Nominated Advisers & Brokers On AIM

Criteria for being a nominated adviser:

General

The eligibility criteria are the requirements that an applicant must satisfy before the Exchange will consider approving it as a nominated adviser. The eligibility criteria are in addition to any legal or regulatory authorisation required by an applicant in any jurisdiction in which it operates. The Exchange is able to exercise discretion as to the application and interpretation of the eligibility criteria, as it thinks fit.

An applicant will not necessarily be approved even if it satisfies the eligibility criteria and there is no right to be granted, or retain, the status of a nominated adviser. When deciding whether or not an applicant should be approved as a nominated adviser, the Exchange’s overriding consideration will be the preservation of the reputation and/or integrity of AIM (including the regulatory obligations of the Exchange as a Recognised Investment Exchange under the FSMA Recognition Requirements). Accordingly, the Exchange reserves the right to decline an application or impose conditions on approval as the Exchange thinks fit in its discretion, notwithstanding that an applicant otherwise satisfies the eligibility criteria.

Criteria for being a nominated adviser:

Criteria

An entity seeking approval as a nominated adviser must:

• be a firm or company (individuals are not eligible);
• have practised corporate finance for at least the last two years;
• have acted on at least three Relevant Transactions during that two-year period;
• employ at least four Qualified Executives and in this regard the Exchange will take in to account the overall experience of the Qualified Executives on an individual basis and as a team; and
• evidence to the satisfaction of the Exchange that the applicant: is capable of being effectively supervised by the Exchange; has appropriate financial and non-financial resources; and is able to comply with rules 23 to 25.

The Exchange may, at its sole discretion, waive the requirement for the applicant firm to have a two-year track record and/or three Relevant Transactions where it determines that the applicant has highly experienced Qualified Executives and pursuant to rule 27(b) the Exchange may impose restrictions or limitations on the services a firm can provide at the time of granting a nominated adviser’s approval or subsequently.

The requirement to practise corporate finance means that the entity (or in some cases a separate division of it) should have practised as its principal business the provision of corporate finance advice, such as advising on public market fundraisings. This should be distinguished from the provision of legal advice or accounting services in relation to corporate finance transactions, which would not qualify for the purposes of this rule.

Criteria for being a nominated adviser:

Overriding principle of the preservation of the reputation and/or integrity of AIM

The Exchange will consider all of the circumstances, including whether the approval of an applicant or a Qualified Executive might be detrimental to the reputation and/or integrity of AIM.

In considering whether an applicant might be detrimental to the reputation and/or integrity of AIM, the Exchange will examine matters including:

• whether the applicant is appropriately authorised and regulated and the applicant’s standing with its regulators;
• the applicant’s general reputation and financial standing;
• whether the applicant or its executives are, and/or have in the past been, the subject of any investigation, disciplinary action, criminal proceedings, conviction or finding of breaches of regulatory duties (including the subject-matter and seriousness of such matters); and
• insofar as is relevant, the commercial and regulatory performance of its clients to whom it has given corporate finance advice.

Even if an applicant otherwise meets the other eligibility criteria, if the Exchange considers that an applicant, any shareholder of an applicant, or any officer of the applicant might be detrimental to the reputation and/or integrity of AIM, this is likely to be treated as a basis for declining the application.

Criteria for being a nominated adviser:

Qualified Executives

A Qualified Executive is a full-time employee of an applicant (or nominated adviser in relation to continuing eligibility), who can demonstrate a sound understanding of the UK corporate finance market and AIM in particular, and who satisfies one of the following:

• in respect of a person applying to be approved as a Qualified Executive has acted in a corporate finance advisory role, for at least the last three years and who has acted in a lead corporate finance role on at least three Relevant Transactions in that three-year period; or
• in respect of an existing Qualified Executive who was approved as a Qualified Executive within the last five years, and has been a Qualified Executive on a continuous basis within that period, has acted in a lead corporate finance role on at least three Relevant Transactions within the last five years; or
• in respect of an existing Qualified Executive who has been approved as a Qualified Executive for five or more years on a continuous basis, has acted in a lead corporate finance role on at least one Relevant Transaction in the last five-year period and can demonstrate to the satisfaction of the Exchange that they are involved in an active capacity in the provision of corporate finance advisory work, and in relation to AIM in particular.

