Listing your company on AIM and raising capital

For fast growing small and medium sized companies the AIM market gives access to capital, market valuation and a higher profile. There is a lot to like about this. The downside is more compliance, transparency and costs. Success, like failure becomes more public.

This is a practical guide to listing your company on AIM. The key is preparation as your business will be exposed to public scrutiny and needs to be transparent to maintain the support of outside investors. SAP can advise you before during and after your listing.

Four Key players needed

  • Nominated Advisor (NOMAD) at all times. The NOMAD guides you through the process and confirms to the London Stock Exchange the company’s shares can be listed. The NOMAD may also appoint its own solicitor. We can make suggestions as to a NOMAD.

  • Nominated Broker who sells the shares mainly to institutions and maintains liquidity in the shares. The company must have a broker at all times.

  • Reporting Accountant who is separate from your company accountant and reports to the NOMAD on the company’s financial position.

  • Company’s solicitors who get the company ready for its listing. They carry out a due diligence exercise and deal with issues raised by the NOMAD. Much of this work can be done before the listing process starts and it is easier to deal with this if the company adopts best corporate practices early on. We can help you here.

Key players’ typical Fees

  • NOMAD – between 3 to 5% of the capital raised by the flotation plus a fee of around £250,000. You have to pay an ongoing annual fee of around £35,000.

  • Nominated Broker, accountants and lawyers will cost around 5% of the capital raised. As solicitors we will give you an estimate of our costs at the outset.

  • If you budget on costs of 10% of the capital raised this should be sufficient.

Your Company

It must be a PLC or foreign equivalent. Foreign companies can be listed provided there is no restriction in their home country. There would have to be some UK link or interest in buying the shares in the UK for a foreign company to go on AIM.

Normally AIM companies have one class of ordinary shares but different classes are permitted.

What we as lawyers typically do to prepare for an AIM listing

  • Review company share structure.

  • Conversion to a PLC.

  • Consider group structure.

  • Review Company contracts.

  • Review directors’ and key employees’ employment contracts.

  • Review share option schemes. These are likely to become important on a listing.

  • Restrictions on shareholders selling out quickly.

  • Warranties to be given by directors to NOMAD.

  • Obtain tax clearances liaising with your accountants.

  • Ownership and leases of any property.

  • Understand any foreign aspects. We are particularly strong on how any French, Belgian or Dutch aspects are to be presented.

  • Prepare prospectus/admission document.

  • Finally we deal with the burial of any of your company’s “skeletons.”

Summary

Listing your company on AIM is likely to be worthwhile if you want to raise capital for expansion without using bank funding. You have to be willing to run the business on a transparent basis as you will have outside shareholders. The increase in value of your business could be substantial and allow you to exit in due course with far more capital than you would achieve by a trade sale or management buyout. Initial costs are however high and you must be committed to the restraints imposed by outside ownership.

December 2017
David Anderson
Solicitor-Advocate and Chartered Tax Adviser