New AIM Rules mark a departure from the UK comply or explain principle

In early August 2026, the London Stock Exchange (LSE) published its latest version of the AIM Rules for Companies (AIM Rules). This followed shortly after the closure of the LSE’s consultation in July 2026. The amendments, some of which were proposed on a temporary basis following the publication of the LSE’s Feedback Statement on the future of AIM in November 2025, were given formal effect immediately. These included various relaxations designed to make it easier for AIM companies to conduct M&A transactions and raise capital in an increasingly competitive international listing environment.

The new AIM Rules also made changes to the corporate governance landscape of UK-listed SMEs, which included the following:

• The allowing of AIM companies to have dual-class share structures for certain shareholders on admission to the market with no sunset clause.
• The voluntary disclosure by AIM companies, through a public announcement or on their website, of a statement detailing their engagement with proxy advisers.
• The removal of the requirement for AIM companies to specify a recognised corporate governance code, and that they ‘comply or explain’ against its principles.

Many of these changes mirror those made in the latest version of the UK Listing Rules, which were published for Main Market companies in July 2024. However, of particular note is the move away from recognised corporate governance codes and the ‘comply or explain’ principle, which marks a significant departure from some of the cornerstones of UK market practice as they have developed in recent decades. As the AIM Rules state:

Under the previous iteration of the AIM Rules, companies had the flexibility to either apply the principles of a corporate governance code or to deviate from them if they provided an explanation for doing so. Consequently, the removal of the requirement to identify a recognised code, and subsequently comply or explain against it, untethers AIM companies from this principle-based approach.

In its place, the new AIM Rules suggest that companies should consider a recognised corporate governance code for the purpose of guidance and informing its approach when thinking about its governance arrangements. In addition, AIM companies are to disclose their corporate governance approach to the following:

• “Board composition: the name of its directors and brief biographical details of each, as would normally be included in an admission document, and details of those who are independent.
• The role and responsibilities and functions of each director for the delivery of the AIM company’s strategy, commercial objectives and the effective management of its risks.
• Remuneration and performance: details of the structure of executive and non-executive director remuneration and how this is aligned with individual and AIM company performance and how it is assessed.
• Risk and controls framework: details of corporate governance committees and their role and responsibilities.
• Investor relations: the AIM company’s approach to AIM shareholder engagement.”

Moreover, many institutional investor voting policies borrow heavily from aspects of the UK Corporate Governance Code, and have often referred to the principles of its less stringent cousin, the QCA code, when assessing the governance arrangements of AIM constituents.

Consequently, now that the requirement to report against a corporate governance code on a comply or explain basis has been removed from the AIM Rules, companies can, with some merit, state that to assess their governance practices against the codes’ principles is no longer a valid interpretation, given the bespoke nature of their arrangements. Such a position may lead to further engagement between companies and their shareholders in an effort to better understand these arrangements, which adherents of the changes may highlight as a positive. Conversely, it may be the case that some AIM companies will continue to report against the QCA Code despite no longer being required to do so by the AIM Rules.

Nonetheless, in voting application it is yet to be seen if investors will accept companies’ arguments regarding the suitability of their bespoke governance arrangements if they choose to deviate from long-standing market practice, or whether they will endeavour to uphold UK corporate governance principles as they have developed in recent years.