An individual will not be considered for approval as a Qualified Executive by the Exchange (or be eligible to be a Qualified Executive on a continuing basis) where that person has been subject to disciplinary action or similar by a regulator or law enforcement agency in the context of financial services, corporate finance or similar or has any unspent convictions in relation to indictable offences.

As part of the Qualified Executive approval process, the Exchange reserves the right to conduct interviews in order to assess the competence and suitability of the individual. If, as a result of any interview which it conducts, the Exchange considers that the individual has an inadequate understanding of corporate finance, market practice, the legal or regulatory framework for corporate finance or these rules and the AIM Rules for Companies, it will not approve the individual as a Qualified Executive. Accordingly, the Exchange reserves the right to decline an application for Qualified Executive status notwithstanding that an individual otherwise meets the requirements set out in this rule.

Qualified Executive status is a designation which is granted to a nominated adviser firm denoting those individuals within the firm who are authorised by the Exchange to lead AIM Rules for Companies advice for that nominated adviser. Accordingly, Qualified Executive status is not an individual status or qualification. A nominated adviser is responsible for the conduct of a Qualified Executive in the respect of its obligations and responsibilities as a nominated adviser.

Criteria for being a nominated adviser:

Relevant Transactions

A Relevant Transaction is:

• a transaction requiring a Prospectus or equivalent in any EEA country; or
• a transaction involving acting for the offeror on the take-over of a public company within an EEA country which requires the publication of an offer document (or similar document where it is being effected by a scheme of arrangement);

in each above case in respect of shares quoted on a regulated market (as defined by the Market in Financial Instruments Directive (2014/65/EU), as amended from time to time); or

• in the case of a proposed or current Qualified Executive, or in relation to the continuing eligibility a nominated adviser, a transaction requiring the publication of an admission document where he or she has been employed by the acting nominated adviser.

The Exchange will at its discretion consider similar initial public offerings or other major corporate transactions for publicly quoted companies on major stock exchanges (including mergers and acquisitions requiring the publication of a public document) whether within an EEA country or elsewhere in the world.

The Exchange will generally not consider a transaction as a Relevant Transaction unless the applicant or employee (or nominated adviser in relation to continuing eligibility) acted as a lead corporate financial adviser and was (in the case of an applicant or nominated adviser) named prominently and unequivocally as such in the public documentation pertaining to that transaction. Copies of this public documentation must be included with the application to become a nominated adviser.

Where an applicant has acted as lead financial adviser on one of the above transactions but was not, for example, the UK Official List sponsor or nominated adviser, the Exchange will take into account whether the activities conducted by the applicant in relation to such transaction(s) are similar to those set out in Schedule Three to these rules.

Both a proposed Qualified Executive and an existing Qualified Executive may cite the same Relevant Transaction if they have each been involved to an appropriate extent.

Criteria for being a nominated adviser:

Fees

At the same time that any application form is submitted, the applicant must submit the requisite fee to the Exchange in order for its application to be processed.

This fee is non-refundable whether or not the applicant is subsequently approved as a nominated adviser except in the circumstances in which an application is withdrawn prior to gazetting (see rule 9 below) where half the application fee will be refunded.

The application fee is in addition to the annual fee which is payable upon approval as a nominated adviser, and subsequently, at the rates set out in and in accordance with the ‘AIM Fees for Companies and Nominated Advisers’ as published by the Exchange from time to time.

In order to remain eligible, a nominated adviser must pay the annual fees as soon as such payment becomes due.

Process for becoming a nominated adviser:

Application forms and documentation

An applicant seeking approval as a nominated adviser must complete and submit to the Exchange the following (all of which are available at www.londonstockexchange.com/aim):

• Form NA1;
• Form NA2 in respect of each proposed Qualified Executive (a minimum of 4 will therefore be required);
• all supporting documentation requested within the above Forms (and in particular at the beginning of Form NA1); and
• a cheque made payable to London Stock Exchange plc in respect of the application fee payable (the current fee is set out in the publication entitled ‘AIM Fees for Companies and Nominated Advisers’ as published by the Exchange from time to time).

