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Financial Management

Read Complete Research Material

FINANCIAL MANAGEMENT

Financial Management

Financial Management

Part 1

Ans1A)

Alternative Investment Market (AIM)

The Alternative Investment Market (AIM) is a submarket of the London Stock Exchange that allows smaller companies access to equity markets and circulates their capital under a more flexible regulatory framework for the rest of the Main Market companies. This market was active in 1995 in order to accommodate the SMEs. Now it have found an opportunity to growth and, most interesting to AIM (Alternative Investment Market) of London Stock Exchange (LSE), is that it has obtained a position of absolute dominance, becoming a sort of new global NASDAQ.

The accumulated experience has shown that investors who are willing to work on AIM bet on the growth capacity of the company requiring the admission, while approach to corporate governance problems, based indication of non-binding best practices, is considered well-balanced as it offers investors with an adequate level of protection, without increasing excessively the management of newly listed companies (business.nd.edu/).

Distinguish Features of AIM

AIM is conceived as the most flexible market. Companies wishing to go on AIM not imposed any special requirements for the history of existence. There are no requirements for minimum size, minimum number of shareholders or a minimum market capitalization, with the exception of investing companies (so-called shell companies (shell companies), the main activity of which, by definition, the London Stock Exchange is investing their funds in securities of other companies or acquiring business of other companies). This needs to attract funds in an amount not less than 3 million pounds sterling. The securities which can admitted to AIM comprises of all types and classes, including equities, preferred shares and debt securities.

Reason to choose AIM

World's Most Successful Growth Market

Fast accessibility

Streamlined admission process

Balanced approach to regulation

Cost Effective

Objective market valuation

Professional investor base

International profile

Tax breaks

Exit strategy for existing shareholders

The Companies in AIM

1642 - Number of companies listed on AIM

311 - International companies on AIM

548 - Market capitalization (£ bn)

40 - Number of Represented sectors

60 - Capital raised since 1995 (£ bn)

278 - Number of IPOS in 2006

77 - International IPOS in 2006

Ans1B)

AIM Rules: The Basic Requirements For Eligibility

AIM Rules set out a simple and accessible language, and do not include legal and technical jargon. Their goal - to serve as an invitation to international companies and to be understood as a broad range of individuals. Since the rules can be found on the website of the London Stock Exchange . Current regulation of the companies admitted to AIM based on the requirement of timely and reliable market for the public disclosure of material information, which provides control over the nominated adviser (www.londonstockexchange.com).

Shareholder approval is rarely required. Requirements for admission and the requirements of this regulation are set high enough to maintain investor confidence, but at the same time are not so stringent that an obstacle to the exit of companies on AIM. Hence in order owrds:

Admission Criteria for Companies:

No minimum size

No trading record required

No minimum free float

No prior shareholder approval required for

Transactions (most cases)

Admission documents pre-vetted by

Nominated advisor (NOMAD)

NOMAD required at all times

No minimum market ...
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