The London Stock Exchange has confirmed that it has strengthened the corporate governance requirements for AIM companies from the 28th September this year with new entrants to the market having to comply with the rule from the end of March 2018.
The board of directors at AIM companies must now provide a recognised corporate governance code that the board of directors of the AIM company has decided to apply. If they are UK-based company this is likely to be the main UK corporate governance code administered by the Financial Reporting Council or the Quoted Companies Alliance’s (QCA) corporate governance code.
The disclosures must provide details of how the AIM company complies with that code, and where it departs from its chosen corporate governance code an explanation of the reasons for doing so. This information must be reviewed annually and the company’s website should include the date on which this information was last reviewed. Until now, AIM companies had the choice of disclosing on their website which corporate governance code they followed, or stating they did not follow a code and setting out their own arrangements. The changes follow a consultation launched last December.
Responding to the new requirements the QCA said that its research indicated that over 400 AIM companies currently refer to its corporate governance code. Of the remaining companies on AIM that do not refer to the QCA Code it said many chose to issue ‘boilerplate’ statements saying that they do not follow a corporate governance code due to their size and stage of development, others followed the UK code or at least some aspects of it or the corporate governance code of their home country while small number followed other codes that were tailored to their sector.
The ACA said it would be updating its code in April this year with features including information on what good corporate governance is; the 10 corporate governance principles to follow and step-by-step guidance on how to effectively apply the principles within a company.