FINANCIAL MANAGEMENT

Financial Management



Financial Management

Part 1

Ans1A)

Alternative Investment Market (AIM)

The Alternative Investment Market (AIM) is a market segment on the London Stock Exchange London Stock Exchange. AIM came in to existence in 1995 when London Stock Exchange provide a way to finance for new and growing companies, and to give them an advantage in the issuance of securities and funds turnover of shares in the company AIM belongs to the so called alternative trading platforms, specifically created to facilitate access to financing for young, growing companies. In some cases, investors are looking not so much on the history and financial performance, but on the prospect and potential of the company (www.devisscher.com).

AIM was originally created for British companies, but over the last few years the spectrum, the parties involved has increased significantly. Since 2005 AIM has become one of the key markets of Europe. Companies that seek to AIM, it is basically:

The young growth companies, companies whose shareholders need the services of the exchange , but prefer the London Stock Exchange, a simplified tax structure of AIM;

Companies with a large number of shareholders ;

Companies who cannot or choose not to go to the main stock exchange ;

Companies that do not meet the requirements of the London Stock Exchange (due to the small number of shareholders or the lack of a three-year financial report).

There are variety of advantages enjoys by the companies through AIM which are as followed:

It is easier to be a process of mergers and acquisitions (M & A)

Ability to increase funding (for example, issue additional shares, using shares as collateral, etc.)

Easier it will be the regulatory process by the exchange (and therefore cheaper, compared to the cost of the main companies in the market)

Greater level of "market" and the transparency of the company (with the active interaction of stakeholders and shareholders)

Developing and improving a favourable corporate image (increase public confidence in the company's activities, public awareness)

The increase in the interest of employees in its successful development (through incentive schemes that involve employees focus on increasing market capitalization and share price) Ans1B)

AIM rules: the basic requirements for eligibility

The basic requirement for eligibility for the AIM does not require any financial track record or trading history. However, AIM do not entail for any minimum requirement in provisions of size or number of shareholders. This shows that AIM is more flexible and reflects the fact that the objective of the AIM was intended for smaller companies which are growing in order to offer them a balance regulatory regime for investors and companies. Aim consists of the prominent diverse and devoted community stakeholders invented of several participants of the market. For the market success the Specialist advisers are essential part of the AIM which range from enthusiastic Nominated Advisers (Nomads). These are the one who cooperate and play a chief role in the AIM life along with the lawyers, brokers and hence accountant. Moreover, the main players and stakeholders consist of investors, public relations and investor relations ...