What are the Advantages of Alternative Investments?

AIM is the abbreviation of Alternative Investment Market in English. It refers to the market set up by the UK for companies that are not qualified to be officially listed on the London Stock Exchange. These companies are usually small or high-risk enterprises.

Alternative investment market

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Chinese name: Alternative investment market
Foreign name: Alternative Investment Market

Short name: AIM
Investment scope: Economic Investment Market for Virtual Reality Market Conversion

AIM

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From Reuters Financial Dictionary

London Exchange Alternative Investment Market (AIM)

In order to meet the needs of small, emerging and growing enterprises to enter the open capital market, in June 1995, the London Stock Exchange established the Alternative Investment Market (Alternative Investment Market, also known as high-growth market.) AIM). Since its establishment, more than 2,000 companies have been listed on AIM, of which 212 overseas companies have raised a total of 19 billion pounds. In just ten years, the AIM market of the London Stock Exchange has become the main financing market for small and medium enterprises worldwide. AIM is composed of companies from various industries, and currently covers 33 different industries in the market.

AIM is affiliated with the London Stock Exchange, but has its independent operating rules and management agencies. Its main feature is that the listing standards are low.

The market has no minimum requirements for the company's past performance, nor does it set a minimum limit on public ownership. When emerging companies apply for listing on the second board market, they only need to have sufficient working capital to support at least the current 12-month demand.

Directors and employees who own 10% or more of their shares must commit not to sell any shares for at least one year after the company's listing if its main operating profit record is less than two years. The key to listing on the alternative investment market is to hire a professional consultant (sponsor). Professional consultants assist companies in making full disclosures in listing documents when they apply for listing and provide ongoing collaboration to meet regulatory requirements.

And the United States Nasdaq and other converted from the OTC market

-Tailor-made market entry rules for small and medium-sized companies, allowing many companies to enter the open market in the early stages of development without any transaction records.

-No minimum total market capital required

-Suitable for companies with fewer or no transaction records looking for growth and new capital.

--Compared to the threshold of -25% for companies in the main board market, shareholders are required to disclose the transaction in advance only when the proportion in any classification test (both reverse takeover or basic disposal) exceeds 100%

-There is no minimum public shareholding requirement. However, it should be noted that fewer "freely-tradable shares" are a factor that may cause the company's stock liquidity to decrease.

-AIM is considered "unlisted" in terms of taxation, so certain tax incentives will be provided to corporate investors who meet the relevant eligibility requirements. For someone, including corporate investment tax relief and reinvestment tax deduction.

-Faster approval

Appoint a consultant (sponsor),

Appoint a broker;

There are no restrictions on tax-free, transferable shares.

Is a registered stock listed company or equivalent;

Prepare a certificate of listing application;

It is paid to the stock exchange at a certain trading rate once a year.

For companies that are just getting started, entering AIM is the first step into the public market. For companies that are growing and have not met all the standards for listing on the main board market, or have no more suitable environment, but have high growth potential, AIM provides a development channel for them. Many companies that have successfully traded on the main board market have started with AIM.

Since the 1980s, the United Kingdom has conducted arduous explorations around the direct financing of small and medium-sized enterprises, especially technology companies. The USM market, the AIM market, and the TECH market have been established. Currently, there are more than 700 listed companies in the UK's Alternative Market (AIM), with a total market value of more than 10 billion pounds.

Before the 1970s, Britain had long been pursuing a policy of phasing out SMEs. After 1973, the United Kingdom began to change this wrong policy; instead, it actively supported the development of SMEs. In the 1980s, Britain successively introduced 11 bills on SMEs to promote the development of SMEs. Against this background, the United Kingdom established the Unlisted Securities Market (USM) in 1980, with 23 companies that year. By the end of 1989, USM had a total of 448 listed companies with a total market value of £ 8.975 billion. Since then, the USM market has been shrinking year by year, with only 12 companies and a market value of £ 839 million when it closed in 1996. Despite the setbacks in the USM market, the UK's policy to support SME development has not changed. In 1995, the United Kingdom established the Alternative Market (AIM), which targets SMEs and start-ups.

