UK: The London Stock Exchange Introduces New Rules to Allow Foreign Corporations Fast-Track Entrance to its Alternative Investment Market

Last Updated: 26 June 2003

Article by Keith Ott and Kevin Evans

The London Stock Exchange has recently introduced new rules that allow overseas companies that are already quoted on other major international markets to apply to join its junior market, AIM, without the need to issue a full prospectus or repeat the original initial public offering exercise in the United Kingdom. The changes offer the possibility of a secondary trading facility with a pragmatic regulatory environment at a fraction of the previous expense and time. To view the new rules in detail please visit:

The Alternative Investment Market ("AIM") of the London Stock Exchange ("LSE") is London’s junior equity market. It was established in 1995 and has been a big success attracting institutional and private funds into small and medium sized, often high growth, companies. By March 2003, more than 700 companies were quoted on AIM – more than are quoted on all the remaining European second-tier markets – and more than £8 billion in funds has been raised. In the last two years, 337 companies were admitted to trading on AIM.1 This number is set to rise as a consequence of the Deutsche Börse’s decision to wind up the Neuer Markt, AIM’s principal European rival during the late 1990s.

By contrast, there are approximately 3,750 Nasdaq-quoted companies down from a peak of approximately 5,500 in 1996. In the last two years, 670 companies were delisted from Nasdaq, and only 118 began trading on Nasdaq.2

To further promote the international potential of AIM, the LSE on 18 March 2003 published a consultation document setting out proposed changes to the AIM Rules.3 These proposed changes, which entered into force on 28 May 2003, give overseas companies that are quoted on another major international market designated by the LSE the ability to join AIM without the need to issue a full prospectus or repeat the expensive and time consuming due diligence process undertaken for the initial public offering in their home market. The new rules are expected to dramatically reduce the cost and time currently involved in securing a secondary trading facility.

In addition, the LSE is encouraging investment banks and other market practitioners in overseas markets to apply to AIM to be recognised as a "nominated adviser." Once granted, this should enable the process of admission to AIM to be handled entirely from an applicant’s local jurisdiction without the need to appoint an agent sponsor in the United Kingdom – again potentially saving on costs and inconvenience.

Joining AIM
Nominated Adviser
Each company has to appoint a nominated adviser, who could potentially be the applicant’s existing adviser in its local jurisdiction. The LSE publishes eligibility criteria for advisers looking to obtain LSE approval as nominated advisers.4 Typically, the large accounting firms and investment banks make up a large proportion of those on the register. As the criteria is based predominantly on relevant corporate finance experience, many US broker-dealer firms should be eligible to register as nominated advisers.

The nominated adviser will effectively be the market regulator. The LSE relies on the nominated adviser’s judgment as to the suitability of a company wishing to have its shares traded on AIM, and it is the responsibility of the nominated adviser to prepare or approve submissions to the LSE to join AIM and ensure that the company continues to act in an appropriate manner after its admission. The nominated adviser must be independent of the issuer.

Previous Admission Requirements for Overseas Companies
Prior to the introduction of the new rules, all new applicants, whether local or overseas, were required to publish an admission document complying with the contents requirements of the Public Offers of Securities Regulations 1995 (the "POS Regulations") and with the LSE’s AIM Rules, whether or not the application involved any marketing of securities.5

The admission document is considered an essential document to allow potential investors to make informed decisions about a company’s shares. Even if use is made of the exemptions available under the POS Regulations, for example where there is no "offer to the public in the United Kingdom", the document must still contain all those matters prescribed in Schedule 1 of the POS Regulations. Unless an exemption is used the document is referred to as a "prospectus"; otherwise, it is an "admission document." In practical terms it is a distinction without a difference: whether a "prospectus" or an "admission document," the content requirement is virtually identical.

Any prospectus/admission document must contain all such information as investors would reasonably require, and would expect to find, in order to make an informed assessment of assets and liabilities, financial position, profit and losses and the prospects of the issuer of the securities and the rights attaching to those securities. It is not uncommon to see AIM admission documents in excess of 100 pages in length.

The accuracy of the information will be the sole responsibility of the directors of the company. The LSE will not officially engage in a substantive review of the document, although the LSE will act as the competent authority for authorising omissions from a prospectus or admission document otherwise required by the POS Regulations. For example, a derogation from the strict disclosure requirements can be requested when a company wishes to avoid revealing confidential business information which could have an adverse impact if made public.

