‘Pendulum swung too far’: AIM hit with 222 delistings ahead of nomad changes
More than two hundred companies have been forced off London’s junior stock market over the last two decades after losing their corporate adviser in a move that has sparked a regulatory pullback by the London Stock Exchange.
Some 222 firms on the alternative investment market (AIM) market have de-listed in the last 20 years after the loss of their nominated adviser, which refers to firms approved by the London Bourse to act as the primary regulator for the small-cap firms.
Companies who lose their nomad are given 30 days to find another or face being delisted from AIM – an event that normally leads to a sharp fall in the value of the company’s shares.
Figures from accountancy firm UHY Hacker Young show just 23 nomads exist for AIM firms, compared to 30 in 2020 and 68 in 2009.
The firm pointed to an increased compliance burden on nomad firms as having driven the exodus, with the London Stock Exchange hitting the advisers with hefty fines for regulatory breaches from the clients they monitor.
In one of the most high-profile cases, City stockbroker Seymour Piece was hit with a £400,000 fine in 2011 for failures in its responsibilities to properly advise companies listed on the market. The figure was nearly double the previous highest fine ever levied by AIM at the time.
Colin Wright, chairman of the UHY Hacker Young Group: “The pendulum had swung too far in the direction of overregulation of AIM and the London Stock Exchange has started to fix that problem.”
London Stock Exchange shakes up rules for AIM nomads
The London Stock Exchange rolled out changes to the nomad regime on June 4, where it clarified the duties and responsibilities of the firms.
The re-freshed rules clarify nomads do not have the responsibility for ensuring an AIM company’s website has the correct information on it to comply with disclosure rules.
It is also not obliged to monitor online commentary about an AIM company taking place across chatrooms and blogs.
“Nomads play a really important role in marketing the concept of AIM to businesses so a bigger community of nomad firms should lead to more IPOs on AIM,” Wright said.
Last year, the City’s junior stock market turned 30 but did so with a backdrop of a series of bruising delistings.
Aberdeen projected the market would shrink by a fifth following a series of companies laying out plans to drop their listing.
Chancellor Rachel Reeves targeted AIM shares in her maiden budget, where she removed the inheritance tax exemption and reduced tax relief to 50 per cent. This effectively set the rate at 20 per cent with it set to kick in from April 2026.