On 5 October 2017, the London Stock Exchange (the Exchange) issued an AIM Disciplinary Notice (AD 16) which announced that the AIM Disciplinary Committee has publicly censured and fined Management Resource Solutions PLC (Company) £125,000 (discounted to £85,000 for early settlement) for its breach of the AIM Rules.
The rules breached, and the reasons for the action, are as set out below.
- Breach of AIM Rule 10. The Company failed to include a caveat in its notifications of the fact that it was aware of difficulties in obtaining funds from an entity that was financing a reverse takeover acquisition, for which it had published an admission document.
- Breach of AIM Rule 31. While the directors of the Company discussed its concerns with other advisers (such as lawyers, accountants and auditors), the Company failed to keep its nominated adviser informed of the difficulties it was having in drawing down these funds, and failed to seek the nominated adviser’s advice on the AIM Rules.
- Breach of AIM Rule 22. The board, as it was composed at the time of the events, did not fully co-operate with the Exchange during its investigations into these breaches.
The censure is a reminder that an AIM company must ensure that notifications provide a clear understanding of the matters disclosed and that they are properly caveated where necessary in order to comply with AIM Rule 10. These disclosure obligations are essential for market confidence and, where there is actionable evidence, the Exchange will bring companies that fail to meet the required standards of disclosure to account. It also serves as a reminder of the importance of keeping the nominated adviser informed of events and of seeking advice. This is so that the nominated adviser can advise and guide a company in its disclosures.
The Exchange notes that discussing matters with other advisers is not a substitute for the obligation to seek advice from a nominated adviser and to keep the nominated adviser informed. Further, when AIM companies are under investigation, they are required to use due skill and care to ensure that information provided to the Exchange is correct, complete and not misleading.