Alternative Investment Market

AIM is an exchange regulated venue featuring an array of principles-based rules for publicly held companies. AIM's regulatory model is based on a comply-or-explain option that lets companies that are floated on AIM either comply with AIM's relatively few rules, or explain why it has decided not to comply with them.

Aside from granting leeway in regard to regulatory compliance, the Exchange also mandates continuous oversight and advice by the issuer's underwriter, referred to as a Nominated Adviser (Nomad). The role of Nomads is central to AIM's regulatory model, as these entities play the role of gatekeepers, advisers and regulators of AIM companies. In advising each firm as to which rules should be complied with and the manner in which existing requirements should be met, Nomads provide the essential service of allowing firms to abide by tailor-made regulation, reducing regulatory costs in the process. Theoretically, Nomads are liable for damages from tolerating misdemeanors on behalf of their supervised companies, including the loss of reputational capital. However, this heavy reliance on Nomads has been criticised as creating a conflict of interest, since Nomads receive fees from the companies they purportedly supervise while, in practice, managing to avoid liability for market misconduct.

In 2006, the London Stock Exchange launched a review of Nomad activities, resulting in a regulatory "handbook" for Nomads published by the Financial Services Authority in 2007.

{{cite news

| last = Warwick-Ching

| first = Lucy

| title = Advisers walk away from smallest fry

|work=Financial Times

| date = 29 December 2007

| url = http://www.ft.com/cms/s/0/ceaa9e54-b5af-11dc-896e-0000779fd2ac.html

}}

{{Cite journal |last=Mendoza |first=Jose Miguel |date=October 2007 |title=Securities regulation in low-tier listing venues: The rise of the Alternative Investment Market |journal=Fordham Journal of Corporate & Financial Law |type=abstract |location=New York |volume=XIII |issue=1 |ssrn=1004548}}

AIM is an unregulated market segment, therefore it escapes most of the mandatory provisions contained in European Union directives – as implemented in the UK – and other rules applicable to companies listed in the LSE. AIM believes self-regulation is pivotal to AIM's low regulatory burden: companies seeking an AIM listing are not subject to significant admission requirements; after admission is granted, firms must comply with ongoing obligations which are comparatively lower to the ones that govern the operation of larger exchanges; and certain corporate governance provisions are not mandatory for AIM companies. Therefore, AIM-listed companies are often subject to manipulation by institutional investors. AIM-listed companies usually are only required to adhere to the corporate governance requirements of their home jurisdiction, which, as a practical matter, vary widely.

However, the regulatory requirements are more onerous than for private companies and AIM listed plcs are required to prepare audited annual accounts under IFRS.{{Cite web |title=Rule 19 of AIM Rules for Companies (2010) |url=http://www.londonstockexchange.com/companies-and-advisors/aim/advisers/rules/aim-rules-for-companies.pdf |url-status=live |archive-url=https://web.archive.org/web/20130102195554/http://www.londonstockexchange.com/companies-and-advisors/aim/advisers/rules/aim-rules-for-companies.pdf |archive-date=2 January 2013 |access-date=15 August 2013 |website=London Stock Exchange |df=dmy-all}}

Another important element of AIM's model is the composition of its investor base. Although AIM-listed companies are not start-ups, most are small and potentially more risky than a FTSE listing. This may prove to be hazardous for unsophisticated investors who lack both the knowledge and resources to conduct proper inquiries into a firm's prospects and activities, or even larger investors which lack strong internal control and risk management requirements. As a consequence, AIM's investor base is largely composed of institutional investors and wealthy individuals.

The following table lists the 10 biggest AIM companies on 31 May 2021.

{{needs update|date=October 2024}}

The following table lists the top 100 AIM companies by market capitalisation on 25 April 2020.{{Cite web |date=2020-04-25 |title=FTSE AIM 100: Market overview |url=https://www.hl.co.uk/shares/stock-market-summary/ftse-aim-100/ |access-date=2020-04-25 |website=Hargreaves Lansdown}}{{needs update|date=October 2024}}

In March 2007, U.S. securities regulator Roel Campos suggested that AIM's rules for share trading have created a market like a casino. Campos reportedly said: "I'm concerned that 30% of issuers that list on AIM are gone in a year. That feels like a casino to me and I believe that investors will treat it as such."{{Cite news |last=Jill Treanor |date=9 March 2007 |title=Treanor, Jill "City hits out over US 'casino' jibe at Aim" The Guardian 10 March 2007 |publisher=Business.guardian.co.uk |location=London |url=http://business.guardian.co.uk/story/0,,2030750,00.html?gusrc=rss&feed=24 |url-status=live |access-date=20 November 2011 |archive-url=https://web.archive.org/web/20070314205431/http://business.guardian.co.uk/story/0,,2030750,00.html?gusrc=rss&feed=24 |archive-date=14 March 2007 |df=dmy-all}} The comment resulted in several angry retorts, including one from the London Stock Exchange, which controls AIM, pointing out that the number of companies that go into liquidation or administration in a year is actually fewer than 2%.

