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January 2016
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Changes to AIM Rules for Investing Companies
By Ronan O’Sullivan, Matthew Poxon & Sam Holdsworth
With effect from the 1 January 2016, investing companies listed on AIM, the London
Stock Exchange’s junior market, will now be required to meet higher fundraising
thresholds for admissions to listing. Furthermore, the time period during which an AIM
listed company must undertake a reverse takeover following a fundamental disposal has
been shortened.
Following on from a consultation conducted in October 2015 (AIM Notice 42), the London Stock
Exchange has implemented changes to the AIM rules which affect investing companies and
companies which make fundamental disposals.
The changes seek to ensure that companies can only access the benefits of an AIM listing if they
have sufficient cash balances to make meaningful investments, and that AIM companies continue
to enjoy investment from institutional investors whilst still being subject to appropriate levels of
scrutiny.
Increased Fundraising Thresholds for Investing Companies
Under AIM rule 8, an investing company (a company which has as its primary business or
objective, the investing of funds in securities, businesses or assets of any description) must now
raise a minimum of £6 million as a condition of admission. This has doubled from the previous
threshold of £3 million which was originally introduced in 2005.
AIM Rule 15 Cash Shell
Changes have also been implemented in relation to the classification of AIM companies that have
made fundamental disposals of their trading business or assets.
Under the old rules, a company that made a fundamental disposal was classified as an “investing
company” and had twelve months following such a disposal to (1) evidence the implementation of
an investment policy or (2) make an acquisition constituting a reverse takeover.
Under the new rules, however, such companies will no longer be automatically classified as
investing companies but will instead be classed as “AIM Rule 15 cash shells”. These companies will
have a shortened period of six months to make an acquisition constituting a reverse takeover
(as prescribed by AIM Rule 14).
Becoming an investing company will, for the purposes of Rule 14, be treated as a reverse takeover and will be subject to the requirements of Rule 8, including the higher fundraising threshold. The AIM Note for Investing Companies has been updated to clarify that the proceeds from a fundamental disposal will count towards the minimum fundraising threshold for investing companies. 1 . If an AIM Rule 15 cash shell has not undertaken an acquisition within the prescribed six month period, the shares of that company will be suspended. Where a company does not intend to undertake the required acquisition it will be expected to seek shareholder approval for the cancellation of its AIM admission at the same time as it seeks permission for the fundamental disposal. Grandfathering provisions apply, meaning any company that became an investing company before 1 January 2016 will be subject to the old rules, which stipulate a twelve month deadline for undertaking a reverse takeover or evidencing the implementation an investment policy. Note for Nomads Finally, the Guidance to the AIM Rules has been updated and now requires Nomads to notify the Exchange when an AIM company becomes an AIM Rule 15 cash shell, or when there is a possibility of such occurrence.  If you have any questions concerning these developing issues, please do not hesitate to contact any of the following Paul Hastings London lawyers: Ronan P. O’Sullivan 44.020.3023.5127 ronanosullivan@paulhastings.com Matthew Poxon 44.020.3023.5171 matthewpoxon@paulhastings.com Sam Holdsworth 44.020.3023.5143 samholdsworth@paulhastings.com Paul Hastings LLP Stay Current is published solely for the interests of friends and clients of Paul Hastings LLP and should in no way be relied upon or construed as legal advice. The views expressed in this publication reflect those of the authors and not necessarily the views of Paul Hastings.
For specific information on recent developments or particular factual situations, the opinion of legal counsel should be sought. These materials may be considered ATTORNEY ADVERTISING in some jurisdictions. Paul Hastings is a limited liability partnership.
Copyright © 2016 Paul Hastings LLP. 2 .
Becoming an investing company will, for the purposes of Rule 14, be treated as a reverse takeover and will be subject to the requirements of Rule 8, including the higher fundraising threshold. The AIM Note for Investing Companies has been updated to clarify that the proceeds from a fundamental disposal will count towards the minimum fundraising threshold for investing companies. 1 . If an AIM Rule 15 cash shell has not undertaken an acquisition within the prescribed six month period, the shares of that company will be suspended. Where a company does not intend to undertake the required acquisition it will be expected to seek shareholder approval for the cancellation of its AIM admission at the same time as it seeks permission for the fundamental disposal. Grandfathering provisions apply, meaning any company that became an investing company before 1 January 2016 will be subject to the old rules, which stipulate a twelve month deadline for undertaking a reverse takeover or evidencing the implementation an investment policy. Note for Nomads Finally, the Guidance to the AIM Rules has been updated and now requires Nomads to notify the Exchange when an AIM company becomes an AIM Rule 15 cash shell, or when there is a possibility of such occurrence.  If you have any questions concerning these developing issues, please do not hesitate to contact any of the following Paul Hastings London lawyers: Ronan P. O’Sullivan 44.020.3023.5127 ronanosullivan@paulhastings.com Matthew Poxon 44.020.3023.5171 matthewpoxon@paulhastings.com Sam Holdsworth 44.020.3023.5143 samholdsworth@paulhastings.com Paul Hastings LLP Stay Current is published solely for the interests of friends and clients of Paul Hastings LLP and should in no way be relied upon or construed as legal advice. The views expressed in this publication reflect those of the authors and not necessarily the views of Paul Hastings.
For specific information on recent developments or particular factual situations, the opinion of legal counsel should be sought. These materials may be considered ATTORNEY ADVERTISING in some jurisdictions. Paul Hastings is a limited liability partnership.
Copyright © 2016 Paul Hastings LLP. 2 .
