AIM-listed companies will be required to adopt recognised corporate governance code
AIM has proposed changes to AIM Rule 26 which will require AIM-listed companies to adopt a recognised corporate governance code from 28 September 2018.
Why does it matter?
Currently, AIM companies are required to set out the corporate governance code they adhere to and detail how they comply. If no actual code has been adopted, there should be a statement to this effect and the company’s corporate governance arrangements should be disclosed. However, under the new Rule 26, each AIM company will be expected to choose a recognised corporate governance code and publish on its website the following information:
- the recognised corporate governance code it has applied
- how the company complies with that code, and
- an explanation for any departures the company makes from its recognised code.
This is likely to require an audit of the AIM company against its chosen recognised code to identify any departures and to inform the explanations for any such departures. AIM confirmed in AIM Notice 50 that it will not be defining “recognised corporate governance code” or providing a list of such codes. Rather, it stipulates that in each case, the code adopted should be one that is appropriate for a company admitted to a public market. Two examples of acceptable codes are:
- the Financial Reporting Council UK Corporate Governance Code, and
- the Quoted Companies Alliance Corporate Governance Code
What action should you take?
- If you are an AIM-listed company assess whether you already apply a recognised corporate governance code. If you do not, the board of directors must choose one to adhere to.
- Carry out an audit of your company against the chosen code to ascertain deviations from the code and the reasons for these.
- Publish all the above information on your website.