(1) A designated sponsor and a designated broker must be appointed;

(2) A company legally established in accordance with the laws of the country and being a public company and similar companies;

(3) The company's accounting accounts comply with the UK or US general accounting standards;

(4) It has two years of main business profit record. If this condition is not met, the directors and employees must agree that they must not sell any of their interests in the company's securities for at least one year from the date of entry into the AIM.

In addition, in 1993, the London Stock Exchange specifically formulated the listing rules for scientific research companies contracting; in 199, it formulated the listing rules specifically for start-up high-tech companies contracting. On this basis, the London Stock Exchange officially established the London Technology Board TECH-MARK in November 1999 to provide financing services for companies with technological innovation. Any company applying for listing on the technology requires a three-year financial record, but does not require profit; after the company is issued, the public holds more than 25% of the shares; the company does not require three years of operating performance and profit requirements, and no shareholders and senior management Lock-up restrictions on the sale of shares; the number of shares offered by the company must be at least 30 million U.S. dollars and the total market value of the company is expected to be no less than 80 million U.S. dollars.

AIM is a global market opened by the London Stock Exchange for smaller, growing companies. It gives these companies access to the capital and liquidity of the London market, Europe's largest and most dynamic market.

AIM offers the benefits of trading on the open market and allows companies to grow in a flexible authentication environment. The main reasons why these companies are attracted to AIM are:

Admission standards are relatively loose, allowing various companies to enter the open market in the early stages of development.

The management system is not too strict, allowing companies to learn and experience as a stock listed company without being restricted by the set of codes of conduct stipulated by the UK listing authority.

Acquisition rules are more relaxed, which is conducive to expansion through acquisitions.

Certain tax benefits, which may be an advantage for some companies.

AIM was established in 1995. There are now more than 700 companies (51 overseas companies) listed on AIM, with a total market capital of 10 billion pounds. AIM has succeeded in a global slump in the initial public offering (IPO) market in recent years. In 2002, AIM had 60 IPOs, accounting for 46% of all IPOs in Western Europe this year.

AIM is open to companies from various industries around the world

. It is specifically tailored to the needs of young and growing companies, so there are no specific suitability criteria for companies' eligibility to join AIM. AIM accepts a variety of companies, from cutting-edge technology companies to distribution companies.

Sponsor

: Any company that wants to join AIM must first appoint a sponsor (commonly known as "Nomad"), which is responsible for assuring the stock exchange that a particular company is suitable for joining AIM. This is an important quality control measure for AIM, and it also specifies Sponsors have a very serious responsibility. After the company is listed, it also needs sponsor services to make suggestions on the company's current work of disclosing company information.

The sponsor is a company composed of experienced corporate finance professionals approved by the London Stock Exchange, with a total of 69 companies. As the international image of AIM continues to grow, the sponsor network is being deployed globally.

Any company that wants to act as a sponsor must be approved by the exchange and registered in the nominated sponsor register.

The company must also appoint a (broker) broker, a securities firm that is a member of the London Stock Exchange. They will bring together the sellers and buyers of the stock and help the company go public and trade in the market after the issuance of securities.

The broker is also responsible for providing important information about the company that is available through the SEATS PLUS system.

Other necessary professional advisers are legal advisers, reporting accountants and investor relations advisers.

Join the AIM program

The main requirement is that the company must be "fit" to the market and that judgment is made by the company's designated consultants. To apply for AIM, a company must take the following steps:

(1) Appoint a sponsor and broker

(2) No restrictions on the free transferability of its stock

(3) Pay a flat annual fee

(4) Traditionally, all companies must also prepare market entry documents (or profiles), including all relevant information about the company and its activities. However, the London Stock Exchange has recently launched a new fast-track access to AIM. Companies already listed on nine overseas exchanges can now use their existing annual reports and books as a basis for supplementary quotations on AIM.

(5) During the preparations for the listing, the company must announce its willingness to list on the market and submit an application to the London Stock Exchange containing appropriate documentation.

All AIM companies enjoy the benefits of being on the London Stock Exchange-A recent survey (April 2003) found that 83% of respondents believe that AIM has met or exceeded their expectations despite the low stock price.