The Exchange reserves the right to request any other information, documentation or confirmations from the applicant or other persons as it might require in order to consider or progress an application.

Upon receipt of the above information the Exchange will indicate to the applicant the likely time period required to process and consider the application.

Process for becoming a nominated adviser:

Interview

The Exchange may conduct interviews of some or all of the proposed Qualified Executives put forward by an applicant to ensure that they have sufficient understanding of corporate finance, market practice and the legal or regulatory framework for corporate finance (including these rules and the AIM Rules for Companies). Such interviews will be conducted either at the Exchange or at the applicant’s premises. Costs incurred by the Exchange (for example accommodation and travel) in visiting the applicant’s premises will be reimbursed by the applicant.

Process for becoming a nominated adviser:

Gazetting

At least fourteen days before the Exchange determines whether to approve an applicant, it will notify the applicant’s name and its proposed Qualified Executives together with any other information the Exchange thinks necessary in order to give public notice of the application and to invite comment from market participants.

In addition, where an applicant operates mainly outside the United Kingdom, at least fourteen days before it makes its decision, the Exchange may issue a newspaper advertisement in a leading domestic financial newspaper(s) in the jurisdiction in which the applicant is registered or in which it operates stating the same information and inviting any objections.

The Exchange will take into account any comments which it receives as a result of the above gazetting process when considering whether to approve the application.

Where an application does not proceed to the gazetting stage, the Exchange will refund half of the application fee.

Process for becoming a nominated adviser:

Appeals

An applicant will be informed privately, in writing (including by email), of the decision of the Exchange concerning whether to approve the applicant or not as a nominated adviser.

If an applicant is approved, the Exchange will include with its written decision a list of the nominated adviser’s employees which it has accepted as Qualified Executives.

Any such decision of the Exchange may be appealed by an applicant (but not an individual) as a non-disciplinary appeal in accordance with the Disciplinary Procedures and Appeals Handbook.

Continuing eligibility for nominated advisers and notification requirements:

Continuing eligibility

A nominated adviser and each Qualified Executive of a nominated adviser, once approved, must satisfy the eligibility criteria on a continuing basis at all times as if it/he/she were a new applicant.

A nominated adviser must regularly consider whether it and its Qualified Executives continue to meet the eligibility criteria. If at any time a nominated adviser believes it or a Qualified Executive(s) might not satisfy these requirements, it must inform AIM Regulation forthwith.

The Exchange may at any time request any information from a nominated adviser and/or a Qualified Executive it requires, including submission of all or any of the forms and documentation set out at rule 7, in order for it to consider and determine whether a nominated adviser is still eligible.

The Exchange may at any time conduct interviews and/or tests of the nominated adviser and its Qualified Executives in order to ensure that it has maintained an understanding of corporate finance and these rules and the AIM Rules for Companies. The provisions of rule 8 in relation to interviews will apply as appropriate.

If the Exchange finds that a nominated adviser has fallen below the eligibility criteria or a Qualified Executive no longer fulfils the requirements of rule 4, the Exchange may remove nominated adviser or Qualified Executive status or impose conditions on the nominated adviser’s ability to act as a nominated adviser (including those set out in rule 27 and/or the imposition of a moratorium pursuant to rule 31). Any such decision of the Exchange may be appealed by such nominated adviser (but not an individual) as a non-disciplinary appeal in accordance with the Disciplinary Procedures and Appeals Handbook.

Continuing eligibility for nominated advisers and notification requirements:

Changes at a nominated adviser

A nominated adviser must inform AIM Regulation as soon as possible (by telephone and by email) of any matters that may affect its operation, role or performance as a nominated adviser. Such notifications include (but are not limited to):

• any proposed changes to its name, its address or places of business;
• the commencement of an investigation by any other regulatory body or law enforcement authority in any jurisdiction which relates to the conduct of the nominated adviser;
• the commencement of any disciplinary action or criminal proceedings which relate to the conduct of the nominated adviser and/or any of its employees relevant to the work undertaken by the nominated adviser;
• the receipt of any conviction or finding of breach of duties to which the nominated adviser and any of its employees was subject, or any formal warning or disciplinary communication from any other regulatory body or law enforcement authority;
• any material adverse change in its financial or operating position that may affect its ability to act as a nominated adviser;
• as soon as any decision is made to consult, engage or appoint an administrator(s) or similar practitioners;
• any potential changes to the structuring or organisation of the directors, partners or employees which impacts the nominated adviser services provided by the firm. Such changes include (without limitation) the notice of resignation of a Qualified Executive, Head of Corporate Finance or relevant compliance officer; or
• any proposed change of control of the nominated adviser which is reasonably likely.

