The decision as to whether a company is appropriate for AIM rests with the Nomad. Once the Nomad has come to the initial view that company is suitable and all parties are happy to proceed, the Nomad will draw up a detailed timetable and set the scope of work for the professionals undertaking the due diligence.
The following key reports, which are typically addressed to the company and the Nomad, are produced by the advisers:
Legal due diligence report
This report, typically prepared by the lawyers to the company, sets out, in respect of the company and its subsidiaries, details of items such as constitution, corporate structure, material contracts, litigation, title to assets, employment arrangements and tax. Long form report This is a detailed report on the company’s business operations and financial history prepared by the reporting accountant.
Working capital report
This is a report prepared by the reporting accountant reviewing the financial forecasts provided by the company. Its purpose is to support the statement required to be made by the company’s directors in the admission document that the company has sufficient working capital for at least 12 months.
Historical financial information
Companies are usually required to disclose in the admission document audited historical information for three financial years prior to flotation.
Pro forma financial information
This is an optional statement showing the effect on assets, liabilities and earnings if there has been a significant change since the last audited balance sheet, such as an acquisition which will be completed conditional on flotation occurring.
Financial reporting procedures
The reporting accountant will review the company’s financial and management controls to form a view as to the adequacy of the company’s financial reporting procedure.
All AIM applicants must produce an admission document that describes accurately and in detail the business, activities, financial information and legal affairs of the company. The preparation of this document is managed by the Nomad with assistance from the company and the other professional advisers.