Cornwall Stodart recently acted as the Australian legal advisers to Tasmanian mining, exploration and development company, Zeehan Zinc Limited (and subsidiaries), in its successful application for admission to AIM – the London Stock Exchange’s international market for smaller growing companies.
Zeehan Zinc Limited was admitted on 6 March this year. As part of the admission process, it raised GBP 9 million giving the company a market capitalisation of approximately GBP 26 million on admission.
AIM began in 1995. It now has more than 2100 companies with differing levels of business maturity from many countries which operate in a diverse range of industries.
AIM is particularly popular with companies, including Australian companies, operating in the natural resources and financial sectors.
Principal attractions for companies wishing to be admitted on AIM are simpler admission criteria than major international exchanges, a simplified regulatory regime, ready access to capital markets and pre- and post -admission support by a Nomad (Nominated Adviser) and Broker.
An Australian company seeking admission on AIM does not need a London office or UK- based directors (although it may choose to do so).
These are the key personnel:
- The most important is the Nomad. Nomads are approved by the London Stock Exchange - as a rule they are corporate finance professionals;
- Accountants. Invariably they are involved in checking and finalising relevant accounts, conducting financial due diligence and advising on working capital requirements;
- Broker. They will often be aligned to the Nomad. The Broker facilitates and promotes trading in a company’s shares;
- Lawyers. The location of the company and the nature of the company’s business will determine how many firms of lawyers are required (in the case of Zeehan Zinc Limited, in addition to Cornwall Stodart the company employed UK lawyers and Tasmanian lawyers for Tasmanian mining law advice);
- Competent Person (in the case of mining company admissions, a competent persons report is required);
- Public Relations Advisers (this is optional); and
- Share Registrar.
The key document for admission is the Admission Document. Similar to a prospectus, the Admission Document contains information such as the history and background of the company, its actual and proposed business affairs, directors and officers, financial position, major contracts and share transactions during a specified period, and so on.
Underpinning the Admission Document are numerous supporting documents such as:
- financial and legal due diligence reports;
- documents created to deal with any issues that might impede admission;
- verification notes that ensure the accuracy of all statements and representations made in the Admission Document;
- Nomad and Broker Agreements;
- Directors Responsibilities Information packs;
- Placing Agreement (where shares are being placed as part of the fundraising);
- Share Registry Agreement;
- Lock In Agreements (restricting directors, related parties and major shareholders from selling shares in the company for a specified period after admission);
- Corporate Governance Statement;
- AIM Admission application documents.
No hard and fast rule applies on how much lead time is needed to gain admission. Much depends on the state of readiness of the particular company.
However, in the usual situation the admission process should take between three to six months from the time advisers are appointed.
A company with securities trading on the Australian Stock Exchange may use the special AIM Designated Markets Route to “fast-track” an application for admission on AIM. Such a company need not produce an Admission Document and can use its existing annual report and accounts as a basis for admission on AIM. This fast-track route should take only four to six weeks to complete.
More information about AIM and the admission process can be found by clicking on the AIM icon at www.londonstockexchange.com.
Please also contact Stephen Newman, Partner on (03) 9608 2219 or s.newman@cornwalls.com.au or Kathryn de Bont, Lawyer on (03) 9608 2256 or k.debont@cornwalls.com.au. Stephen and Kathryn were the principal lawyers who acted for Zeehan Zinc Limited.
