[Last updated: 1 January 2024, unless otherwise noted]

All issuers with securities admitted to trading on a UK MTF need to comply with Regulation 596/2014 of the European Parliament and of the Council on market abuse, as applied in the UK pursuant to the European Union (Withdrawal) Act 2018 (as amended), and as supplemented by the Market Abuse (Amendment) (EU Exit) Regulations (SI 2019/310) (UK MAR). AIM is an MTF and AIM companies must therefore comply with the provisions of UK MAR as well as the AIM Rules for Companies. AIM companies are subject to a dual regulatory regime and compliance with one set of rules does not ensure compliance with the other, even though there is considerable overlap between the two sets of rules. AIM Regulation enforces the AIM Rules for Companies and the FCA enforces UK MAR. It is expected that AIM Regulation and the FCA will cooperate in enforcing the respective sets of rules.

AIM rules for companies

General disclosure of price sensitive information. An AIM company must issue notification without delay of any new developments which are not public knowledge which, if made public, would be likely to lead to a significant movement in the price of its AIM securities. By way of example, this may include matters concerning a change in:

• Its financial condition.
• Its sphere of activity.
• The performance of its business.
• Its expectation of its performance.

Information that would be likely to lead to a significant movement in the price of an AIM company’s securities includes, but is not limited to, information which is of a kind which a reasonable investor would be likely to use as part of the basis of his or her investment decisions. There are some limited exceptions to the announcement obligations for impending developments or matters in the course of negotiation. An AIM company is permitted to disclose such information in confidence to various categories of persons (such as advisers or employees involved in the development or matter and transaction counterparties) provided the recipients are made aware of the requirement to refrain from dealing upon receipt of the information and who are bound by a duty of confidentiality. In addition, the AIM company must ensure that it has in place effective procedures and controls designed to ensure the confidentiality of such information in order to minimize the risk of a leak.

Deliberate or reckless failure to comply with these disclosure obligations would constitute a breach of the AIM Rules and may constitute an offence under the Financial Services and Markets Act 2000 (FSMA), insider dealing or market abuse laws.

Other disclosure requirements. An AIM company must also publicly disclose, among other things:

• Certain information relating to directors’ and their family members’ holdings and dealings in the company’s shares or related financial products.
• Details of any proposed substantial transactions.
• Details of any proposed transactions to be undertaken with related parties (widely defined to include directors, recent directors, 10% shareholders and associates of any of them) of a significant size.
• Details of any transaction classified as a reverse takeover (broadly, a transaction which would lead to a fundamental change in the business, or in board or voting control, of the company), which transaction must be conditional upon shareholder approval.
• Details of any disposals resulting in a fundamental change of business, which disposal must be conditional upon shareholder approval.
• Any changes passing through a percentage point, so far as is known to the company, to any person’s holding of 3% or more of the company’s shares (excluding any treasury shares).
• Changes in the board of directors, to the company’s legal name or the registered office of the company.
• Any change in accounting reference date.
• Any material change between actual trading performance or financial condition and any public forecast, projection or estimate.
• Any change in the Nomad or broker.
• The reason for an application for admission or cancellation of any shares of a class admitted to AIM.
• The occurrence and number of shares taken into and out of treasury.
• Any change in the website address at which certain information (including that listed below) must be made available.
• Certain information relating to dividends on shares admitted to trading on AIM.

Website. From the date of its AIM admission, an AIM company must maintain a website on which certain information, including the following, is available free of charge:

• A description of its business (including its investing policy and details of any investment manager and/or key personnel if the AIM company is an investing company).
• Its country of incorporation and main country of operations.
• Its current constitutional documents (such as its by-laws or articles of association).
• Details of any other exchanges or trading platforms on which the company has applied or agreed to have any of its securities (including its AIM securities) admitted or traded.
• The number of AIM securities in issue (noting any held as treasury shares) and, insofar as it is aware, the percentage of AIM securities that is not in public hands together with the identity and percentage holdings of its significant shareholders. This information should be updated at least every six months and the website should include the date on which this information was last updated.
• Details of any restrictions on the transfer of the company’s securities.
• The annual accounts published for the last three years or since admission, whichever is the lesser, and all half-yearly, quarterly or similar reports published since the last annual accounts, and from 3 January 2018 the annual accounts published (on or after that date) and all half-yearly, quarterly or similar reports published (on or after that date) must be posted and maintained on the web site for a period of at least five years.
• All notifications the company has made in the past 12 months. The company must also post and maintain on its website for a period of at least five years all inside information it is required to disclose publically by UK MAR on or after 3 January 2018.
• Its most recent Admission Document together with any circulars or similar publications sent to shareholders within the past 12 months and for a period of at least five years any prospectus it has published on or after 3 January 2018.
• Details of a recognized corporate governance code that that the board of directors has decided to apply, how the company complies with that code, and where it departs from its chosen corporate governance code an explanation of the reasons for doing so. This information must be reviewed annually and the website should include the date on which this information was last reviewed.
• The names of its directors and brief biographical details of each.
• A description of the responsibilities of the members of the board of directors and details of any committees of the board of directors and their responsibilities.
• Where the company is not incorporated in the United Kingdom, a statement that the rights of shareholders may be different from the rights of shareholders in a UK incorporated company.
• Whether it is subject to the UK City Code on Takeovers and Mergers or any other similar legislation or code in its country of incorporation or operation, or any other similar provisions it has voluntarily adopted.
• Details of its Nomad and other key advisers.

