Junior market detractors should AIM criticisms elsewhere

Fieldfisher head of equity capital markets Neil Matthews' letter responding to points raised in the Sunday Times' 6 January article "Junior market AIM wrestles with reputation for blow-ups" was published here on 13 January 2018.

The full version of the letter sent to the Sunday Times can be read below.

Junior market detractors should AIM criticisms elsewhere

Dear Sir,

I write in response to the article "Junior market AIM wrestles with reputation for blow-ups", published on 6 January.

The criticism that AIM regulation is cavalier is both familiar and tedious to those of us who have long been advising companies on this market.

Mr Evans makes the point that AIM's listing requirements are "laissez faire", while one of his interviewees goes so far as to suggest there is a "chasm" between the requirements for floating on AIM and those for a Main Market listing.

Just because the rule book for AIM is shorter, does not mean that the regulations are less onerous – the rules are, in fact, extremely wide in scope and carefully drafted to protect the market while reflecting the nature of emerging or smaller businesses.

The article acknowledges the welcome change last year to corporate governance requirements for AIM-listed companies, but fails to mention the introduction, also last year, of an early notification form for companies intending to float on AIM to allow the LSE further time to make enquiries as to applicants' suitability for admission to AIM. 

Without AIM, early-stage businesses would have no choice but to resort to alternative growth funding such as venture capital – a sector where the failure rate is undoubtedly far higher than the 1.7% recorded by AIM in 2018.

The "sneering" which Mr Evans twice refers to accurately describes the resentment felt by other jurisdictions, such as the US, which lack an equivalent to the AIM market and therefore have to rely on other forms of difficult to secure growth funding.

As UHY Hacker Young, the authors of the analysis referred to in the article, point out, the growth nature of many AIM companies means they can be financially weaker than established companies and therefore find it much harder to raise money from investors made cautious by the global stock market sell off and associated volatility in the final quarter of last year.

However, this is as a result of the current macroeconomic climate rather than a systemic failure of regulation.

I have no doubt that the AIM rules will continue to be regularly updated to keep pace with the evolution of this dynamic and extremely important growth market.

Yours faithfully,

Neil Matthews, Partner

Fieldfisher LLP

2 Swan Lane

London

EC4R 3TT