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March 10, 2008

AIM Remains Number One Choice for Listings Despite Tighter Regulation

The Taking AIM Survey 2008, undertaken by Baker Tilly in partnership with Faegre & Benson, was carried out by an independent research consultancy. The survey involved 200 companies currently quoted on AIM, 50 private companies and 50 institutional investors actively investing in companies listed on AIM. Of the 200 companies listed on AIM, 60 are overseas companies and 140 are UK companies.

2007 saw AIM adopt a number of new rules and regulations - the tightening of the AIM rules in that past year has generally been welcomed as a sensible move.

The majority of AIM companies agreed that tighter regulation has had a positive effect on new listings and been beneficial to the market's performance and investor confidence. The Taking AIM 2008 research concluded that two thirds of AIM companies found the self-regulation effective and has attracted, rather than deterred, new investors.

Despite the tighter regulations, AIM is still considered to have a light regulatory touch. A large majority of investors (74%) disagree that low regulation means low performance, however, (54%) believe that increases in the regulation of AIM is still necessary. Most of the AIM companies (85%) agree that these regulations have had a positive effect on new listings and been beneficial to the market's performance and investor confidence.

The Taking AIM survey 2008 also found that the general standard of corporate governance among AIM companies is a huge improvement from last year (58% up from 33% in last year's Taking AIM survey).

But AIM companies are finding compliance more burdensome, with 60% of AIM companies considering the obligations of being an AIM listed PLC to be onerous – highest figure since 2005.

Within the overall changes in AIM rules, the tightening of the Nomad rulebook has also been welcomed by investors with 34% of investors agreeing that the changes have had a positive effect, which ultimately led to improved relationships.

Melanie Wadsworth, a corporate partner at Faegre & Benson noted:

"AIM's lighter regulatory touch has always been seen as one of its fundamental strengths and is intended to balance the requirement of a small growing company with protection required for investors. Despite negative press from various quarters about AIM, it remains a fast growing equity market.

AIM has benefited from the continuing success of London as an international financial centre. It has evolved to become the market of choice for young or small companies across the world due to its relatively light regulation and access to investors. The new AIM rules for Nomads have clarified the responsibilities of the Nomad to ensure that the regulation is light but effective."

Chilton Taylor, head of capital markets at Baker Tilly, said:

"The tightening of AIM rules and the introduction of new rules for Nomads have been welcomed by companies and investors alike. Investors consider there is still room for improvement whilst AIM companies find the obligations increasingly burdensome. This shows that this important balancing act between the impositions of rules versus self regulation is probably just about right."

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