access key information about the company at all times.
Information that must be displayed (free of charge) on the company's website includes:
- a description of the business of the company;
- the names of directors and brief biographical details;
- a description of the responsibilities of the members of the board of directors and details of any sub-committees of the board of directors and their responsibilities;
- its country of incorporation and main country of operation;
- the percentage of AIM securities that are not in 'public hands' and the identity and holdings of significant shareholders;
- its most recent annual report and all half-yearly or similar reports published since the last annual report; and
- details of the Nominated Adviser and other key advisers.
AIM companies will be under a continuing obligation to keep the information disclosed up to date. In particular, the company will have to update details of the percentage of AIM securities which are not in 'public hands' and the holdings of significant shareholders at least every six months.
The emphasis placed upon the role of the company's website reflects the growing importance of electronic communications in company law. The Companies Act 2006 contains important provisions, which are already in force, facilitating a company's ability to communicate electronically with its shareholders. Companies with a large shareholder base that have not already done so should review their articles of association and seek appropriate legal advice to ensure they can benefit from the new procedures.
For companies without a website (admittedly a minority) it will be a big challenge to ensure that they develop websites within the six months permitted by the new rules. But even those companies with websites will need to have a look at their existing website infrastructure to ensure compatibility. The issue of website compliance is something of a legal minefield (and moreover, in view of the rapidity of technological developments, a minefield that is constantly shifting). A failure to ensure that the information on the website is kept up to date and in accordance with the AIM Rules will be a breach of those rules, and consequently it is not an issue that companies can afford to ignore.
For example, is the website compliant with the Data Protection Act 1998? This requires, among other things, safeguards to guarantee the integrity of data stored on the website. What about overseas data transfers, which are subject to additional requirements? How is digital content managed? Statements appearing on a website must be monitored at all times: the prospective areas of liability for statements may range from defamation to unauthorised financial promotion to misleading advertising to making false statements to the market. Maintenance and hosting agreements assume particular importance given that companies will need to act quickly to ensure that the information they carry on their website is always up to date.
Businesses offering goods or services overseas will have to bear in mind local laws when structuring their website. In particular, any business with a website offering services in the US needs to tread particularly carefully in view of the strict regulatory environment in place there.
The Walker Morris Technology and Media Unit have a depth of experience in advising companies setting up and/or enhancing their websites and would be delighted to assist you in negotiating the legal and regulatory pitfalls lining the road to compliance with the new AIM Rules.
1 For further information please contact us to request a copy of our Legal Briefing 'Changes to AIM Rules – Nominated Advisers'.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.