Marcus Stuttard, Head of UK Primary Markets & AIM at London Stock Exchange, believes there is underlying confidence in the UK business community – and has underlined the importance of tax efficient schemes in supporting the growth of small businesses.
Speaking to Intelligent Partnership for our upcoming AIM Industry Report 2019, Stuttard said that despite uncertainties such as the ongoing Brexit position, the business community that he and his colleagues are talking to remain confident for the future.
“The fact we have seen AIM companies continue to raise capital means they are continuing to be positive,” he said. “Last year, 70% of capital raised on AIM was through further issues.
“So the core function of the market is performing incredibly well.”
Within this, Stuttard added that the various tax efficient initiatives such as Business Relief (BR), the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) are playing an important role. Following the changes that were made to EIS and VCT rules that increase the focus on risk, Stuttard said there has been a period of adjustment, which is now bedding down. “People now have a lot more clarity about what they can invest in,” he said.
On BR, the recent Office of Tax Simplification’s inheritance tax review second report questioned whether allowing AIM shares to qualify for BR was not within the original policy objective of the relief. However, Stuttard pointed to the fact that the report had also referenced the government’s response to the Patient Capital Review in which it said it was committed “to protecting the important role that BR plays in supporting family owned businesses and growth investment in AIM and other growth markets”.
Stuttard also addressed London Stock Exchange’s recent changes to the corporate governance rules for AIM companies, describing them as a “natural extension to bring more consistency across the market”. However, he added: “We are not doing this to add prescriptive or unnecessary disclosures; these rules were implemented to provide a framework for open conversation between company boards and their investors.”
He rejected suggestions that further regulation might be on the way in the wake of the high-profile accounting issues at one-time AIM high performer, Patisserie Valerie, stating that the changes instituted in March 2018 were as much about codifying existing best practice and were the result of ongoing feedback from companies, advisors, and the investment community.
“The regulatory model has gradually evolved but we have not moved away from the core principles that we set out when AIM launched,” he said. “We are clear that we are not trying to operate a zero failure regime: companies will fail and that is the nature of markets and equity finance.”
The AIM Industry Report will be published in September, with input from a wide range of industry experts.
And to get a further understanding of what is going on in the AIM market, we are hosting six Showcase events around the country in September focusing on the market. To find out more about these, click here.