AIM companies will be required to provide details of a recognised corporate governance code that the board of directors has decided to apply, and give evidence of how the company complies with the code or explain why it does not. According to AIM notice 50, published in March 2018, this information 'should be reviewed annually and the website [of the company] should include the date on which this information was last reviewed'.

New applicants have from March been required to state which corporate governance code they intend to follow. Several applicable codes exist but, in practice, companies incorporated in the UK are likely adhere to either the QCA Corporate Governance Code or the UK Corporate Governance Code. With regards to companies incorporated elsewhere, they are advised to consider appropriate standards in their home jurisdiction.

The change has been incorporated into AIM Rule 26, which clarifies the responsibilities of directors to maintain a website which displays a description of the business, its country of incorporation, and other information critical to investors.

Bob Beveridge, a non-executive director of three companies, said: ‘The changes to AIM Rule 26 provided a stimulus to assess governance arrangements. Furthermore the timely introduction of the new QCA Corporate Governance Code has provided a useful checklist of requirements and best practices. The QCA Corporate Governance Code has been used by boards to review current governance practices and identify opportunities for improvement.’

According to Tim Ward, chief executive of the Quoted Companies Alliance, an organisation that promotes the interests of small and mid-size quoted companies: ‘Good governance should be about creating long-term, sustainable value for shareholders. In order to do this, a company needs to think about its business model, its other stakeholders, its culture and its board performance. If this is not done effectively then the company will not be able to deliver in the long-term.

‘We are already hearing that adoption of the QCA Corporate Governance Code has helped to instigate discussions at board level on sensitive issues that previously were denied a proper airing, or were dealt with at a superficial level.

‘Governance codes should be about helping create shareholder value. Where rules drive good conversations then codes add value.’

Launched in 1995, the AIM is a London Stock Exchange sub-market which specialises in smaller companies. Its most recent records show that it hosts 942 companies with a market value of £1.14bn.

Report by James Bunney