AIM has since issued new rules requiring that listed companies maintain a website.{{Cite web |title=LSE AIM Rule 26 |url=http://www.aimlisting.co.uk/index.php/page/aim-rule-26-explained |url-status=live |archive-url=https://web.archive.org/web/20111112094243/http://www.aimlisting.co.uk/index.php/page/aim-rule-26-explained |archive-date=12 November 2011 |access-date=20 November 2011 |publisher=Aimlisting.co.uk |df=dmy-all}}

The calibre of participants in the market has also been criticised by fund manager John Hempton of Bronte Capital Management.{{Cite magazine |last=Frost |first=James |date=November 2016 |title=The iconoclast |magazine=SmartInvestor |publisher=The Australian Financial Review |page=9 |quote="And then there are certain places with a preponderance of bad people. Stockbrokers from Long Island, mining promoters in Perth or Vancouver, anything on the AIM boards in the UK."}}

In 2003 Langbar international was admitted to the AIM.

In 2011 Langbar's now former CEO, Stuart Pearson was found guilty of "three counts of making misleading statements by falsely claiming in stock market announcements that the company had assets held by Banco do Brasil and that some assets were being transferred to the company", jailed for 12 months and banned for being a company director for five years.{{Cite web|last=Croft and Binham|first=Jane and Caroline|date=14 November 2011|title=Ex-chief at Langbar jailed|url=https://www.ft.com/content/a44acf24-9b72-11e0-bbc6-00144feabdc0|url-status=live|access-date=2021-08-14|website=www.ft.com|archive-url=https://web.archive.org/web/20180519084523/https://www.ft.com/content/a44acf24-9b72-11e0-bbc6-00144feabdc0 |archive-date=19 May 2018 }}

This £365 million ($750m) share fraud was investigated by the Serious Fraud Office{{Cite news |last=Simon Bowers |date=25 November 2005 |title=Fraud inquiry starts into shell firm's missing millions |work=The Guardian |location=UK |url=https://www.theguardian.com/business/2005/nov/26/3 |url-status=live |access-date=20 November 2011 |archive-url=https://web.archive.org/web/20130930145309/http://www.theguardian.com/business/2005/nov/26/3 |archive-date=30 September 2013 |df=dmy-all}}{{Cite web |last=Bowers |first=Simon |date=2005-11-30 |title=Fraud office launches inquiry into Langbar |url=https://www.theguardian.com/business/2005/nov/30/money |access-date=2018-08-24 |website=The Guardian |language=en}} and the City of London Police when it was discovered in November 2005 that Langbar had none of the assets it declared at listing. This was due in part because the Nomad (Nominated Adviser) failed to carry out due diligence. Also, the Exchange did not ensure that the AIM rules had been complied with. AIM changed the rules for Nomads in 2006.[http://business.timesonline.co.uk/tol/business/article681778.ece "Sharewatch: LSE takes AIM"] {{webarchive|url=https://web.archive.org/web/20110612031136/http://business.timesonline.co.uk/tol/business/article681778.ece |date=12 June 2011 }}. The Sunday Times, 2 July 2006[http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article681813.ece "Inside the City: Rogue nomads in the firing line"] {{webarchive|url=https://web.archive.org/web/20110612031407/http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article681813.ece |date=12 June 2011 }} The Sunday Times, 2 July 2006{{Cite news |last=Essen |first=Yvette |date=3 October 2006 |title=LSE takes aim at nomads to quell concerns |work=The Daily Telegraph |location=UK |url=https://www.telegraph.co.uk/finance/2948359/LSE-takes-aim-at-nomads-to-quell-concerns.html |url-status=live |access-date=20 November 2011 |archive-url=https://web.archive.org/web/20140313063236/http://www.telegraph.co.uk/finance/2948359/LSE-takes-aim-at-nomads-to-quell-concerns.html |archive-date=13 March 2014 |df=dmy-all}} On 19 October 2007 they fined Nabarro Wells £250,000 ($512,500){{Cite web |date=19 October 2007 |title=Historic Currency Conversion |url=http://www.discount-currency-exchange.com/historical-rates/history_currency_search.cfm |url-status=live |archive-url=https://web.archive.org/web/20080511211921/http://www.discount-currency-exchange.com/historical-rates/history_currency_search.cfm |archive-date=11 May 2008 |access-date=20 November 2011 |publisher=Discount-currency-exchange.com |df=dmy-all}} and publicly censured them for breaches of the AIM rules.{{Cite web |date=19 October 2007 |title="Nomad strayed from market rules" Financial Times 19 October 2007 |url=http://www.ft.com/cms/s/0/a709e5b6-7e6a-11dc-8fac-0000779fd2ac.html |url-status=live |archive-url=https://web.archive.org/web/20120629165722/http://www.ft.com/cms/s/0/a709e5b6-7e6a-11dc-8fac-0000779fd2ac.html |archive-date=29 June 2012 |access-date=20 November 2011 |website=Financial Times |df=dmy-all}}[http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article2696969.ece LSE hits Nabarro Wells with £250,000 fine over AIM checks"] {{webarchive|url=https://web.archive.org/web/20110612031432/http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article2696969.ece |date=12 June 2011 }} The Times 20 October 2007

