Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates

London Stock Exchange Sets Out Reforms to AIM Rules

Skadden Publication

Danny Tricot Justin Lau Leesha Curtis

Executive Summary

  • What’s new: The London Stock Exchange (LSE) announced a series of changes to the AIM Rules. These are intended to lighten the regulatory burden, align AIM’s requirements with those of the LSE’s Main Market and reinforce AIM’s reputation as an attractive trading venue for small and growth companies.
  • Why it matters: Rules will provide for companies with dual class share structures and a variety of transactions, including reverse mergers, secondary securities offerings and related party transactions. The AIM admission document will also be redesigned, and the working capital statement may be dispensed with.
  • What to do next: Many of the changes are effective immediately, either through rule changes or via derogations (exceptions) granted by the exchange, so companies currently traded on AIM or contemplating a listing there will want to consider the changes when seeking fundraisings on AIM.

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On 21 November 2025, the LSE published Feedback Statement: Shaping the Future of AIM, which summarises the feedback received on its April 2025 Discussion Paper proposing reforms to the AIM Rules. The LSE intends to publish new rules in H1 2026, but many of the changes are effective immediately through derogations granted by AIM Regulation before the formal revised rules are published.

This development signals a new era for AIM, with some significant changes to the AIM Rules, which have not been materially updated since 2018 (other than Brexit-related changes in January 2021).

In general, respondents to the Discussion Paper showed strong support for AIM and its unique position, but emphasised the importance of repositioning AIM to clearly distinguish it from the LSE’s Main Market, especially in light of the Financial Conduct Authority’s (FCA) changes to the UK Listing Rules last year. The changes are designed to ensure that AIM remains an attractive market for smaller and growth companies that are not yet ready for the Main Market but nonetheless require access to the public markets.

The key changes are summarised below with the status of each.

1. Dual Class Share Structures (Status: Effective immediately)

  • Dual class share structures (DCSSs) that satisfy the current Main Market requirements (applying equivalency where appropriate) will be acceptable for prospective AIM companies. This change will be welcomed by founder-led businesses.
  • Since the LSE published the Feedback Statement, the Takeover Panel has published its Response Statement 2025/1 on DCSSs and IPOs, in which it effectively adopted its previous proposals regarding updates to the Takeover Code for DCSSs and imposed additional disclosure obligations in IPO prospectuses for UK companies adopting a DCSS. The changes to the Takeover Code will be effective on 4 February 2026.

2. AIM Reverse Takeovers (Status: Effective Immediately)

  • Where a nominated adviser (Nomad) can demonstrate that an acquisition exceeding 100% in any of the class tests does not result in a fundamental change of business, AIM Regulation may determine that this is a substantial transaction rather than a reverse takeover and therefore an admission document will not be required.
  • Pending changes to the AIM Rules to remove the automatic suspension of trading upon notification of a proposed reverse takeover in the absence of an admission document, the LSE will consider requests from Nomads not to impose an automatic suspension where it can be shown that appropriate alternative disclosure can be made.
  • Where both parties to a reverse takeover are publicly traded companies, AIM Regulation may allow reduced disclosure in an admission document instead of the full Schedule Two requirements.

3. Significant Transactions and Class Tests (Status: Currently Permissible)

  • The LSE intends to increase the disclosure threshold for substantial transactions from 10% to 25% under the class tests, allowing companies more flexibility and opportunity for M&A activity. This is in line with the threshold for significant transactions under the updated UK Listing Rules. The LSE’s rationale is that growth companies should not be subject to more onerous disclosure obligations than Main Market companies.
  • The class tests will also be updated to remove the profits class test (again, in line with the UK Listing Rules changes last year) and introduce a pro-rata gross capital class test for investment companies/funds where they are only acquiring a minority stake rather than consolidating or assuming responsibility for any of the target company’s liabilities. Derogations to the class tests may be made by Nomads pending the redrafting of the AIM Rules.

4. Related Party Transactions and Directors’ Remuneration (Status: Effective Immediately)

  • AIM Rule 13 currently aims to protect shareholders by stipulating that an AIM company may only enter into a related party transaction after its Nomad has agreed that the terms of the transaction are fair and reasonable.
  • The LSE received feedback that the current application of AIM Rule 13 to director remuneration places Nomads in a challenging position in terms of board considerations. Where a Nomad is satisfied that the contractual terms for a director’s remuneration (that is not part of the standard remuneration package) provide reasonable commercial protections for the company (such as good leaver/bad leaver provisions), it will no longer be required to consider the fairness and reasonableness of the remuneration. All other aspects of Rule 13 (related party transactions) will continue to apply.

5. UK GAAP, Historical Financial Information and Working Capital Statement (Status: Effective Immediately)

  • Pending updates to the AIM Rules, the LSE will consider derogation requests from Nomads for historical financial information to be incorporated by reference, provided that information is readily available to investors and will remain so on an ongoing basis.
  • The LSE will permit the use of UK GAAP (FRS 102), the accounting standard commonly used by UK private companies prior to seeking admission to AIM, thus significantly reducing the lead time and costs associated with converting historical financial information to meet International Financial Reporting Standards prior to an AIM IPO. Pending redrafting of the AIM Rules, Nomads can request derogations to enable the use of UK GAAP (FRS 102).
  • As part of a wider review of the admission document (see below), the LSE will be considering feedback on the working capital statement. The feedback did not indicate a strong need for a working capital statement when weighed against the cost of production.

6. Further Issues of New Securities (Status: Effective Immediately)

  • The LSE intends to change the AIM Rules so that admission of a new class of securities to trading on AIM will not require the publication of an admission document. In the meantime, derogations will be considered.
  • The LSE has confirmed that, pursuant to the introduction of the new regime for public offers and admissions to trading in January 2026, it will not require a “MTF prospectus” (which will be required for AIM IPOs) for further issues. This will facilitate secondary fundraises.

7. Admission Document/Working Capital Statements (Status: Pending)

  • The LSE intends to redesign the AIM admission document to be more user-friendly. This will include introducing incorporation by reference and updating the requirements to remove disproportionately burdensome requirements, for example, by potentially dispensing with the working capital statement.

8. Reforming of the Nominated Adviser Role

  • The majority of respondents were in favour of retaining the Nomad model but were of the view that Nomads should refocus on providing expert corporate finance advice and act less as a compliance function. The LSE plans to support this change and will engage with firms on a new technical guide for Nomads in H1 2026.

We welcome these changes to the AIM Rules, which will help to reinforce AIM’s position in the UK capital market landscape for growth companies in particular. The adjustments to the AIM Rules will deliver maximum immediate impact for both AIM companies and investors.

Beliz McKenzie, senior knowledge strategy lawyer, contributed to this article. 

This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.

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