On September 24, 2015 AIM Regulation published guidance on AIM company disclosures relating to equity financing products involving AIM securities and in which an AIM company or its directors may have an interest. Examples given by way of illustration include equity financing facilities, equity swap facilities, and crowd-funding type products.
Complexity and non-standard terms:
AIM Regulation notes that the structure of any such facilities, including any non-standard terms, should be carefully analysed by AIM companies and their Nominated Advisers when considering disclosure requirements in order to ensure that sufficient information is disclosed to give a proper understanding to investors. This may require the provision of more detail than announcements in respect of more commonly used forms of financing and in all cases the disclosure should properly reflect the substance of the transaction.
Disclosure of Directors’ share dealings:
In addition to equity financing arrangements available to AIM companies, AIM Regulation notes that products are available to Directors of AIM companies that enable them to use their holding in the company as a means of personal financing (for example, share sale and repurchase agreements). Careful consideration should be given to the consequences of these agreements, particularly in relation to the requirement to disclose Directors’ dealings under the AIM Rules. Taking into account the broad definition of “deal” in the AIM Rules, the nature of any Directors’ dealings arrangements should be clearly and fully disclosed, generally at the time the transfer of an interest becomes binding. AIM companies should also make appropriate updates where there are subsequent changes (for example, if there are changes to a Director’s previously stated intentions or a margin call is not met).
Systems and controls for disclosure:
In respect of Directors’ personal deals, as the company is often not a party to these equity financing arrangements, an AIM company’s agreements with its Directors should ensure it can obtain all information that it will need from the Directors in order to comply with the obligation to notify Directors’ dealings under the AIM Rules.
Consideration should be given as to who within the AIM company is best placed to be involved in preparing notifications to the market where key executive directors, or a number of directors, are involved in equity financing arrangements.
AIM companies should consult with their Nominated Adviser at the earliest opportunity about the proper disclosure of these types of arrangements and Nominated Advisers should consult with AIM Regulation if they are in any doubt as to the disclosure requirements.
(AIM Regulation, Inside AIM: AIM Company Disclosures relating to Equity Financing Products, 24.09.15)