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Aim reform campaign ‘misses point’ about market

Aim reform campaign ‘misses point’ about market

A partner at a UK accounting firm has disputed whether Sharesoc’s demands to revamp the Aim market would be compatible with market-based investment.

Yesterday (8 June) Sharesoc – an organisation supporting shareholders – launched a campaign pledging for reform of the Aim market.

Sharesoc wants the London Stock Exchange - which manages the Aim - to ensure it does not list firms which have a high potential for failure to reduce the likelihood of investors losing money.

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Some recommendations included improving enforcement of Aim regulations, introducing a corporate governance code similar to the main market, and ensuring an independent panel vets new listings.

However, Robin Stevens, corporate finance partner at Crowe Clark Whitehill, said the nature and stage of development of many Aim companies means they could not have a corporate and governance infrastructure equivalent to a main market company.

He said Aim companies already have governance procedures which are appropriate to their size and structure, and claimed they often have the flexibility and “entrepreneurial drive” to adapt to market changes faster and more effectively than larger competitors.

In its campaign, Sharesoc pointed to figures which revealed only a third of the firms which joined the Aim when it launched 20 years ago are still listed, with some going under.

However, Mr Stevens - who is also the head of the auditing firm’s capital markets - said: “Companies will fail, or withdraw from the market for reasons other than going bust.

“That is the very nature of an uncertain business world, where the future is full of projections not facts.”

He also said the failure rate of Aim companies is “extremely low” and claimed new entrants are well governed, with the good value ones attracting institutional investors.

But one area Mr Stevens suggested could be improved would be clarification around the proportion and geographic spread of “free-float” expected.

He also said Aim should be seen as a stock-pickers market, and private investors should be able to make informed investment decisions by comparing alternative investments in the sector.

“Aim is not a market for investors driven by indices or a roll of the dice approach,” he added.

“Sharesoc’s wish to avoid investors losing money, while laudable, is not compatible with a logical assessment of any capital market-based investment.

“If you take away risk you significantly reduce return and if that’s what individual investors want then perhaps the purchase of Premium Bonds, or a secure mattress, would be a better option.” ‎

Earlier this year, the London Stock Exchange (LSE) Group announced it was planning to merge with German exchange Deutsche Börse, which is the third merger attempt in 16 years.

katherine.denham@ft.com