What's Market: 2010 AIM admissions and corporate governance analysis

A round up of AIM admissions added to What's Market during 2010 and an analysis of the corporate governance codes and guidelines such companies have stated they intend to follow. (free access.)

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Following an improvement in market conditions, 2010 has seen a significant increase in the number of companies admitted to trading on AIM ...show full speedread

Following an improvement in market conditions, 2010 has seen a significant increase in the number of companies admitted to trading on AIM. 24 companies with a market capitalisation of £25 million and above have been admitted to trading on AIM so far this year. Of the most recent of these admissions, four companies (including one of the most recent admissions, Jubilant Energy N.V.) are based in India (see London Stock Exchange press release: Five Indian companies join AIM in ten weeks). This compares to just five admissions of companies with a market capitalisation of £25 million or more during 2009. Details of these admissions and links to the admission documents can be accessed from PLC's What's Market, see What's Market, AIM Admissions: 2010 and What's Market, AIM Admissions: 2009.

There has over the last few years been an increasing focus on the effectiveness of the UK's corporate governance regime. Although AIM companies are not formally required to adhere to the UK Corporate Governance Code, or any other corporate governance guidelines, many voluntarily do. From a review of the admission documents of the 24 companies admitted to trading on AIM during 2010 and included on What's Market:

  • 18 companies stated that they intended to comply with the UK Corporate Governance Code, so far as was practicable for a company of their size. 10 of these companies also stated that they intended to comply with the Quoted Companies Alliance's corporate governance guidelines.

  • Four companies stated that they only intended to comply with the QCA's guidelines.

  • Only one company stated it would also comply, in addition to the UK Corporate Governance Code and QCA guidelines, with the NAPF's Corporate Governance Policy and Voting Guidelines for AIM Companies.

  • Two non-UK incorporated companies stated their intention to comply with their national corporate governance code or guidelines.

So how do these statements of intention compare with the corporate governance codes and guidelines that companies already listed on AIM have stated they are committed to comply with? What's Market contains summaries of a selection of AIM companies' AGM notices, see What's Market, AGMs: AIM: 2010. From a review of the annual reports of 20 AIM companies included on What's Market:

  • 12 companies have stated that they have sought to comply with the provisions of the Combined Code, so far as is applicable to a company of their size, including one company which stated that it also followed the QCA's guidelines.

  • One company described its compliance with the QCA's guidelines only.

  • Seven companies included no statement of compliance with the Combined Code or any other guidelines, however, five of these companies did include statements in respect of corporate governance issues.

  • No company from this selection has stated that it had complied with the NAPF's guidelines.

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Introduction

AIM companies are not required to "comply or explain" against the Combined Code (www.practicallaw.com/9-107-5943), or for companies with reporting years beginning on or after 29 June 2010, the UK Corporate Governance Code (www.practicallaw.com/2-502-1888), which is aimed at companies on the Main Market. There are corporate governance guidelines for AIM or smaller quoted companies, namely:

A company seeking admission to AIM must include a corporate governance statement in its admission document as to whether it complies with the UK corporate governance regime and if not, why it does not so comply. There is no continuing obligation under the AIM Rules for Companies (www.practicallaw.com/1-203-1160) for a company to report any changes to its corporate governance regime after admission or its compliance or non-compliance with such regime. However, the QCA Guidelines recommend the publication of an annual governance statement and NAPF expects larger AIM companies to comply, or explain non-compliance, with the provisions of the Combined Code (the NAPF Guidelines have not yet been updated to reflect the UK Corporate Governance Code).

For further details of the corporate governance requirements for companies admitted to trading on AIM, see Practice note, Corporate governance and AIM companies (www.practicallaw.com/6-202-2295).

 

Corporate governance statement in admission documents 2010

Set out below is a summary of the corporate governance statements included in the admission documents for companies whose shares were admitted to trading on AIM during 2010, where the market capitalisation on admission was £25 million or above.

For full details and links to the deal documentation of these admissions to AIM, see What's Market, AIM Admissions: 2010.

AIM company

Date of admission

Compliance with: Combined Code/UK Corporate Governance Code or other national code

Compliance with: QCA Guidelines and/or NAPF Guidelines

Madagascar Oil Limited

29 November

The directors intended to implement steps to comply with the UK Corporate Governance Code so far as it was practicable having regard to the size and current stage of development of the company.

 

Jubilant Energy N.V.

24 November

The directors intended to comply with the UK Corporate Governance Code in such respects as were appropriate for a company of the size, nature and stage of development of the company, as well as applicable Dutch law requirements.

The company also proposed to follow (to the extent practicable and save as set out in the admission document) the QCA Guidelines.

Zanaga Iron Ore Company Limited

18 November

The directors intended, in so far was appropriate having regard to the size and nature of the various companies of which the group was comprised, to comply and to take such measures as practicable to comply with the UK Corporate Governance Code

As a BVI company, there is no equivalent to the UK corporate Governance Code, however, the Business Companies Act 2004 brings with it a more formalised approach to corporate governance.

