AIM companies to be required to apply a recognised corporate governance code

The London Stock Exchange has announced that all AIM companies will be required to apply a recognised corporate governance code from 28th September 2018.

Until now, AIM companies have had the choice of stating which corporate governance code they followed, or stating they did not follow a code and setting out their own approach. It will no longer be compliant to not follow a code and from 28 September 2018, AIM companies will be required to follow a recognised corporate governance code on a “comply or explain” basis.

This a material change from the current position under AIM and companies will be required to disclose details of the recognised corporate governance code that the board has decided to apply, 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 in each case.

The two codes which AIM companies are most likely to apply are the QCA Corporate Governance Code, which was updated on 25 April 2018, and the UK Corporate Governance Code, which is expected to be updated later this year.

To demonstrate compliance with a recognised corporate governance code will mean consideration being made by boards and companies of matters such as:

  • strategy and business model
  • shareholder needs and expectations
  • wider stakeholder and social responsibilities
  • effective risk management
  • maintaining a well-functioning board
  • directors’ experience, skills and capabilities
  • board evaluation
  • corporate culture
  • governance structures
  • communications with shareholders and stakeholders

MSP has significant corporate governance expertise and is assisting a number of AIM companies in their adoption of the QCA Code and the UK Corporate Governance Code. Mindful of our clients’ way of doing business we adopt a sound and pragmatic approach that ensures the full benefit of governance adoption are realised without stifling the entrepreneurial spirit in which the company was created.

For a free consultation and further details on how we can help you as an AIM company in corporate governance matters or generally please contact Ian Farrelly, Director of Legal & Company Secretarial Services at ianf@mspsecretaries.co.uk or on 0207 637 5216.