United Kingdom Market Abuse Regulation

Inside information. An AIM company is subject to a continuous disclosure requirement designed to prevent the creation of a false market in the company’s securities. The company will be required to publicly disclose any inside information that directly concerns the company.

Broadly, inside information is information which:

• Is of a precise nature (meaning it indicates a set of circumstances which exist or may reasonably be expected to come into existence and is specific enough to make conclusions as to the possible effect on price).
• Relates, directly or indirectly, to one or more companies or to one or more financial instruments.
• Has not been made public.
• Would be likely to have a significant effect on the price of those financial instruments.

In determining the likely price significance of information, an AIM company should assess whether the information in question would be likely to be used by a reasonable investor as part of the basis of his or her investment decisions and would therefore be likely to have a non-trivial effect on the price of the company’s financial instruments.

When inside information is disclosed, the company must make the information available on its website by the close of the business day following its release and keep it there for a period of at least five years. Where a public disclosure includes inside information, the company must clearly identify that the information communicated is inside information (usually satisfied by including a prominent legend to that effect), the identity of the person making the public disclosure; and the date and time of the public disclosure.

Delay of disclosure of inside information. An AIM company may delay the disclosure of inside information in certain circumstances. This is permissible where a company is faced with an unexpected and significant event, in which case a short delay may be acceptable if necessary to clarify the situation. In such circumstances, a holding announcement should be released if there is a danger of the inside information leaking out before the facts and their impact can be confirmed. In addition, in circumstances where the issuer considers that immediate disclosure of inside information is likely to prejudice the issuer’s legitimate interests, an issuer may delay the disclosure provided that to do so would not be likely to mislead the public and the issuer is able to ensure the confidentiality of the information. Where an AIM company delays the disclosure of inside information, it must inform the FCA that disclosure of the information was delayed immediately after the information is disclosed to the public. The FCA may request that the issuer provides a written explanation of how the conditions outlined above were met.

Insider lists. In order to control access to inside information, AIM companies and any person acting on their behalf or on their account are required to each draw up and maintain a list of persons who have access to inside information. Insider lists must be prepared in accordance with a prescribed template identifying each person having access to inside information and be updated promptly to reflect new people gaining, or existing insiders ceasing to have, access to inside information. Insider lists must be kept for a period of at least five years from being drawn up or updated and must be provided to the FCA upon request. AIM companies must also ensure that every person on an insider list acknowledges their obligations under the insider dealing and market abuse legislation and is aware of the sanctions that might be imposed for breaches of such legislation.

PDMR reporting. Directors, other senior managers and persons closely associated with them, including spouses, children, relatives sharing their household and certain controlled entities (directors and other senior managers, together, known as PDMRs) must notify the AIM company and the relevant regulator (commonly, the FCA) of the occurrence of all transactions conducted on their own account relating to the shares or debt instruments of the company or to derivatives or other financial instruments linked thereto. Notification must be made in a prescribed format and within three business days of the day on which the transaction occurred. The company must also publicly disclose this information within two working days of receiving notification of a transaction from the PDMR.

PDMR trading restrictions. PDMRs of AIM companies must not conduct transactions on their own account (or for the account of a third party) relating to the shares or debt instruments of the AIM company or to derivatives or other financial instruments linked to such shares or debt instruments during any closed period. A closed period is a period of 30 calendar days before the announcement of the annual or interim financial results or any period where there exists any matter which constitutes "inside information" in relation to the company. A transaction is widely defined to include not only acquisitions, disposals, short sales, subscriptions and exchanges, but also gifts, donations and inheritances. These restrictions are in addition to the statutory prohibitions on insider dealing and market abuse which are discussed at the end of this section 4.

Market soundings. If an AIM company wishes to conduct a market sounding, that is, communicate information (especially where this includes inside information) to one or more potential investors prior to the announcement of a transaction in order to gauge their interest in a possible transaction and the conditions relating to it (such as its potential size or pricing), the company must comply with certain disclosure and record-keeping requirements if it wishes to take advantage of a safe harbor permitting the disclosure of inside information during a market sounding.

Financial statements

An AIM company must publish annual audited accounts, which must be sent to shareholders without delay and, in any event, not later than six months after the end of the financial period to which they relate.

EEA companies. An AIM company incorporated in an EEA country must prepare and present its annual accounts in accordance with IAS. If an AIM company is not a parent company at the end of the relevant financial period, it can, alternatively, prepare and present its annual accounts in accordance with the accounting and company legislation and regulations applicable in its country of incorporation.

