MiFID II came into force on 3 January 2018. Among other things, this EU directive establishes the SME Growth Market concept. The European Commission hopes that this new market classification which will allow growth markets across the European Union to benefit from a more flexible regulatory environment.
The objectives of SME Growth Markets are to raise the visibility of these growth markets, reduce the administrative burdens for growing companies when they either seek to float, or maintain a listing on a growth market, and increase the incentives for small and mid-size companies to access capital markets to finance their growth and development.
The London Stock Exchange has confirmed that AIM became an SME Growth Market on 3 January 2018. This means that AIM companies will be able to benefit from certain exemptions from current and future legislation passed at the EU level.
At the current time, exemptions lie within the Market Abuse Regulation. However, the European Commission is currently consulting on other ways it can cut red tape to encourage smaller companies to list their shares on SME Growth Markets.
Market Abuse Regulation
Since the regulation came into force on 3 July 2016, AIM companies had been required to maintain full insider lists. With AIM’s new status as an SME Growth Market, they are now exempt from these requirements under Article 18.
However, these exemptions are only available if a company is still:
- Able to provide, subject to an FCA request, a reduced content insider list containing both their insiders’ date of birth (where there is no national ID number like in the UK) and the personal full home address and personal telephone number (but only if the company possesses this information at the time of the FCA’s request); and
- Able to ensure that all individuals with access to inside information acknowledges the legal and regulatory duties entailed and is aware of the relevant sanctions.
AIM companies required to keep certain aspects of corporate governance information on their website for five years
- Furthermore, as a result of AIM becoming an SME Growth Market, London Stock Exchange confirmed a number of minor changes to AIM Rule 26 of the AIM Rules for Companies.
- AIM companies must now ensure that the following pieces of information remain on a company’s website for at least five years after publication:
- Annual financial reports and half yearly financial reports under AIM Rules 18 and 19;
- Regulatory notifications made public containing inside information for the purposes of the Market Abuse Regulation; and
- Any prospectus.