On 22 December 2015, the London Stock Exchange published AIM Notice 43 setting out changes to the 'AIM Rules for Companies'.

The changes to the AIM Rules took effect on 1 January 2016 and principally affect cash shells and investing companies. The changes are likely to result in a decline in the number of cash shell listings on AIM.

The changes

AIM Rule 8 - Investing Companies

Following the changes, investing companies will now have to raise a minimum of £6 million in cash on admission to AIM, up from £3 million prior to the changes to the AIM Rules.

AIM Rule 15 - Fundamental Change of Business

With effect from 1 January 2016, where an AIM company divests or undertakes any action the result of which being that it ceases to control all, or substantially all, of its trading business, activities or assets, it will be regarded as an 'AIM Rule 15 cash shell' under the AIM Rules (a new term under the AIM Rules).

Nomads are now under an obligation to notify the Exchange if an AIM company for which it acts becomes (or if there is a possibility that it has become) an 'AIM Rule 15 cash shell'. They are also now obliged to consult with the Exchange as soon as possible where there is any question as to whether the AIM company has become an 'AIM Rule 15 cash shell' or the point at which it has become an 'AIM Rule 15 cash shell'.

'AIM Rule 15 cash shells' will now have only six months in which to make an acquisition(s) constituting a 'reverse takeover' under AIM Rule 14 (down from a period of 12 months prior to the changes to the AIM Rules), failing which the Exchange will suspend trading in the AIM securities in accordance with AIM Rule 40.

The shortened period of six months within which to make an acquisition under AIM Rule 14 will not affect AIM companies which became investing companies prior to 1 January 2016. Such investing companies will have 12 months in which to make an acquisition(s) which constitutes a 'reverse takeover' or to implement their investing policy, failing which the Exchange will suspend trading in the AIM securities.

AIM companies should note that, for the purposes of AIM Rule 15, becoming an investing company pursuant to AIM Rule 8 (including the associated raising of funds required by AIM Rule 8) will be treated as a 'reverse takeover' and the AIM company will be required to publish an admission document in accordance with AIM Rule 14.

The 'AIM Note for Investing Companies' has however also been amended to make it clear that cash funds resulting from a disposal under AIM Rule 15 can form part of the £6 million cash to be raised by AIM companies becoming investing companies under AIM Rule 8.

AIM Rule 36 - Settlement

The published changes to the AIM Rules have also removed the Exchange's ability to agree in certain circumstances a derogation from the requirement for AIM securities to be eligible for electronic settlement.

This amendment follows AIM Notice 41 (setting out the Exchange's implementation of the EU Regulation on Central Securities Depositories in particular in relation to AIM 'Regulation S, Category 3' traded securities) and took effect from 1 September 2015.