 

Produce Investments plc

18 November

The directors intended to observe the requirements of the UK Corporate Governance Code to the extent they consider appropriate in light of the company's size, stage of development and resources.

The company also proposed to follow the QCA Guidelines to the extent possible in light of the current composition of the board.

HaloSource, Inc.

18 October

The company intended to, in so far was practicable given the size, nature and state of development of the company, comply with the main provisions of the UK Corporate Governance Code.

The company also intended to, in so far was practicable given the size, nature and state of development of the company, comply with the QCA Guidelines and the NAPF Guidelines.

Caparo Energy Limited

12 October

The company and the board intended to comply with the provisions of the UK Corporate Governance Code so far as it was practicable for a company of its size, stage of development and nature quoted on AIM.

The board also intended to comply with the provisions of the QCA Guidelines.

SKIL Ports & Logistics Limited

7 October

The board intended to comply with the provisions of the UK Corporate Governance Code so far as was practicable for a company of its size, stage of development and nature as a company whose securities were traded on AIM.

In any event, the board intended to comply with provisions of the QCA Guidelines.

Central Asia Metals Plc

30 September

 

The company would follow, as far as practicable, the QCA Guidelines.

iEnergizer Limited

14 September

 

The directors intended for the company to comply with the main provisions of the QCA Guidelines insofar as they were appropriate given the company’s size and stage of development.

Mood Media Corporation

13 September

As a Canadian company, the company was subject to instruments published by relevant Canadian securities regulators including National Instrument 58-101 Disclosure of Corporate Governance Practices and National Policy 58-201 Corporate Governance Guidelines.

 

NBNK Investments plc

20 August

The directors confirmed that they intended to comply with the UK Corporate Governance Code insofar as practicable given the company's size and nature.

 

Masawara Plc

19 August

 

The directors intended to comply with the provisions of the QCA Guidelines.

Argos Resources Limited

29 July

The directors intended, given the company's size and the constitution of the board, to comply with the main provisions of the Combined Code.

 

Easydate plc

30 June (First admission date)

1 July (Second admission date)

The company intended, so far as was practicable and appropriate for a company of its size and nature, to comply with the provisions of the Combined Code, as modified by the recommendations of the Quoted Companies Alliance.

The company intended, so far as was practicable and appropriate for a company of its size and nature, to comply with the provisions of the Combined Code, as modified by the recommendations of the Quoted Companies Alliance.

Ncondezi Coal Company Limited

10 June

The directors intended to comply with the Combined Code so far as was appropriate having regard to the size and nature of the various companies making up the group.

As a BVI company, there is no equivalent to the UK corporate Governance Code, however, the Business Companies Act 2004 brings with it a more formalised approach to corporate governance.

 

Kibo Mining plc

27 April

 

The company intended, in so far as is practicable given the size and nature of the company and the constitution of the board, to comply with the provisions of the QCA Guidelines.

Squarestone Brasil Limited

12 April

The board intended to comply with the provisions of the Combined Code, so far as it was practicable for a public company of its size, stage of development and nature quoted on AIM.

 

Cambria Automobiles plc

1 April

The company would endeavour to comply with the Combined Code but, given the size and nature of the company, would not seek to comply with those aspects of the Combined Code which are considered to be more appropriate for a larger public company with shares admitted to the Official List.

 

Metminco Limited

1 April

As an Australian company, the directors intended to comply with the ASX Corporate Governance Council's Principles of Good Corporate Governance and Best Practice Recommendations (First Edition Corporate Governance Guidelines) and Corporate Governance Principles and Recommendations (Second Edition Corporate Governance Guidelines) so far as is practicable and appropriate for a public company of its size and nature.

 

Bellzone Mining plc

1 April

The directors intended to observe the requirements of the Combined Code to the extent they consider appropriate in light of the company's size, stage of development and resources and in accordance with the QCA Guidelines.

The directors intended to observe the requirements of the Combined Code to the extent they consider appropriate in light of the company's size, stage of development and resources and in accordance with the QCA Guidelines.

EMIS Group plc

29 March

The directors intended to apply the principles of the Combined Code as far as practicable and appropriate for a public company of its size and nature.

The board also proposed to follow, as far as practicable, the recommendations set out in the QCA Guidelines.

CSF Group plc

22 March

The group intended to adopt certain features of the Combined Code insofar as they were appropriate given the group's size and stage of development.

The group also intended to comply with the provisions of the QCA Guidelines.

Sherborne Investors (Guernsey) A Limited

9 March

The directors would take appropriate measures to ensure that the company operated with due consideration to any codes of corporate governance that the board deemed appropriate and may choose to operate in accordance with the Combined Code, having regard to the company's size and nature of business.