AIM's Lifetime Sponsor System

The UK AIM market implements a "lifetime" sponsor system. In AIM in the UK, sponsors and brokers are united together, just like the two Optimus Primes in the GEM market, supporting a clear sky for investors and promoting the standardized and stable development of the GEM market. In this sense, the emergence of the sponsor system is first of all a norm for the GEM market and inherent requirements for sound development.

After considering the status quo of the domestic market, the British government has clearly put forward the main theme of supervision to maintain market confidence and put the protection of investors' legitimate rights and interests in the first place through the regulatory principles. In addition, the establishment of a "life-long" sponsor system for AIM's continuous foundation is an effective solution to prevent and resolve market operation risks.

(1)

Re-appointment of sponsors is a prerequisite for contracted listing of companies

After the London Stock Exchange accepted a listing application for corporate contracting, the main considerations were whether the issuer could comply with the transfer rules and whether investors could buy and sell freely. To this end, AIM has established two important market roles, sponsors and brokers. All corporate contractors seeking an AIM listing must first hire a sponsor and a broker. The sponsor mainly provides information guidance and advice to the issuer on the listing rules. The role of the broker is to focus on providing and supporting the trading convenience of corporate stocks. The sponsor and broker's responsibilities can be performed by the same company. Hiring a sponsor is one of the prerequisites for the AIM listing review standard, and no company can do it.

Britain's regulation of financial markets has always been known for its strictness. The primary goal of the regulator is to maintain market confidence and protect the interests of investors. In view of the high-yield and high-risk coexistence characteristics that are common in the GEM market, regulators require a lifelong sponsor system for AIM listed companies. The lifelong sponsor system means that a listed company must at any time hire a qualified company as its sponsor to ensure that the company continues to abide by market rules and enhance investor confidence. The term of the sponsor is based on the duration of the contract of the listed company. One day after the company is listed, the sponsor will be accompanied by about one day's salary. If the sponsor is absent due to resignation or dismissal, the stock trading value of the sponsored enterprise will be immediately stopped by the divisor, and the transaction value will not be continued until the new sponsor has officially assumed his duties. If there is still no new sponsor to fill the vacancy within one month, the stock of the sponsored company will be delisted from the market.

(2) The focus of the sponsor's duties is different before and after the company goes public

Sponsor's duties

The scope is defined in principle in the regulations, and the right of interpretation belongs to the London Stock Exchange. The duties of AIM sponsors include:

1. Duties and obligations of directors of listed companies under the AIM market rules provide guidance to directors to ensure that directors have received sufficient training and are aware of their responsibilities.

2. Do your best to conduct proper and careful due diligence on all aspects of the issuer.

3. Confirm that the issuer and the shares to be issued comply with the AIM market rules and make a written statement to the exchange.

4. Continuously provide advice and guidance on the duties and obligations of directors of listed companies to ensure that the issuer complies with AIM market rules at all times after listing.

5. When deciding to terminate the sponsorship, the exchange must be notified in the form and time limit required by the exchange.

6. Regularly check the actual trading activities and financial status of the enterprise against any profit forecast, estimate and prospect plan published in the application documents of the listed company or published publicly.

7. When there is a significant difference between the profit forecast formulated by the listed company and the actual performance of the company, assist the directors to decide whether to disclose such circumstances.

It can be seen that the focus of the sponsor's sponsorship work before and after the company goes public is different. Before an enterprise applies for listing, the sponsor must make a substantial review of the issuer's texture and conditions. It must first evaluate and judge that the issuer has met the relevant requirements of the listing standards and confirm the transaction amount in writing before the application process can continue. It also needs to ensure that the company's directors have been consulted and guided about their responsibilities and obligations and comply with relevant AIM market rules. The sponsor must promise to advise the company at any time as a consultant to provide guidance to the company on the relevant AIM market rules. At this stage, the sponsor plays the role of mentor and independent auditor.

In order to be accountable to the London Stock Exchange, sponsors typically conduct detailed due diligence on the issuer's situation. In accordance with the requirements of the Regulations on the Public Issuance of Securities in 1995, some of the information that needs to be disclosed to investors in the prospectus are: the issuer's assets and liabilities, financial status, profitability, business development prospects, securities rights, etc.

