City lawyers have applauded news that the London Stock Exchange (LSE) is to review regulations of its junior market AIM.
The proposed changes would see floating companies' nominated advisers (nomads) given their own codified rules, enforced by the Financial Services Authority (FSA). Companies listed on AIM would also have to have their own website clearly displaying financial and management information.
Norton Rose partner Julian Stanier said: "The conclusions from the LSE's review are inevitable - and prudent - given the tremendous speed with which AIM continues to grow, both internationally and domestically."
AIM has grown from a few dozen businesses to around 1,600 companies, 300 of which are foreign, in the 11 years of its existence.
"I think they've got it right this time," said Eversheds partner Neil Matthews. "They're striking a balance between creeping regulation and ensuring AIM's integrity. They've avoided introducing more rules, at least for now." Lawyers read the underlying message of the LSE's announcement as one of concern over recent well- publicised scandals, including the multimillion-pound investigation of Langbar International for fraud.
Of course, more regulation for nomads means more compliance and more work for their lawyers, according to Davenport Lyons partner Jeanette Gregson.
Matthews agreed, stating that corporate lawyers could expect to get more work from companies needing to create websites. Matthews said that although the proposed changes would not substantially change the IPO process, it might discourage nomads from bringing smaller companies to AIM and would force lawyers to undertake more thorough due diligence, "which is never a bad thing".