Admission to AIM—due diligence and verification
Admission to AIM—due diligence and verification

The following Corporate practice note provides comprehensive and up to date legal information covering:

  • Admission to AIM—due diligence and verification
  • Why do due diligence?
  • Potential liabilities
  • Who does due diligence?
  • Organisation of due diligence
  • Types of due diligence
  • Business/commercial due diligence
  • Financial due diligence
  • Legal due diligence
  • Process
  • More...

Part of the process when a company applies for an initial admission to trading on AIM (AIM admission) will be an investigation into the company's financial and commercial position and prospects, as well as the risks associated with the company's business.

Due diligence carried out in connection with an AIM admission will be more comprehensive and detailed than that carried out on an acquisition. Whereas in the case of an acquisition the buyer may be willing to accept certain issues on the basis of the contractual protections in place in an AIM admission, these contractual protections do not exist and the company, its directors and the nominated adviser (nomad) have to comply with the AIM Rules for Companies (AIM Rules) and the AIM Rules for Nominated Advisers (Nomad Rules). Further to this the company and its directors may have civil and criminal liability for any information published which is inaccurate or misleading. See Practice Notes: Misleading statements under the Financial Services Act 2012 and Misleading impressions under the Financial Services Act 2012.

Why do due diligence?

There are a number of reasons for carrying out a comprehensive and detailed due diligence exercise as part of the AIM admission process.

The due diligence exercise:

  1. identifies, at an early stage, any matters which need to be resolved to ensure that the company will be suitable and ready for AIM admission,

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