AIM companies have a real opportunity to make governance reporting shorter and more useful under the market’s new rules, but should think carefully before cutting disclosure too far, according to Ben Harber, Company Secretarial Director who leads arch.law CoSec.
Changes to the AIM Rules for Companies, which came into force on 5 August 2026, remove the requirement for AIM companies to adopt a recognised corporate governance code and report against it on a comply-or-explain basis.
AIM Rule 26 now requires companies to disclose their governance arrangements across five specified areas: board composition; directors’ roles and responsibilities; remuneration and performance; risk and controls; and investor relations and shareholder engagement.
Harber says the move towards a less prescriptive regime should be welcomed, particularly for smaller and growth-stage businesses for which a standardised governance framework may not always be proportionate.
However, he cautions that there are risks in both directions, and that significantly reducing governance disclosure could have unintended consequences when companies are seeking investment.
“The direction of travel is understandable, and the reasoning behind it is sound. The Exchange was responding to feedback that, although companies have always been free to explain departures from a code, in practice many felt obliged to comply. AIM encompasses companies of very different sizes, structures and stages of development, so greater flexibility in how they approach and communicate governance makes sense,” said Harber.
“There is a genuine opportunity here to strip out reporting that adds nothing, such as principle-by-principle compliance tables that restate generic text, or content duplicated between the website and the annual report. Boards should take it.
“But there is an important distinction between reducing prescription and reducing governance. Companies need to consider how their reporting is viewed through the eyes of investors.
“For institutional and inward investors in particular, strong governance and transparent reporting can be an important part of assessing a business. If a company responds to the new rules by substantially reducing the information it provides, there is a risk that this creates more questions rather than fewer.
“The test should therefore not be ‘what are we now required to disclose?’ but ‘what information gives existing and prospective investors confidence in how this company is governed?’”
The concern is not his alone. In its response to the Exchange’s consultation, the Quoted Companies Alliance questioned the drafting of the new Rule 26 and warned that the changes could lead to a loss of confidence among investors. Harber says the right answer will differ from company to company.
He believes many existing AIM companies may find that continuing to use an established framework, such as the QCA Corporate Governance Code, remains the most practical approach.
Most AIM companies have already developed governance reporting around a recognised code, with the QCA Code widely used across the market. Existing reporting will also overlap with companies’ wider statutory reporting obligations, including section 172(1) Companies Act 2006 reporting on how directors have had regard to stakeholders and the long-term interests of the company.
Rather than starting again, Harber says companies can review and map their existing disclosures against the new AIM requirements.
“Where the QCA framework already fits the business, there is little value in dismantling a governance approach that works,” he said.
“A practical approach may be to continue using the QCA Code as a framework where it remains appropriate to the company’s listing, size and stage of development, and map existing QCA and section 172 disclosures across to the areas now required under the AIM Rules.
“That allows companies to take advantage of the flexibility the new regime provides without inadvertently weakening the governance story they are presenting to investors.”
The revised AIM Rules form part of a wider package of reforms intended to increase the flexibility and attractiveness of the UK’s growth market, including changes to admissions, fundraising and corporate transactions.
Harber arch.law CoSec boards should use the reforms as an opportunity to review whether their governance reporting is proportionate and useful, rather than simply shorter.
“Good governance should support growth rather than constrain it. The opportunity here is to remove reporting that adds little value while retaining the transparency that investors need.
“For boards, company secretaries and advisers, the question over the coming reporting cycle will be how to strike that balance.”