Should the Exchange deem a change of control to have occurred, a new application for nominated adviser status will be required, including the payment of the associated application fee. For the avoidance of doubt, the Exchange will consider the new controller when determining eligibility of the nominated adviser, in particular the ability of the new controller to satisfy the eligibility criteria in its own right.

Continuing eligibility for nominated advisers and notification requirements:

Departing or new Qualified Executives

If a Qualified Executive leaves the full-time employ or ceases to work in the corporate finance team of a nominated adviser for whom he/she was a Qualified Executive, the nominated adviser must inform the Exchange by submission of a Form NA3.

On leaving the full-time employ or ceasing to work in the corporate finance team of a nominated adviser, a person who was a Qualified Executive will no longer be a Qualified Executive under these rules. However, if he/she joins another nominated adviser, that firm can submit a Form NA2 to apply for approval of that person as a Qualified Executive of that nominated adviser. The Exchange may, at its discretion, waive the requirement to submit a Form NA2 on submission by a person who was (until very recently) previously approved as a Qualified Executive.

A nominated adviser can submit at any time a Form NA2 in respect of any employee who it proposes be approved as a Qualified Executive.

General Obligations:

Appropriateness of an AIM company

The nominated adviser to an AIM company is responsible to the Exchange for assessing the appropriateness of an applicant for AIM, or an existing AIM company when appointed as its nominated adviser.

Where a nominated adviser believes that an AIM company for which it acts as nominated adviser is no longer appropriate for AIM it must contact AIM Regulation.

General Obligations:

Compliance with the rules

• A nominated adviser shall be bound by and observe:
• these rules and the AIM Rules for Companies, including any guidance notes issued by the Exchange;
• any rules and procedures set out in any supplementary documentation issued by the Exchange under these rules;
• the provisions of any notices issued by the Exchange; and
• any requirement, decision or direction of the Exchange. Each nominated adviser should nominate a person within its firm to act as the Exchange’s principal contact on compliance matters.

That person should be a senior person within the firm’s compliance function or its corporate finance team.

General Obligations:

Due skill and care

A nominated adviser must act with due skill and care at all times.

Nominated adviser responsibilities:

Advising and guiding an AIM company

The nominated adviser is responsible to the Exchange for advising and guiding an AIM company on its responsibilities under the AIM Rules for Companies both in respect of its admission and its continuing obligations on an ongoing basis. A nominated adviser must be available to advise and guide AIM companies for which it acts at all times.

A nominated adviser should allocate at least two appropriately qualified staff to be responsible for each AIM company for which the nominated adviser acts in that capacity, including at least one Qualified Executive, in order to ensure an appropriate corporate finance contact with knowledge of the AIM company is available at all times.

Nominated adviser responsibilities:

Nominated adviser responsibilities

In deciding whether a nominated adviser has complied with these rules and the undertakings it has provided to the Exchange in its nominated adviser’s declaration, the Exchange will have regard to the matters set out in Schedule Three, which should be exercised with due skill and care and after due and careful enquiry.

Information obligations:

Liaison with the Exchange

A nominated adviser must provide the Exchange with any information, in such form and within such time limits as the Exchange may reasonably require. A nominated adviser should reasonably satisfy itself that all such information provided by it is correct, complete and not misleading and, if it comes to the subsequent attention of the nominated adviser that the information provided does not meet this requirement, the nominated adviser should advise the Exchange as soon as practicable.

A nominated adviser must liaise (and be available to liaise) with the Exchange when requested to do so by the Exchange or an AIM company for which it acts and should be contactable at all times, in particular during the Exchange’s market hours.

