Shaping the Future of AIM: Key Takeaways from London Stock Exchange’s Latest Discussion Paper

On 7 April 2025, London Stock Exchange published its “Shaping the Future of AIM” discussion paper, inviting all market participants to provide feedback on wide-ranging proposals that address both AIM Rule amendments and broader efforts to bolster liquidity, capital flows and investor engagement. The paper’s overarching goal is to ensure that AIM remains a premier global growth market for entrepreneurial, often founder-led companies, refining its regulatory model to balance innovation, proportionate disclosure and investor protection, while aligning with wider UK capital markets reforms.

The paper builds on ongoing reforms to the UK regulatory ecosystem, including the changes to the UK Listing Rules last year and the upcoming FCA reforms to the UK prospectus rules. Emphasis is placed on minimising execution costs, preserving core investor protections, and safeguarding AIM’s brand as a competitive marketplace for emerging businesses.

Flexible Regulation and Targeted Incentives

AIM’s foundations rest on proportionate regulation and carefully calibrated tax incentives such as EIS, VCT, ISA inclusion and Business Relief, which aim to lighten growth companies’ capital-raising burdens and encourage investment in smaller UK issuers. The paper acknowledges increasing compliance costs (particularly audit fees) and seeks input on whether such expenses, alongside existing disclosure obligations, remain appropriately balanced.

Key Proposals

1. Admission Documents
   
   Proposals include the option of a more streamlined or “simplified” admission document, featuring fewer repetitive disclosures and the possibility of incorporating already-public information (for example, Historical Financial Information, Articles of Association and Competent Person’s Reports) by reference. This approach could reduce the time and cost of listing on AIM by avoiding duplication of material already available in the public domain.
    
2. Working Capital Requirement
   
   Rather than mandating the traditional ‘clean’ working capital statement, AIM is exploring alternatives, including using the model currently applied to AIM Designated Market (ADM) applicants (i.e. a “no reason to believe” that the working capital available to it or its group will be insufficient for at least twelve months from the date of its admission statement). In certain cases, the paper even questions whether a  formal working capital statement is required provided investors receive prominent warnings of the associated risks.
    
3. Reverse Takeovers
   
   AIM is consulting on whether to relax the default requirement to produce an admission document for acquisitions that surpass a technical size threshold but do not essentially change the company’s business. Instead, a shorter schedule of disclosures could potentially suffice if the deal aligns with an already familiar direction of travel for the business and does not involve a “fundamental change” in existing business activities.
    
4. Related Party Transactions & Directors’ Remuneration
   
   In recognition of a founder-led environment, the paper investigates exempting certain transactions like shareholder-approved share schemes or routine board indemnities from the related-party rules. Additionally, it raises whether directors’ remuneration (especially for non-executives paid partly in equity) should be overseen primarily under a company’s chosen governance code, rather than automatically qualifying as a related-party transaction.
    
5. Second Lines of Securities and AIM Designated Market (“AMD”) Route
   
   i).  For second lines of securities, the paper proposes dispensing with the need for a full admission document where the issuer is already in full compliance with AIM’s ongoing obligations, thus lowering hurdles for those tapping additional financing structures.
   
   ii).  Meanwhile, AIM is also seeking to refine the ADM route, so applicants already admitted to a comparable market could more genuinely benefit from streamlined due diligence, rather than facing near-duplicate compliance processes. Expanding the existing list of eligible markets is also contemplated, along with reviewing the market capitalisation test of £20million. 
    
6. Other Areas (Class Tests, Accounting Standards, Dual-Class Shares).
   
   i).  The discussion paper contemplates harmonising the substantial transaction threshold with that of the Main Market (moving from 10% to 25%), which would reduce the volume of deals requiring separate AIM disclosure.
   
   ii).  Debate is open on whether more local accounting standards—beyond those currently permitted -should be accepted by AIM in order to reduce conversion costs and attract international issuers.
   
   iii).  Reflecting a founder-friendly outlook, the London Stock Exchange also proposes replicating dual-class share structures already allowed on the Main Market, giving founders of growth companies more scope to keep decisive control after admission.

Commentary

Overall, the discussion paper showcases AIM’s drive to maintain a delicate equilibrium: keeping regulation manageable for smaller growth companies, which often incur disproportionate compliance costs whilst ensuring investor protections remain in step with market expectations. It seeks to refresh the nominated adviser model and disclosure framework so that best practices in due diligence and corporate governance do not unduly inflate costs or deter listings.

In the context of the recent reforms to the UK Listing Rules, the AIM Rules have appeared comparatively burdensome. We will participate in the consultation, but broadly we welcome the proposals, as hopefully this will redress the balance and attract more growth companies to consider a listing on Aim, either as their long-term listing venue or as a stepping stone to a listing on the Main Market. 

What’s Next

The London Stock Exchange will accept responses to the discussion paper on or before 16 June 2025, after which any formal changes to AIM Rules will undergo a separate market consultation. While no immediate revisions take effect, these proposals signal potentially significant shifts in admission processes, disclosure practices and investor safeguards.

For any queries on the potential impact of these proposals or to discuss the implications for your business, please contact our London capital markets team.