Holland Bendelow have recently introduced the ‘The AIM Stock Exchange a Guide for Companies’. The AIM Stock Exchange, or The Alternative Investment Market (AIM) to give it its correct title, was established in 1995 by the London Stock Exchange as an international stock market for smaller and growing companies. Since its launch AIM has become the most successful growth stock market in the world, in the main due to an international reputation for its comparatively flexible regulatory regime. This whitepaper looks at how the AIM Stock Exchange can provide companies with the opportunity to raise funds at an earlier stage in their development than would normally be the case on other stock markets.

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CONTENTS
1. WHAT IS THE AIM STOCK EXCHANGE? 1
2. THE BENEFITS OF THE AIM STOCK EXCHANGE 2
3. THE DRAWBACKS OF JOINING THE AIM STOCK EXCHANGE 4
4. JOINING THE AIM STOCK EXCHANGE 5
5. RAISING FUNDING ON THE AIM STOCK EXCHANGE 8
6. THE COSTS OF JOINING THE AIM STOCK EXCHANGE 9
7. OVERSEAS COMPANIES JOINING THE AIM STOCK EXCHANGE 10

3. THE AIM STOCK EXCHANGE GUIDE FOR COMPANIES PAGE 1
1. WHAT IS THE AIM STOCK EXCHANGE?
The AIM Stock Exchange, or The Alternative Investment Market (AIM) to give it its correct title, was
established in 1995 by the London Stock Exchange as an international stock market for smaller and
growing companies.
Since its launch AIM has become the most successful growth stock market in the world, in the main due
to an international reputation for its comparatively flexible regulatory regime.
The AIM Stock Exchange provides companies with the opportunity to raise funds at an earlier stage in
their development than would normally be the case on other stock markets.
Companies choose to join The AIM Stock Exchange for a variety of reasons, including;
 a platform to raise funding in the short term to expand their business
 a mechanism to undertake further fundraisings to enable continued business growth
 the opportunity to enhance the value of the company
 a way in which a company can take advantage of opportunities to acquire other businesses
 an opportunity to raise the profile of the company to new and existing customers
 a potential strategic exit route for existing shareholders
The AIM Stock Exchange is now firmly established, and is the only major growth market that has survived
and flourished through two complete economic cycles.

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2. THE BENEFITS OF THE AIM STOCK EXCHANGE
The AIM Stock Exchange offers companies a range of benefits, which Bank Debt and Venture Capital are
unable to match. Companies joining AIM can establish effective employee share schemes, which can be
used to help recruit, incentivise and retain key employees.
In addition to the funding raised at admission to AIM, there is a deep pool of liquidity in London for AIM
companies to tap into via the issue of further shares after the initial flotation.
It is inevitable that joining AIM will provide a company with a higher profile than if it were to remain
private. The company will receive greater press coverage, thus widening the awareness of the company,
its products and services.
Companies that join the AIM Stock Exchange benefit from the enhanced status and credibility that AIM
brings. This can lead to new work with existing customers, or bring the company to the notice of new
customers.
Companies that join the AIM Stock Exchange are regarded as un‐quoted for tax purposes, meaning there
are certain tax benefits associated with the market. Because of the complexity of the tax rules in
relation to AIM, it is advisable to take advice from a tax expert ahead of admission to the market.
One of the key benefits that sets AIM aside from other stock exchanges is the flexibility in its regulation.
A comparison of the AIM Stock Exchange against the London Stock Exchange’s Main Market is shown
below;
Main Market AIM Stock Market
Minimum of 25 per cent of shares must be held in
public hands
No minimum amount of shares in public hands
For most companies a 3‐year trading record is
required
No minimum trading record required
A minimum market capitalisation the company
(market value) £700,000
No minimum market value required

5. THE AIM STOCK EXCHANGE GUIDE FOR COMPANIES PAGE 3
Shareholder approval required prior to significant
major acquisitions or disposals
Shareholder approval only required for major
acquisitions or disposals
A sponsor may be needed for some transactions No sponsor required

