PROPOSED CHANGES TO THE AIM RULES INCLUDING FAST TRACK APPLICATIONS FOR ADMISSION

The London Stock Exchange has recently published an AIM Notice to consult on a number of proposed changes to the supplement to Schedule 1 to the AIM Rules for companies listed on an AIM Designated Market and Rules 16 and 17 of the AIM Rules which relate to half-yearly reports and the standards under which the audited accounts are to be prepared.

1 Supplement to Schedule 1

One problem often encountered by companies listed on an AIM Designated Market who are seeking to apply for Admission to AIM is that if their latest audited accounts have a year end which is more than nine months prior to Admission, they could not apply for Admission to AIM by the fast track method and have to produce a full admission document.

Under the proposed changes, such an applicant would be able to produce an audited interim statement made up to a date not less than six months from the financial year to which the audited accounts relate to supplement its most recent audited report and accounts. Should this change be adopted, it will remove the artificial deadline which many companies were faced with as most companies whose shares are traded on an AIM Designated Market will already have to prepare half yearly information and will only be required to have these audited as opposed to preparing a full Admission Document.

2 Half Yearly reports

The proposed change to the AIM Rules here is to address the current position where the AIM Rules require the preparation and disclosure of half yearly reports but do not give any guidance as to the format which they should take. Under the proposed change, Rule 16 would be amended so that the half-yearly report would have to include at least a balance sheet, an income statement and a cash flow statement and be presented in a form consistent with the annual accounts having regard to the accounting standards applicable to such annual accounts.

3 International Accounting Standards

Rule 17 of the AIM Rules requires annual audited accounts of companies to be prepared in accordance with UK GAAP, US GAAP or International Accounting Standards. EU company's listed on an EU regulated market, which includes the London Stock Exchange, will be required to adopt IAS for financial years commencing on or after 1 January 2005. For AIM companies which are registered in the European Union, the proposal is that IAS must be adopted for financial years commencing on or after 1 January 2006 although this proposal will initially take the form of an amendment to the guidance notes rather than the AIM Rule. It is also proposed that this amendment to the guidance notes also provides that AIM companies registered outside the European Union be required to publish audited accounts using either US GAAP or IAS for financial years commencing on or after 1 January 2006. The important point to note is that existing companies and new applicants to AIM should be mindful that they will eventually have to adopt IAS.

A copy of the AIM notice is available at www.londonstockexchange.com/aim


If you require further information on any matter covered in this note, please contact your principal contact at Charles Russell or Simon Gilbert, Katy Knight, Clive Hopewell or Alexander Keepin (London), Francis Rundall or Richard Norton (Cheltenham) or Geoff Sparks (Guildford) on 0207 203 5000.

Please note that the summaries above are a general indicative guide only. They are not exhaustive. This information has been prepared by the firm as a service to our clients. As it is a general guide, we recommend that you seek professional advice before taking action. No liability can be accepted by the firm for any action taken or not taken as a result of this information. The firm is not authorised under the Financial Services and Markets Act 2000 but we are able in certain circumstances to offer a limited range of investment services to clients because we are members of the Law Society. We can provide these investment services if they are an incidental part of the professional services we have been engaged to provide.