After the company completes its listing, the sponsor's sponsorship work turns to guide and urge the company to continue to abide by market rules and fulfill its information disclosure obligations as required. In addition, the sponsor can also actively communicate with the trading house and investors on behalf of the company.

Although the scope of the sponsor's work has expanded after listing, one thing must be clear: the core responsibility of the sponsor is to counsel the directors of the company to comply with market rules and fulfill their due responsibilities and obligations. Especially in terms of information disclosure, the sponsor's guidance and supervision of the company will directly affect the quality of AIM's market operation and the vital interests of investors. Therefore, it can be said that the functions of "counseling" and "independent auditor" are the essence and key of the sponsor system.

The British AIM market has made great progress on the basis of "starting from scratch" and has become a new bright spot in the global GEM market. The basic experience of its success is as follows:

(1)

Diversified industry distribution of listed companies

When the British AIM market was established, it was clear that it was necessary to provide financing services for growing small and medium-sized enterprises, but there were no special requirements for the nature of the enterprise and the industry. Contrast. Therefore, the industry of listed companies in the AIM market is very wide. There are both technology companies and non-tech companies. In the technology-based technology sector, the industry distribution is also scattered and not limited to the IT industry. Taking the end of 2002 as an example, its 704 listed companies are distributed in petroleum, aviation, defense, electrical equipment, general motors, automation accessories, consumer electronics, medical equipment, biotechnology, pharmaceuticals, retail, publishing, services, transportation Transportation, communications and finance, IT and other industries. Among them, there are 271 general service industries, accounting for 38.5%, ranking first, 136 financial institutions, accounting for 19.3%, ranking second; 94 IT industries, accounting for 11.9%, ranking third.

(2)

The size of the single financing is small, and the company's market value is small

. From 1995 to 2002, a total of 1166 companies (including companies that have already been delisted) were issued for IPO in the AIM market. The total amount of funds raised was 46.661 pounds, and the average amount of financing was 3.7 million pounds. In 2002, a total of 160 companies went public, and the IPO financing capacity was 490.1 million pounds, with an average of 3.07 million pounds each, a record low in 8 years. This is in contrast to the new markets in continental Europe and the Hong Kong Growth Enterprise Market. For example, the average number of IPOs of listed companies in Germany's new market is 89.57 million euros, France is 22.45 million euros, and Hong Kong is 163.83 million Hong Kong dollars. Not only that, the refinancing scale of listed companies in the AIM market is not large, and the basic trend and scale are similar to the IPO. It should be said that the small and multiple financing method of the AIM market is in line with the development characteristics of SMEs and the objective needs of financing.

(3)

Change the establishment model and adopt a parallel subsidiary model

. In response to the deficiencies in the design of the unlisted market (USM) system, the London Stock Exchange has made corresponding adjustments in a timely manner. Although it still adopts the subsidiary model, AIM has an independent listing system, regulatory system, information disclosure system, and risk warning system. Designed from the perspective of effective use of resources and control of risks. This mode of using the existing trading system to establish a relatively independent GEM market and equipped with independent management agencies to monitor the market can not only make full use of the existing resources of the exchange, but also ensure the independence of market actions. In addition, the motherboard and AIM companies have maintained a certain degree of independence, and it is rare for AIM companies to switch to the motherboard. By the end of 2002, only 43 companies had been converted into motherboard companies, which ensured the quality of AIM companies, improved their ability to resist risks, and made AIM a high-quality market. In addition, in order to ensure a good reputation in the London market and reduce market risks, the AIM market has adopted a system of appointing sponsors.

(4)

The rise and rapid development of British SMEs,

Provides a steady stream of fresh blood for the AIM market. Changes in the British government's SME contracting policy have promoted the development of SMEs. Statistics show that the total number of British companies increased from 2.4 million in 1980 to 3.75 million in 2001, an increase of 58.7%, most of which were SMEs. From 1979 to 1996, the proportion of employment provided by British SMEs (with less than 250 employees) as a percentage of the national employment rose from 49.1% to 58.2%. By 2001, there were 3.759 million British SMEs, accounting for 99.8% of all enterprises, providing 54.4% of employment opportunities, and the realized turnover accounted for 51.6% of the total turnover, providing a continuous stream of quality resources for the AIM market.

What are the Advantages of Alternative Investments?

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