6. THE AIM STOCK EXCHANGE GUIDE FOR COMPANIES PAGE 4
3. THE DRAWBACKS OF JOINING THE AIM STOCK EXCHANGE
Whist the rules governing the AIM Stock Exchange are designed to provide a reasonable balance
between providing flexibility to a company and protection to the investor, there are a number of issues
that companies looking to join AIM may need to consider:
 Flotation on the AIM Stock Exchange means that companies are subject to closer levels of
scrutiny
 Following admission to the AIM Stock Exchange, the company will need to maintain good
investor relations. This will be an on‐going requirement, keeping investors aware of the
company’s development and future activities
 Having joined the AIM Stock Exchange, a company’s share price may be susceptible to market
conditions
In addition to satisfying the regulatory hurdles to joining AIM, a company must have growth prospects
that are attractive to AIM Stock Exchange investors. This may depend on a variety of factors including:
 Does the company have a credible business plan?
 Is the business model clearly defined?
 Does the company have demonstrable growth potential?
 Does the management team have a track record?
Although the Combined Code on corporate governance is not applicable to AIM Stock Exchange
companies, AIM investors will expect to see that the principles of the code are applied to a company
where appropriate. In practise this will mean that a company will need to appoint at least 2 Non‐
Executive Directors.

7. THE AIM STOCK EXCHANGE GUIDE FOR COMPANIES PAGE 5
4. JOINING THE AIM STOCK EXCHANGE
Companies listed on the AIM Stock Exchange, range from start‐up and young businesses to larger, more
established companies. The AIM Stock Exchange enables companies with short, or in some cases, no
trading record, to join the market.
There is no minimum requirement for companies joining AIM in terms of;
 Size of a company when it joins the market
 The period that a company has been trading
 The number of shares that a company must put on the market
 The number of employees the company has
 The turnover of the company
 The profitability of the company
AIM Stock Exchange timetable
The process of admission to the AIM Stock Exchange is usually between 3 to 6 months. However, for
many companies it is advisable to commence preliminary tasks ahead of this. This may include
undertaking a strategy review, and corporate governance issues. Because every company is different,
the speed and efficiency at which the information for the AIM admission document can be produced and
the depth of due diligence required will vary.
It is advisable to undertake an AIM feasibility study at the outset to establish if the company is
potentially suitable for AIM and what fundraisings may be possible.
What advisors will your company require?
An admission to The AIM Stock Exchange requires a company to assemble a team of advisors, each with
their own specialist skills, to assist the company in the process of flotation. In addition to the advisor
teams, companies operating in the mining, or oil and gas sectors may require particular specialists to
support the company and its advisors with the preparation of admission documentation.

8. THE AIM STOCK EXCHANGE GUIDE FOR COMPANIES PAGE 6
Flotation Consultant
Flotation Consultants are usually the first advisors used in the flotation process. Flotation Consultants
are experts who help a company consider flotation as an option. Often they undertake AIM flotation
feasibility studies on behalf of the companies to assess the viability of a flotation and predict how this
may best enhance the business. They consider the fundraising capacity of a company and the likely
valuation that it may command at the time of flotation.
The Flotation Consultant will usually be an independent expert acting solely on behalf of the company
and not connected in any way to other advisors’ firms. This ensures they provide expert impartial advice
and guidance.
Broker
AIM companies must retain an AIM Broker at all times. The Broker is a securities house, responsible
principally for dealings in the company’s shares. Often AIM Stock Exchange Brokers also act as Nomads.
Nomad
The Nomad is normally a firm of specialist corporate finance advisers who ensure that companies comply
with the AIM Stock Exchange rules. A Nomad’s duties are, first and foremost, to the London Stock
Exchange who own and operate the market.
Reporting Accountant
The reporting accountant will review a company’s financial position, together with its reporting
procedures and disclosure of historical financial information.
Lawyer
The Lawyers advise on the structuring of a company and its subsidiaries, and undertake the following key
tasks:
 Legal due diligence on the business
 Verification of the ownership of assets
 Add support with the drafting of the AIM admission document
 Preparing employment agreements for Directors and other key staff

