Launched in 1995, the alternative investment market of the London Stock Exchange (“AIM”), imposes less regulation and no requirements for capitalization or number of shares issued. For emerging companies to whom access to the U.S. public markets may currently be out of reach or viewed as overly burdensome, the listing requirements of AIM have made it an increasingly attractive vehicle to take a company public. The London Stock Exchange reports that over 2,700 companies chose to join AIM since 1995. The total value of shares traded on AIM in 2006 was 58,000,000,000 GBP, and included 278 IPOs.

Unlike NASDAQ, which has minimum financial, operating, public float, market value, bid price, shareholder base, number of market makers and established corporate governance requirements that must be met for an initial listing, AIM has no formal listing requirements other than the appointment of a nominated adviser, called a NOMAD, that will determine the suitability of the company to offer its securities on AIM and guide it through the offering process. In addition, semi-annual reporting in the UK versus quarterly reporting in the US, as well as the absence of Sarbanes-Oxley Section 404 that requires management to make a formal assessment of the company’s internal controls and an independent auditor to issue a report on management’s assessment, make an AIM listing particularly appealing.

There are, however, certain requirements that the NOMAD will insist on. For example, most NOMADs will expect the issuer to comply with a substantial number of the governance provisions of The Combined Code on Corporate Governance, the governing principles of the London Stock Exchange (Main Board) companies, including providing preemption rights to existing shareholders. In addition, the grant of stock options to executives and other employees, typical for many growth companies in the US, is looked upon unfavorably in the UK, and compensating directors with stock options, a common practice in the US in order to align the directors’ objectives with those of shareholders, is frowned upon in the UK because of the perception that it impairs director independence.