AIM Regulation Team
London Stock Exchange
10 Paternoster Square
London
EC4M 7LS
16 June 2025
Dear AIM Regulation Team,
Subject: Discussion Paper – Shaping the Future of AIM
The International Corporate Governance Network (ICGN) appreciates the opportunity to comment on the Discussion paper – Shaping the Future of AIM.
Led by investors responsible for assets under management of >US$90 trillion, ICGN is a non-profit organisation that promotes high standards of corporate governance and investor stewardship. Our members are based in more than 40 countries, and include asset owners, asset managers and advisers.
ICGN is a supporter of The Investor Coalition for Equal Votes (ICEV), and so we would like to draw your attention to their comment letter and offer our support for their position.
From the ICEV response:
Q30 If you do not agree that AIM should adopt an equivalent route for the admission of dual-class shares as for Main Market companies, please explain the basis for your view. Otherwise, please provide details of any changes to the Main Market approach to dual-class shares, that you would recommend for AIM companies.
We agree that AIM plays an important role in smoothing the transition for companies to continue to grow and develop in the UK, creating a pipeline of successful firms that contribute to UK economic growth.
For AIM to function effectively in terms of i) providing access to the liquid and thoughtful capital that high-growth companies tell us they want and ii) providing investors with access to high-quality companies that are well-placed to grow over the long-term and support good outcomes for our beneficiaries, we think that only a shift to allow dual-class share structures (DCSS) with a sunset clause of seven years or less should be considered in the new AIM rules.
Capital structures providing disproportionate voting rights to founders and other insiders cause long-term performance risk by foreclosing companies’ ability to make necessary leadership changes in response to sustainable underperformance. Boards cannot carry out their fundamental oversight purpose if capital structures are designed specifically to render founders, their favoured board members, and their favoured managers unaccountable to the holders of a majority of outstanding shares. Evidence suggests that the risk to performance stemming from unequal voting rights also increases after only a very few years of a company’s life as a public company1. We view “one share, one vote” structures as the optimal way to avoid this performance risk, and we encourage companies that choose not to enter the public markets with proportionate voting rights to at least incorporate time-based sunset provisions of seven years or less from IPO into their governing documents at the time of going public.
The importance of one-share, one-vote structures (or DCSS with a suitable time-based sunset clause) is even more marked for the kinds of high-growth firms that AIM is hoping to attract and support, in two main respects. Firstly, it is generally more challenging for such firms to attract the thoughtful, long-term capital they need – and the evidence is clear that asset managers and asset owners around the world prefer equal voting rights2. Secondly, a company that is at an early stage of its growth journey benefits significantly from accountability to the financial markets.
Although ICEV considers a “one share, one vote” listing requirement the apex of investor protection on capital structure, our fundamental priority is mitigating long-term misalignment between capital and voting rights. We had previously supported, in our response to FCA consultation DP22/2, the extension of the Premium Listing Principles to all issuers of equity shares under a single segment regime wherein the exercise of DCSS was limited to the very specific circumstances identified in PS21/22. Most importantly for ICEV, PS21/22 limited DCSS to five years for any listed company, at which point the company must either recapitalise to a one-share, one-vote structure or delist.
We believe that changes to AIM that would allow for DCSS with a time-based sunset clause of seven years or less strikes the appropriate balance between a founder’s desire for continued control, and the potential advantages for high-growth companies from listing with a share structure that helps attract high-quality capital and supports long-term growth.
Thank you again for the opportunity to share our perspective. If you would like to follow up with questions or comments, please contact Severine Neervoort, Global Policy Director (severine.neervoort@icgn.org).
Yours faithfully,
Jen Sisson
Chief Executive Officer, ICGN
