London Stock Exchange updates AIM Rules
In December 2009, the London Stock Exchange announced a consultation exercise regarding changes to the AIM Rules relating to disclosure of directors’ remuneration and electronic communication of certain documents to shareholders. Following the consultation, the AIM Rules were updated with effect from 17 February 2010 to reflect the proposed changes, and all AIM companies and their advisers need to be aware of them.
Rule 19 has been amended to provide that the annual accounts of an AIM company must now disclose the remuneration of each director in respect of the financial year in question. Remuneration is defined broadly to include:
- all emoluments and compensation, whether cash or non-cash;
- share options and long term incentive plan details (including details of outstanding options and / or awards); and
- the value of any pension contributions paid by the AIM company.
The current position, at least for AIM companies incorporated in the UK, is that disclosure is required of the aggregate remuneration of the directors together with details of the remuneration of the highest paid director. The change is a welcome increase in transparency and brings the disclosure regime for AIM companies into line with that applicable to companies listed on the Main Market of the London Stock Exchange. It applies to all AIM companies having a year end of 31 March 2010 or later, although as a corporate governance matter companies may wish to start complying earlier.
The other change increases the scope for documents to be sent to shareholders electronically. As a result of changes to the guidance notes to Rules 14, 18 and 19, all AIM companies can potentially now use electronic communications to send accounts and admission documents to shareholders. Previously, only AIM companies subject to the UK Companies Act 2006 had this ability. Besides any constitutional or foreign legal requirements, a number of requirements in the AIM rules need to be satisfied before companies can take advantage of the change. These requirements largely reflect the electronic communication provisions which are in force in the UK as a result of the Companies Act 2006:
- that a decision to use electronic communications has been approved by shareholders in general meeting;
- appropriate identification arrangements have been put in place so that shareholders are effectively informed; and
- that individual shareholders have (1) been contacted to request their consent to receive electronic communications (which will be deemed to have been given if they do not object within 28 days); (2) are able to request hard copies of the documents; and (3) are contacted to alert them to the publication of documents on an AIM company’s website.
For these purposes, “electronic communications” are communications sent by email or made available on an AIM company’s website for the purposes of Rule 26. These changes have immediate effect. Again, this change is to be welcomed.