Your IndustryNov 7 2013

In the wrong place at the wrong time?

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A low share price, of course, could also have a more personal dimension on senior personnel than just the ramifications for acquisition or a sale, according to Philip Secrett, corporate finance partner for Grant Thornton’s capital markets team, as performance packages can often be predicated upon equity stakes in a firm, or future options on shares in it.

Having said this, with Aim’s regulatory model based on a ‘comply-or-explain’ option that lets listed companies either comply with the rules or explain why it has decided not to comply with them, the notion that such limited compliance would have such a major effect on the listing decision of most IFAs looks stretched, given that Aim had relatively few such rules, he added.

All the more so as, in any event, much of this reporting and regulatory burden is shouldered by the exchange-mandated issuer’s underwriter; the Nominated Adviser (Nomad), not to mention the requirement to have a stockbroker in place, and auditor, and a corporate lawyer.

Although the idea of Nomads has been criticised from some quarters as potentially creating a conflict of interest – as they are paid by the firms that they are supervising – Mr Secrett highlighted that it is very well understood by Nomads that their first duty is to the exchange, be it Aim or the LSE.

There is, though, a burden of associated costs, of course, that go along with this level of professional representation: a good Nomad could easily cost around £50,000 a year, as could a decent broker, while an auditing firm and a corporate law firm could end up charging much higher, depending on the degree of advice and work done.

There is also the issue of the amount of time that the senior executives will need to spend away from their company-centric duties, underlined Mr Secrett, not just for results announcements to the relevant shareholders and reporting bodies, but also for more ad-hoc announcements.

More specifically, following the introduction in February 2007 of Aim rule 26, every Aim company must from admission maintain a website on which a range of detailed information must be fully available free of charge, including: the number of Aim securities in issue (noting any held as treasury shares); the percentage of Aim securities not in public hands together with the identity and percentage holdings of its significant shareholders; and details of any restrictions on the transfer of its Aim securities.