AIM Rules Consultation – further pressure on Cash Shells

Admission criteria for investing companies

Currently ‘investing companies’ seeking admission to AIM are required to raise £3 million in cash via an equity fundraising on, or immediately before, admission.  It is proposed that this is increased to £6 million.  This is in contrast to a standard listing on the Main Market, where there is no requirement to raise a specified amount, although it is necessary to have a minimum market capitalisation of £700,000.

Fundamental change of business

The consultation also proposes to change the rules relating to fundamental disposals.  It is proposed that when an AIM company makes a fundamental disposal it will not be automatically classified as an ‘investing company’, but will be classified as an ‘AIM Rule 15 cash shell’.  It will be required, within 6 months of the fundamental disposal, to undertake an acquisition(s) that constitutes a reverse takeover or to become an ‘investing company’, by completing a £6 million equity fundraising and publishing an admission document.  The cash funds received from the disposal will usually be considered to satisfy the minimum cash requirement.

If the ‘AIM Rule 15 cash shell’ does not undertake a reverse takeover within 6 months, trading in its securities will be suspended.  If it is suspended for 6 months its admission to AIM will be cancelled.

AIM expects companies that do not intend to carry out reverse takeovers after a fundamental disposal to seek shareholder approval for the cancellation of their admission to AIM and to consider the best routes to return any remaining funds to shareholders.

It is not intended that the proposed changes will take retrospective effect.  If an AIM company has undertaken a fundamental disposal prior to the new rules being adopted, the old rules will apply.

Responses to the consultation are requested by 12 November 2015.