Essays on Corporate Regulation of Alternative Investment Market Case Study

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The paper 'Corporate Regulation of Alternative Investment Market" is a good example of a finance and accounting case study. The “ Alternative Investment Market” (AIM) was founded in 1995 by the LSE to satisfy the requirements of small upcoming firms and is a high-reward/ high-risk market. Generally, firms or companies on the AIM should have a market capitalization of not less than £ 2 million while the largest would have about £ 500 million. Disclosure necessities are less thorough than on a full LSE listing. A starting company may go to the AIM without three years of IFRS accounts, but it ought to show the accounts if it has a track record.

It is not necessary for an AIM company to obtain shareholder sanction if it needs to make the attainment of less than 100 % of a corporation. The LSE has been supporting the AIM as a secondary stock market listing in London for non-UK corporations that wish to retain their local market main listing (Davidson, 2008 p. 44). AIM has admitted more than 2,500 companies managing to raise more than £ 34 billion collectively.

For an AIM to be considered as mature, 57 % of its shares must be held by institutions. The regulatory structure of AIM centers on the Nominated consultant, or Nomad, which brings the corporation to the bazaar and is accountable for its performance afterwards. A firm has a direct line to its Nomad, which is later controlled by the LSE. On February 2007, the LSE announced some changes in the way AIM is controlled. The Nomads have larger accountability than before for evaluating a firm’ s suitability, its business plan as well as its management, and it is easier for the LSE to discipline the companies.

For firms that deal with natural resources, a competent person’ s report must be carried out. AIM corporations are subject to enhanced disclosure requirements, which include requirements, form August 2008, to display core management as well as financial documents on websites (Davidson, 2008 p. 45). Corporate regulation AIM companies must announce their results twice a year. A number of companies provide quarterly results, but this is not necessary for UK companies but is a requirement for US companies that have a file with the SEC.

every company must also make a trading statement at the AGM once a year. Within the year, it is the obligation of the company to provide any available information to the market if it can affect an investor’ s evaluation of the firm’ s prospects. The annual report ought to be published six months after the year-end as well as interim results within three months of the period end. It is very vital that companies meet these deadlines. Failures to this, the shares are suspended and reputational damage occurs.

The companies that do not follow these instructions regularly are delisted from AIM. Apart from this, the companies are supposed to inform the market the date they are planning to announce the results. This assists the investors to obtain a sense of regularity on which date to expect results as well as helping them build confidence that there is a strong financial reporting process in place.

References

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