9. THE AIM STOCK EXCHANGE GUIDE FOR COMPANIES PAGE 7
 Advise the company’s directors on their responsibilities in accordance with the AIM Stock
Exchange Rules
AIM companies’ shares
AIM companies must be able to offer shares to investors, and all shares listed on the market must be
freely transferable and eligible for electronic settlement.
The AIM Admission Document
Prior to admission to the AIM Stock Exchange, a company, along with its team of AIM advisors, will
produce an admission document that will be made available to all prospective investors. This sets out
such detailed information on the company, its activities, future plans, Directors’ details, together with
containing historical financial information for the last 3 years (if the company has a 3 year trading
history).
Additional documentation
There are certain other documents that must be prepared in order to produce the admission document
for the AIM Stock Exchange; these include;
 a working capital report, which will confirm that the company has sufficient working capital for
at least the 12 months following admission to AIM
 an accountant’s financial due diligence report, often referred to as the ‘long form report’, and
prepared for the Nomad and the Directors
 a legal due diligence report on the company prepared for the Nomad and the directors
Director’s Lock‐ins
Where a company has been recently incorporated, and has not traded in the two years prior to
admission to the AIM Stock Exchange, the Directors and/or substantial shareholders and their respective
families may need to agree to a ‘lock‐in period’ following admission to AIM. During the lock‐in period
they will agree not to sell their shares in the company.

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5. RAISING FUNDING ON THE AIM STOCK EXCHANGE
If the company wishes to raise funds on the AIM Stock Exchange at the same time it joins the market,
often the process begins after the company’s final draft admission document known as ‘the pathfinder
document’.
The company will be required to make presentations to potential investors. This may require the
company’s senior management team committing a number of days to the process.
When the company has received the required take‐up of its shares from investors, a pre‐admission
announcement is made to the London Stock Exchange 10 business days before the admission date.
Three business days prior to admission to the AIM Stock Exchange, the admission document is published
and the main admission announcement is made.

11. THE AIM STOCK EXCHANGE GUIDE FOR COMPANIES PAGE 9
6. THE COSTS OF JOINING THE AIM STOCK EXCHANGE
The costs of admission to AIM consist of the fees of each of the professional advisers involved, whose
fees will vary, depending upon the level of their work involved, and The London Stock Exchange’s fees.
If the company requires a prospectus, there will need to be a consultation process with the UK Listing
Authority (UKLA) well in advance of admission and this may also have an impact on costs and timing.
Managing the costs of joining AIM
Companies often raise additional funding on the market to pay the costs of joining AIM. In many cases it
is also prudent to back end load the AIM advisor fees until the company has gained admission the
market.
It is also considered prudent to agree that a proportion of the AIM advisor fees are contingent on a
successful admission and fundraising. In the majority of admissions and initial fundraisings the costs of
the total costs transaction will be less than 10% of the total money raised.

12. THE AIM STOCK EXCHANGE GUIDE FOR COMPANIES PAGE 10
7. OVERSEAS COMPANIES JOINING THE AIM STOCK EXCHANGE
There is a fast‐track procedure to the AIM Stock Exchange for companies that already have a listing on
certain designated stock markets around the world. The fast‐track route makes the process of joining
AIM more straightforward and can be used by companies that have been listed on designated stock
exchanges such as The Australian Stock Exchange, Deutsche Börse, Euronext, Toronto Stock Exchange, or
NASDAQ for a minimum period of 18 months prior to admission to the AIM Stock Exchange.
The key benefit of the fast track route is that it removes the need for a company to produce an
admission document. A company makes an announcement 20 business days before admission and files
its annual report and accounts with the London Stock Exchange three business days prior to admission to
AIM.
One of the drawbacks of the fast‐track procedure is that it is not available if the company wishes to
undertake a fundraising at the same time as admission.