Non-EEA companies. For an AIM company incorporated in a non-EEA country, the annual accounts must be prepared and presented in accordance with one of: IAS, US GAAP, Canadian GAAP, Australian IFRS or Japanese GAAP. As stated above, the last three years of historical financial information contained in an AIM company’s Admission Document must be presented in a form consistent to that which will be adopted in the company’s next published annual accounts.

AIM companies incorporated in the UK (including the Channel Islands and the Isle of Man) must use UK IAS.

Related party disclosure. The annual accounts must disclose:

• Any transaction with a related party (whether or not previously disclosed), above a certain size, specifying the identity of the related party and the consideration for the transaction.
• Details of the remuneration of each director of the AIM company.

Half-yearly report. An AIM company must prepare a half-yearly report for the six-month period from the end of the financial period for which financial information has been disclosed in its Admission Document and at least every subsequent six months thereafter (apart from the final six month period preceding its accounting reference date for its annual audited accounts). As a minimum, the half-yearly report must include a balance sheet, an income statement and a cash flow statement. It also must contain comparative figures for the corresponding period in the preceding financial year (apart from the balance sheet which may contain comparative figures from the last balance sheet notified). The information must be presented and prepared in a form consistent with that which will be adopted in the annual accounts. Half-yearly reports must be published without delay and, in any event, not later than three months after the end of the relevant period.

Regulatory Information Service. Public disclosure for London listed/traded companies (including AIM companies) is typically made through a Regulatory Information Service (RIS). These organizations receive announcements from issuers and then disseminate the full text of these to secondary information providers such as Bloomberg and Reuters. Disclosure to a RIS that is a primary information provider (PIP) approved by the FCA will fulfill a company’s requirement for public disclosure. In some circumstances, a listed/traded company is also obliged to make information available on its website (such as inside information, its annual report and results of shareholder meetings; please also see requirements for AIM companies discussed above). All AIM companies with securities admitted to trading on AIM are required to have a Legal Entity Identifier or LEI (a unique 20-character reference code identifying the company).

Systems, procedures and controls. The systems, procedures and controls an AIM company puts in place should take into account the use of social media and other forms of electronic communication used by the company in order to manage its disclosure obligations under the AIM Rules. Communication policies should be considered in a meaningful way, taking into account the needs of the particular company, including whether the company has a clear policy on the use of social media and how effective this policy is in practice.

Insider dealing

The Criminal Justice Act 1993 provides that it is a criminal offense for an individual who has inside information, and has that information as an insider, to deal in securities on the LSE or another regulated market (which includes AIM), or through a professional intermediary. For an offense to be committed, the individual must know that the information is inside information and he/she must have knowingly acquired it from an inside source. There are also offenses of encouraging dealing and disclosure by persons who have inside information.

For these purposes, inside information is, broadly speaking, specific or precise unpublished information relating to a particular issuer or particular securities which, if made public, would have a significant effect on the price of any securities. It should be noted that a director who knowingly has inside information about their company, or any other company with which their company has dealings, would be an insider for the purposes of the insider dealing legislation.

The penalty for an offense under the Criminal Justice Act 1993 is an unlimited fine or imprisonment for a maximum of ten years. There are a number of defenses, but it should be noted that these are normally restrictively interpreted and the burden of proof lies with the defendant.

Market abuse

The civil prohibition on market abuse is contained in UK MAR. UK MAR works in tandem with the criminal sanctions against insider dealing and market manipulation. Broadly speaking, market abuse under UK MAR consists of insider dealing, unlawful disclosure of inside information and market manipulation in relation to financial instruments admitted to trading on a regulated market.

Insider dealing arises where a person possesses inside information and uses that information by acquiring or disposing of, for its own account or for the account of a third party, directly or indirectly, financial instruments to which that information relates. The use of inside information by cancelling or amending an order concerning a financial instrument to which the information relates where the order was placed before the person concerned possessed the inside information is also considered to be insider dealing. Recommending or inducing another person to engage in insider dealing may also constitute insider dealing.

Unlawful disclosure of inside information arises where a person possesses inside information and discloses that information to any other person, except where the disclosure is made in the normal exercise of an employment, a profession or duties.

Market manipulation comprises various specified activities which have the effect of misleading and/or distorting the market for financial instruments or benchmarks.

In addition, the FCA have published a set of provisions called MAR 1.3 which give guidance to assist in establishing what type of conduct would be permitted and what type of conduct would be prohibited as market abuse for the purposes of UK MAR.

Under the FSMA, the FCA, as regulator of the financial markets, can impose unlimited fines, public censure, a temporary or permanent prohibition on an individual holding certain positions in an investment firm, a temporary prohibition on an individual acquiring or disposing of financial instruments and/or other penalties for engaging in market abuse. The FCA also has the power to require a company to publish specified information or a specified statement in certain circumstances, including where the company has published false or misleading information or given a false or misleading impression to the public. The FCA may institute proceedings not only for direct engagement in market abuse but also for acts or omissions which require or encourage another to engage in behavior which would constitute market abuse if engaged in by the person who encouraged the other.

It should be noted that proof of intent to engage in market abuse is not required: it is sufficient that the behavior satisfies the criteria for market abuse.