UK Capital Markets: Shaping the future of AIM – what’s changing now and what’s on the horizon?

In its Feedback Statement, the LSE summarises the market’s feedback to its Discussion Paper published earlier this year, highlighting that AIM continues to play a significant role within the UK’s capital market landscape; a view reinforced by feedback received during its discussions with stakeholders, who expressed strong support for AIM as a market uniquely positioned between the private markets and the Main Market. (For background, click here to read our summary of the Discussion Paper).

Furthermore, the LSE has responded to feedback concerning the AIM Rules and will incorporate relevant amendments into the forthcoming consultation on changes to the AIM Rules, anticipated for publication in the first half of 2026. In the interim, AIM Regulation will consider requests for derogation and guidance to implement immediate rule adjustments, helping to reduce existing regulatory burdens on issuers and investors.

What’s changing now?

The LSE has announced that the following rule adjustments are immediately effective:

Supporting founder-led businesses

• Dual class share structures in line with the current Main Market requirements will be accepted for prospective AIM IPO candidates, encouraging more entrepreneurs to consider taking their companies public. Additionally, the LSE will evaluate how to tailor the AIM regime to attract more founder-led businesses. This may include amending its admission requirements and considering its approach to founder control upon admission.
• Nominated advisers will not need to issue a “fair and reasonable” opinion on director pay that is not part of the standard remuneration package where there are reasonable commercial protections are in place (for example, good and bad leaver terms). Other related party transaction requirements under Rule 13 will continue to apply.

Supporting acquisitions

• Where a nominated adviser can demonstrate that an acquisition that exceeds 100% of the class tests does not fundamentally change the business, AIM Regulation may determine that the acquisition is a substantial transaction, rather than a reverse takeover which would be subject to the extensive requirements under AIM Rule 14 and require the publication of an admission document. However, the LSE notes that shareholder approval may still be required for a substantial transaction.
• Where both parties in a reverse takeover are publicly traded companies, noting the availability of public information, AIM Regulation will consider whether alternative disclosures could be included in an admission document, instead of the full Schedule Two requirements.
• AIM Regulation will consider not imposing an automatic suspension of trading of a company’s securities upon the notification of a reverse takeover where it can be demonstrated that appropriate alternative disclosure can be made.
• Derogation requests will be considered in relation to the existing gross capital class test and profits class test pending re-drafting of those tests in the AIM Rules. The LSE confirms that, as part of its proposed re-draft of the AIM Rules, it will also propose to increase the significant transactions threshold from 10% to 25%, ensuring that AIM issuers do not face stricter requirements than those imposed on Main Market issuers.

Attracting international companies

• Recognising that, in practice, the work undertaken by nominated advisers for the AIM Designated Market (ADM) route largely mirrors the work undertaken for a standard AIM admission, the LSE encourages advisers working on prospective ADM admissions to contact AIM Regulation for support in streamlining their work to ensure it provides a genuine fast track route to market. Further consideration will be given to how the ADM route can be enhanced to encourage international companies to more efficiently gain admission to AIM.

Addressing unnecessary friction

• Pending further consideration of the provision of financial information in an admission document including the working capital statement requirement, derogation requests will be considered for historical financial information to be incorporated by reference provided that the information is readily available to investors and will remain so on an ongoing basis. Additionally, derogation requests will be considered to enable the use of UK GAAP (FRS 102) with immediate effect and similarly, other local accounting standards will be considered on a case-by-case basis where equivalency to IFRS can be explained.
• AIM Regulation will consider derogation requests from nominated advisers to dispense with the publication of an admission document for the admission to trading of a second line of securities (that is, new classes of shares or other securities).
• Furthermore, AIM confirms that pursuant to the introduction of the new public offers and admissions to trading regime in January 2026, it will not require an MTF admission prospectus for further issues, as is currently the case.

AIM Rules – other potential changes

In addition to the above, AIM Regulation will also explore changes to other areas, including:

• possible revisions to AIM Rule 11 to avoid duplication with an AIM issuer’s disclosure obligations under UK MAR. The LSE will also consider the role of the nominated adviser in this context, emphasising the importance of it remaining involved and being kept fully informed about the issuer’s approach to disclosure;
• resetting the role of the nominated adviser, ensuring its primary purpose is to provide corporate finance advice to issuers, rather than serving as a compliance function. The LSE will also expand the adviser's involvement in the Qualified Executive approval process, reflecting its importance in the adviser model;
• enhancing AIM’s digital presence and creating marketing tools and resources for all stakeholders to support their route to AIM;
• redesigning the AIM admission document, making it more proportionate and user friendly for both companies and investors, introducing incorporation by reference and exploring digital solutions to enhance its effectiveness; and
• evaluating the secondary market trading infrastructure including introducing trading halts for secondary fundraisings to reduce transaction risks and to enable more open discussions with the wider group of potential investors who would not normally be wall-crossed. As part of its work, the LSE will evaluate the approach taken in international markets and consider the process that an issuer and its nominated adviser would need to follow to request a trading halt.

Wider policy initiatives

Recognising that AIM’s success is also dependent on structural legal and regulatory changes, the LSE has committed to working with the Government, regulators, and industry bodies to support key policy goals that will promote AIM’s growth, including:

• working with the Government and industry to ensure that there are sufficient capital in-flows into AIM companies including from investments by the British Business Bank and pension funds. The LSE will also advocate for greater certainty of the fiscal incentives for AIM and the recalibration of EIS and VCT thresholds to support access to capital as companies grow;
• engaging with the FRC on the issue of AIM companies’ audit costs, ensuring that they are more proportionate. Additionally, in response to considerable criticism of the role and influence of proxy advisers, the LSE will engage with nominated advisers to understand the feedback they receive from their AIM clients on whether the proxy advisers are abiding by the UK Stewardship Code principles so that experiences can be shared with the FRC. Additionally the LSE will be considering how to provide a voluntary disclosure framework for AIM companies to disclose their engagement with proxy advisers;
• working with the QCA to consider whether the current approach to corporate governance for AIM is achieving the correct balance for issuers and investors; and
• working with the FCA on bulletin board users’ responsibilities under the UK’s market abuse regime and more generally, engage with the FCA and the Government to develop a proportionate and streamlined sustainability reporting framework.

Next steps

These immediate rule changes and the broader areas under the LSE’s consideration signal a commitment to ensuring AIM remains a dynamic and attractive market for both issuers and investors. With further reforms and policy initiatives on the horizon, market participants should remain engaged and proactive, ready to leverage new opportunities as AIM evolves to meet the needs of a changing capital markets landscape.

The LSE expects to publish a consultation on the AIM Rule changes and a new technical note for nominated advisers in the first half of next year. In the meantime, it will continue to engage closely with stakeholders and welcome any further comments on the matters set out in its Feedback Statement.

If you have any questions on the Feedback Statement or on any aspect of the UK’s capital markets reforms, please contact your usual contact at Hogan Lovells or one of the listed contacts.

Authored by Daniel Simons, Alex Parkhouse, and Danette Antao.