Opinion.

AIM update on developments in the Ukraine

19/09/2014

At a glance

The London Stock Exchange has released an update reminding AIM-listed companies and Nominated Advisers that they must have adequate regard to developments in the Ukraine and in particular to EU sanctions against Russia. Companies and Nomads must keep up-to-date with their obligations in respect of sanctions generally and Nomads must give particular consideration to the ongoing appropriateness of companies that may fall within the EU sanctions.

In detail

In summary, the sanctions apply to certain Russian banks, military companies and oil companies, and entities which are majority-owned or controlled by those banks, military companies or oil companies. It seems unlikely that many AIM companies would currently fall within this category, but those with business in, or connections to, Russia, particularly in the financial services or oil sectors, will require particular scrutiny and the sanctions regulations could potentially be broadened in the future.

The Exchange requires that all AIM companies must inform their Nomad immediately if they either now, or in the future, fall within the sanctions regulations.

For so long as the sanctions remain in force, the Exchange will not admit to trading securities issued by companies within the scope of the sanctions regulations. Accordingly, the Exchange has modified its AIM application process and has made changes to the AIM application form, which now requires applicants to confirm that their application “does not fall under…Council Regulation (EU) No 833/2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine”.

This follows the UKLA’s stance on requiring similar confirmation from issuers on the Main Market.

The practical result is that Nomads will have to review existing clients where they believe there may be a risk that the sanctions could be breached, and will have to perform additional due diligence on potential new clients where there is a material connection with Russia. Nomads in particular should bear in mind their obligations under the AIM Rules for Nominated Advisers to notify AIM Regulation where they believe that an AIM company for which they act is no longer appropriate for AIM. This will also increase compliance risk and costs on sign-on of new clients, as adequate due diligence will need to be done on companies at risk so that the Nomad can satisfy itself that the sanctions are not being breached.

Details of UK and EU financial sanctions are maintained and published by HM Treasury, and can be found at HM Treasury’s website – https://www.gov.uk/government/publications/financial-sanctions-consolidated-list-of-targets

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