A nominated adviser must, at the earliest opportunity, seek the advice of the Exchange (via AIM Regulation) in any situation where it is unsure as to the application or interpretation of these rules or the AIM Rules for Companies or it has a concern about the reputation and/or integrity of AIM. It should be noted that on detailed or specific regulatory matters the Exchange will not liaise with nominated advisers (or AIM companies or other advisers) on a ‘no-names’ basis.

A nominated adviser should advise the Exchange as soon as practicable if it believes that it or an AIM company has breached the AIM Rules for Companies or these rules.

All communications between the Exchange and a nominated adviser are confidential to the Exchange and should not be disclosed, except as required by any other regulatory or statutory body. Such communications can be disclosed to appropriate advisers to the nominated adviser or to the relevant AIM company, unless the Exchange states otherwise.

Information obligations:

Becoming or ceasing to be nominated adviser to an AIM company

A nominated adviser must submit to the Exchange a completed nominated adviser’s declaration in relation to any applicant seeking admission (in accordance with the AIM Rules for Companies) or where that nominated adviser becomes nominated adviser to an existing AIM company.

Where a nominated adviser ceases to act for an AIM company, it must inform AIM Regulation as soon as possible (by email) and must include with that notification the reason why it has ceased to act.

Independence and conflicts:

Independence on a continuing basis

A nominated adviser must be able to demonstrate to the Exchange that both it and its executives are independent from the AIM companies for which it acts such that there is no reasonable basis for impugning the nominated adviser’s independence.

Where the Exchange requires a nominated adviser to demonstrate clearly that neither its independence nor that of any of its executives has or will be compromised by any potential conflict of interest, the burden of proof will be upon the nominated adviser.

In cases of doubt about its independence a nominated adviser should consult the Exchange in advance of entering into any arrangements.

Schedule One sets out further rules in relation to the independence of a nominated adviser.

Independence and conflicts:

Conflicts of interest

A nominated adviser must not have, and must take care to avoid, the semblance of a conflict between the interests of the AIM companies for which it acts and those of any other party.

In particular, a nominated adviser must not act for any other party to a transaction or take-over other than its AIM company client.

Procedures, staff and records:

Proper procedures

A nominated adviser must ensure that it maintains procedures, systems and controls which are sufficient for it to discharge its ongoing obligations under these rules. The nominated adviser should ensure that its compliance and procedures manual (or similar) reflects and takes account of the requirements of these rules, as appropriate.

In particular, it must ensure that any members of staff who are not approved as Qualified Executives are properly supervised by a Qualified Executive at all appropriate times in relation to matters relating to AIM companies.

Procedures, staff and records:

Adequacy of Staff

A nominated adviser must ensure that it has sufficient Qualified Executives (and other corporate finance staff) to discharge its obligations as a nominated adviser under these rules at all times. In assessing whether a nominated adviser has sufficient staff under these rules, the Exchange will have regard to the number and type of AIM companies for which the firm acts, and the experience in relevant corporate finance matters of the corporate finance team as a whole.

Procedures, staff and records:

Maintenance of appropriate records

A nominated adviser must retain sufficient records to maintain an audit trail of the key discussions it holds with, advice which it has given to, and the key decisions it has made in respect of, the AIM companies for which it acts as nominated adviser. A nominated adviser should ensure that it is able (including by keeping appropriate records) to demonstrate the basis for advice given and key decisions taken, such as internal considerations and any actions taken prior to the advice being given. Such records must be retained whilst a firm is nominated adviser to a company and for at least three years after it ceases to be nominated adviser.

When performing a review of a nominated adviser, the Exchange will look for clear evidence that at least those matters set out in Schedule Three have been considered and that appropriate actions have been taken in order to ensure compliance with these rules and the AIM Rules for Companies.

Review of nominated advisers

A nominated adviser may be subject to a formal review by the Exchange to ensure that it has fully discharged its responsibilities under these rules and the AIM Rules for Companies. A nominated adviser must ensure that its Qualified Executives co-operate fully with the Exchange and that the Qualified Executive who was responsible for a transaction is available to answer any questions by the Exchange about any relevant matter.