In March 2007 The Daily Telegraph noticed a tendency to use listing vehicles incorporated in offshore financial centres prior to floating on AIM. Some 35% of the companies floated on AIM during 2006 were from OFCs, of which the majority came from the Channel Islands or the British Virgin Islands.{{Cite news |last=Essen, Yvette |date=12 March 2007 |title=Aim market: Offshore attractions for the 'sophisticated' investor |work=The Daily Telegraph |location=UK |url=https://www.telegraph.co.uk/finance/markets/marketreport/2805643/Aim-market-Offshore-attractions-for-the-sophisticated-investor.html |url-status=live |access-date=20 November 2011 |archive-url=https://web.archive.org/web/20110805093809/http://www.telegraph.co.uk/finance/markets/marketreport/2805643/Aim-market-Offshore-attractions-for-the-sophisticated-investor.html |archive-date=5 August 2011 |df=dmy-all}}

On 29 January 2009 it was announced that AIM is to form the basis of an Asian-orientated growth or incubator market called 'Tokyo AIM', which will be run as a joint venture between the Tokyo Stock Exchange and LSE. Tokyo AIM will replicate AIM's system of oversight by NOMADs, with 'J-Nomads' being "selected and approved by TOKYO AIM ... to assess companies' suitability for the market".{{Cite web |date=29 January 2009 |title=Tokyo Stock Exchange and London Stock Exchange publish rulebook for public comment; name new growth market "TOKYO AIM" |url=http://www.londonstockexchange.com/about-the-exchange/media-relations/press-releases/2009/tokyostockexchangeandlondonstockexchangepublishrulebookforpubliccommentnamenewgrowthmarkettokyoaim.htm |url-status=dead |archive-url=https://web.archive.org/web/20111029030306/http://www.londonstockexchange.com/about-the-exchange/media-relations/press-releases/2009/tokyostockexchangeandlondonstockexchangepublishrulebookforpubliccommentnamenewgrowthmarkettokyoaim.htm |archive-date=29 October 2011 |access-date=20 November 2011 |publisher=London Stock Exchange |df=dmy-all}} In July 2012, TOKYO AIM changed its name to TOKYO PRO Market, and since then Tokyo Stock Exchange, Inc. has continued to operate TOKYO AIM based on the original market concept.{{Cite web |date=July 2012 |title=Tokyo Stock Exchange changed its name from AIM to PRO Market |url=https://www.jpx.co.jp/english/equities/products/tpm/listing/01.html |publisher=Japan Stock Exchange Group}}

As of 1 October 2018, just under a third of AIM-listed companies have paid shareholders a dividend within their most recent financial year.{{needs update|date=October 2024}} The largest companies to have paid dividends include: Fevertree Drinks PLC (FEVR), Burford Capital Ltd (BUR), and Abcam PLC (ABC). The smallest companies to have paid dividends include: Holders Technology PLC (HDT), Aeorema Communications PLC (AEO), and Stilo International (STL).{{Cite web |date=2018-10-01 |title=Dividend Yield Opportunities On AIM (2018) |url=https://aim-watch.com/articles/aim-dividends/ |access-date=2018-12-16 |website=AIM-Watch}}

• First North – a similar market serving the Nordic countries
• Growth Enterprise Market – a similar market in Hong Kong

{{reflist|colwidth=30em}}

• {{Cite news |date=25 May 2005 |title=Aim for the ambitious |work=The Daily Telegraph |location=UK |url=https://www.telegraph.co.uk/money/main.jhtml?xml=/money/2005/05/25/cmaim25.xml}}{{dead link|date=January 2025|bot=medic}}{{cbignore|bot=medic}}

• {{official website | https://www.londonstockexchange.com/raise-finance/equity/aim}}
• [http://www.ftse.com/ FTSE Group website]
• [https://web.archive.org/web/20131224221603/http://www.tse.or.jp/rules/promarket/ TOKYO PRO market (was Tokyo-AIM until LSE-AIM's withdrawal from Tokyo-AIM)]

{{Economy of the United Kingdom}}

{{Authority control}}

Category:Financial services companies established in 1995

Category:Finance in the United Kingdom

Category:London Stock Exchange

Category:Stock exchanges in the United Kingdom

Category:British companies established in 1995