New guidance from AIM on equity financing product disclosure

AIM Regulation has published an Inside AIM update in light of recent corrections it has required AIM companies to make in relation to the disclosure of equity financing products, including:

• equity financing facilities, which provide AIM companies with a line of funding in return for equity;
• equity swap facilities; and
• crowd funding type products targeted at non-institutional investors.

In the update, AIM Regulation makes the following key points:

• AIM companies and their nomads should carefully evaluate the structure of a facility and any non-standard terms. Given the complexity of some equity financing products, they should consider including more detail in announcements than would typically be the case for more common structures. For example, the issue and circumstances of a drawdown request may of themselves trigger a disclosure obligation pursuant to AIM Rules 10 and 11 (rather than just the actual drawdown);
• in relation to arrangements involving directors’ interests in AIM company shares, AIM Regulation notes the broad definition of “deal” under the AIM Rules and states that the nature of any dealing arrangement should be clearly and fully disclosed (usually, at the point in time at which the relevant commitment becomes binding, even if the dealing takes place at a later date);
• care should be taken when using terminology to describe the nature of the arrangement to ensure appropriate and sufficient disclosure, as different structures vary in key respects (in particular, in relation to the point at which an interest in shares is transferred); and
• AIM companies should have appropriate systems and controls in place to ensure compliance with the AIM Rules, and in particular notification of director dealing under AIM Rule 17. Consideration should also be given to who within the AIM company is best placed to be involved in the preparation of notifications to the market where key executive directors, or a number of directors, are involved in equity financing arrangements. AIM Regulation would expect, as part of an AIM company’s AIM Rule 31 processes, that “appropriate independence is exercised in the preparation of a notification“.

Source: Inside AIM: AIM company disclosures relating to equity financing products, September 2015