 

Kea Petroleum plc

15 February

The directors intended, in so far as practicable given the company's size and constitution of the board, to comply with the main provisions of the Combined Code, as modified by the recommendations of the Quoted Companies Alliance.

The directors intended, in so far as practicable given the company's size and constitution of the board, to comply with the main provisions of the Combined Code, as modified by the recommendations of the Quoted Companies Alliance.

 

Corporate governance statement in annual reports 2010

Set out below is a summary of the corporate governance policy for a selection of 20 AIM companies as stated in their 2010 annual report.

For full details and links to the 2010 AGM notices and annual reports for the full selection of AIM companies on What's Market, see What's Market, AGMs: AIM: 2010.

AIM company

Date of AGM notice

Statement of compliance with Combined Code and/or QCA Guidelines

No statement of compliance with Combined Code or other guidelines

Catalyst Media Group plc

25 August

 

No statement of compliance, however a statement was made in respect of the company's internal financial control systems.

Asos plc

2 August

Combined Code: The Board is committed to achieving the highest standard of corporate governance. The company's corporate governance policies are monitored to ensure that they are appropriate to the company’s circumstances and comply as far as possible with the provisions of the Combined Code given the size of the company.

 

Advanced Computer Software plc

30 July

Combined Code: The Board is committed to the principles of good corporate governance set out in the Combined Code and complies so far as is appropriate for an AIM-listed company of its size.

The corporate governance statement, together with the statement of Directors’ responsibilities and the Directors’ remuneration report, indicates how the company has applied the principles of the Combined Code.

 

First Property Group plc

7 July

 

No statement of compliance.

Leo Insurance Services plc

6 July

Combined Code: The Board appreciate the value of good corporate governance and intend to comply with the requirements of the Combined Code, as far as applicable to the group given its current size and stage of development.

 

Cohort plc

25 June

Combined Code: The Board fully supports the principles set out in the Combined Code and seeks to comply wherever this is appropriate, having regard to the size of the company and the resources available to it.

Details are provided in the corporate governance report as to how the company applies the Combined Code.

 

IS Pharma plc

22 June

Combined Code: The Group fully endorses both the spirit and principles of the Combined Code and seeks to comply wherever possible, whilst taking account of both its own size and its resources. Precisely how the Group has applied these principles is set out in the corporate governance statement.

 

Young & Co.'s Brewery

2 June

 

No statement of compliance, however statements were made in respect of corporate governance issues including the board, committees, internal control and relations with shareholders.

Proton Power Systems plc

21 May

Combined Code: The Directors recognise the value of the corporate governance principles enshrined in the Combined Code and have applied them as far as is practicable and appropriate for a company of this size.

QCA Guidelines: The company also seeks to follow the recommendations within the QCA Guidelines.

 

Patagonia Gold plc

20 May

 

No statement of compliance, however statements were made in respect of corporate governance issues including the board, committees, internal control and relations with shareholders.

M and C Saatchi plc

21 April

 

No statement of compliance.

Autologic Holdings plc

20 April

 

No statement of compliance, however statements were made in respect of corporate governance issues including the board, committees, CSR, environmental policy, internal control and relations with shareholders.

Total Produce plc

16 April

Combined Code: The Board has undertaken to comply with the Combined Code, as far as is practical, having regard to the size and nature of the Group and the corporate governance report describes how the principles and provisions were applied.

 

Fyffes plc

26 March

Combined Code: The Board strives to apply the principles and provisions of the Combined Code and the corporate governance statement sets out the extent to which it has done so.

 

Abbey Protection plc

23 March

QCA Guidelines: The Board recognises the importance of sound corporate governance and intends that best practice is adopted and applied in so far as it is appropriate for a company and group of its size and stage of development. The corporate governance report describes the company's compliance with the requirements of the QCA Guidelines.

 

Modern Water plc

10 March

Combined Code: The Board is committed to the principles of good corporate governance. The corporate governance statement explains how the directors seek to apply the requirements of the Combined Code to the group, where practical given its size, resources and stage of development.

 

Plant Health Care plc

5 March

Combined Code: The company has taken note of the Combined Code and has applied its principles of corporate governance commensurate with the company’s size. The Board is accountable to the company’s shareholders for good governance and the corporate governance statement describes how the principles identified in the Combined Code are applied.

 

GW Pharmaceuticals plc

29 January

Combined Code: The Board is committed to maintaining high standards of corporate governance. The Board has sought to robustly apply the principles of the Combined Code as far as practicable given the size of the Company and the nature of its operations.

 

Gooch and Housego plc

28 January

 

No statement of compliance but statement that the Board recognises the importance of good corporate governance and has, after taking into account the size and stage of development of the Group, put in place procedures it considers appropriate.

RWS Holdings plc

12 January

Combined Code: The Board is committed to ensuring that the Group is well governed and follows the principles of the Combined Code in so far as is practicable and relevant to its size and status.

 

 
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