Each director will be asked to sign a responsibility statement authorising the issue of the document. This responsibility statement will be addressed not only to such director’s fellow directors, but also to the company’s nominated advisers.

The New Rules for Overseas Companies Already Listed on a Designated Market
In circumstances where a company is looking to achieve a secondary listing and not seeking to market further securities, the new rules do away with the need for an admission document.6

Overseas companies seeking to be admitted to trading on AIM are now required to provide two pre-admission announcements. The "10 Day Announcement," which is required for both overseas and domestic AIM applicants, is delivered to the LSE at least 10 business days before the expected date of admission to AIM and contains the information on the applicant listed below.

The "10 Day Announcement"

  • its name;
  • its country of incorporation;
  • its address;
  • a brief description of its business;
  • the number and type of securities in respect of which it seeks admission;
  • an indication of whether it will be raising capital on admission;
  • the full names and functions of its directors and proposed directors;
  • the name of any person who is interested in 3% or more of its securities;
  • details of non-trade related payments or benefits above £10,000 not otherwise disclosed;
  • its anticipated accounting reference date;
  • its expected admission date;
  • name and address of nominated adviser and broker.

In addition, and replacing the previous requirement to produce a lengthy admission document, quoted overseas applicants need to submit a "20 Day Announcement" which is delivered 20 business days before the expected date of admission to AIM, and which contains the information on the applicant listed below.

Table Two – the "20 Day Announcement"

  • the name of the designated market upon which its securities have been marketed;
  • the date from which its securities have been traded;
  • confirmation that it has adhered to the legal and regulatory requirements of the designated market;
  • details of intended strategy following admission;
  • description of any significant change in the financial or trading position which has occurred since the end of the last financial period for which audited annual report and accounts have been published;
  • a statement that its directors have no reason to believe that its working capital will be insufficient for at least 12 months;
  • details of any lock-in arrangements;
  • brief description for settling transactions in its securities;
  • the rights attaching to its securities;
  • information equivalent to that required for an admission document that is not currently public;
  • a website of a page containing its latest published annual report and accounts (prepared in accordance with UK or US GAAP or IAS) and which must not have been signed off more than nine months before the date of admission.

Both pre-admission announcements are short and simple documents prepared by the nominated adviser in a standard format; such documents tend to run to no more than 2 or 3 pages.

The simplified admission procedure will only be available to companies that are already quoted, and have been quoted for a minimum of 18 months, on other major international markets which are "designated" by the LSE. The following markets have been "designated":

  • Australian Stock Exchange
  • Euronext
  • Deutsche Börse
  • Johannesburg Stock Exchange
  • Nasdaq
  • New York Stock Exchange
  • Stockholmbörsen
  • Swiss Exchange
  • Toronto Stock Exchange
  • UK Listing Authority Official List ("Official List")

If a successful applicant subsequently ceases to retain its original listing then this would not affect its ongoing AIM quotation. For a company which may be faced with the prospect of de-listing where, for instance, its share price falls below a regulatory minimum (such as "penny stock" companies on Nasdaq), the proposed simplified admission procedure would enable a share trading facility to be preserved on a recognised international market and at a relatively low cost.

Continuing Obligations
The continuing obligations with which an AIM company is required to comply are similar to those of a company with a listing on the Official List. In addition to the overriding requirement to notify the LSE immediately of any developments which could have an impact on the share price, there are some more specific obligations, these include:

  • publishing unaudited half-yearly financial statements or reports;
  • publishing annual audited accounts prepared in accordance with United Kingdom or United States GAAP or International Accounting Standards;
  • notifying the LSE of details of changes in the shareholdings of directors and individuals connected with the company or significant shareholders; directors joining or leaving the board; further issues of shares of a class already admitted to AIM; and information on dividends or other distributions;
  • notifying the LSE of the resignation, dismissal or appointment of a nominated adviser or nominated broker;
  • notifying the LSE of certain acquisitions, although shareholder consent is only required in the event of a reverse takeover.

1 AIM Market Statistics April 2003,
2 Nasdaq Market Data May 2003,
3 Details of the proposed changes can be found at
4 Details of the nominated adviser criteria can be found at
5 A copy of the LSE’s AIM Rules (revised on 28 May 2003) can be found at A copy of the Public Offers of Securities Regulations 1995 (SI 1995 No.1537) can be found at
6 The new rules now treat overseas quoted companies in the same way that companies already quoted on the UK Listing Authority’s Official List are treated.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.