A nominated adviser must allow Exchange officers access to its records (hard and electronic copies) and business premises when so requested by the Exchange.

Other supervisory powers

The Exchange may take any of the following actions in respect of a nominated adviser’s performance:

• a) require remedial action to be undertaken within the nominated adviser, including directing (pursuant to rule 15) that the nominated adviser take specific steps, such as the employment of additional staff.
• b) impose restrictions or limitations on the services a nominated adviser can provide taking into account: (i) the nominated adviser’s experience and expertise of providing certain types of nominated adviser responsibilities to certain types of companies; and/or (ii) the nominated adviser’s procedures, systems and controls in place taking into account the nature of the services it is undertaking or proposing to undertake.
• c) should the Exchange become concerned about the conduct, competency and/or suitability of a Qualified Executive it may review the ongoing eligibility of such Qualified Executive, including as part of a review of a nominated adviser under rule 26 and may require certain actions or restrictions in relation to that Qualified Executive and/or suspend a Qualified Executive’s approval, for such a time that it considers appropriate.

In relation to (b) above the Exchange may make public these actions by way of an AIM notice published by RNS and/or mark the register accordingly.

The Exchange may take an action(s) under rules 28, 29 and/or 31 regardless of whether or not it has previously undertaken any steps under rules 26 or 27.

Removal of Qualified Executives

The Exchange may remove the Qualified Executive status of an employee of a nominated adviser where that employee is subject to bankruptcy, disciplinary action by another regulator, mentally incapacitated or has been shown by a formal review by the Exchange of the nominated adviser or otherwise to have failed to act with due skill and care or in accordance with these rules or the AIM Rules for Companies in relation to his/her employer’s role as a nominated adviser.

Disciplinary action against a nominated adviser

If the Exchange (in accordance with the procedures set out in the Disciplinary Procedures and Appeals Handbook) considers that a nominated adviser is either in breach of its responsibilities under these rules or the AIM Rules for Companies or that the reputation and/or integrity of AIM has been or may be impaired as a result of its conduct or judgment, the Exchange may in relation to such nominated adviser take one or more of the following actions:

• issue a warning notice;
• levy a fine;
• issue a censure; or
• remove the nominated adviser from the register; and
• publish the action the Exchange has taken and the reasons for that action.

Jurisdiction

When a nominated adviser is removed from the register, the Exchange retains jurisdiction over the nominated adviser for the purposes of conducting an investigation or taking disciplinary action in relation to breaches or suspected breaches of these rules whilst it was approved as a nominated adviser.

Moratorium on acting for further AIM companies

The Exchange may prevent a nominated adviser from acting as a nominated adviser to any additional AIM companies where, in the opinion of the Exchange, a nominated adviser:

• no longer meets the eligibility criteria or it is not meeting its responsibilities under these rules;
• the Exchange has reasonable concerns that a nominated adviser’s procedures, systems and controls are not appropriate to support the nominated adviser services;
• it has insufficient staffing levels pursuant to rule 24 of these rules;
• there is an unplanned, temporary or permanent loss of appropriately experienced member(s) of staff;
• it is the subject of disciplinary action by the Exchange;
• if there is a reasonable likelihood of a change of control or there has been a change in its financial position or operating position that may affect its ability to act as a nominated adviser.

A moratorium on acting for additional AIM companies will remain until that situation is resolved to the Exchange’s satisfaction.

The Exchange may make the imposition of any moratorium public by way of an AIM notice published by RNS and/or marking the register accordingly.

Appeals by nominated advisers

Where the Exchange takes any steps against a nominated adviser or a Qualified Executive pursuant to these rules, any decision of the Exchange in relation to these rules or the AIM Rules for Companies in respect of a nominated adviser may be appealed by that nominated adviser in accordance with the procedures set out in the Disciplinary Procedures and Appeals Handbook.

Publication of the removal of nominated adviser status

Where the Exchange removes nominated adviser status (for example, due to disciplinary action or it failing to continue to meet the eligibility criteria set out in Part One of these rules) or where a nominated adviser requests to have that status removed, the Exchange will notify such removal by way of an AIM notice published on RNS and/or mark the register accordingly.