What the changes to corporate governance rules mean for AIM company NEDs

Since September 2018,  all AIM must follow and report on a recognised corporate governance code. For Chairman and Non-Executive Directors, these changes brought with them increased responsibilities. The entrepreneurial, higher risk element of AIM means that a strong board of Non-Executives can have a big impact on a business’s potential for success. The value that a NED can add on an AIM board is substantial, and it goes far beyond simply fulfilling the corporate governance requirements, so has this change of rules really had that much of an impact?

Whilst good corporate governance has always been encouraged, adherence to a specific code on AIM had previously been optional. The new rules mean that all AIM companies must state which Corporate Governance Code their business complies with, and detail how this compliance is maintained.

Chairman and NEDs of AIM businesses must make sure they understand the different codes, and which code will be most suitable for the companies of which they are a board member. Beyond this, Chairman and NEDs will still need to focus on bringing commercial and strategic insight to the board, using their objectivity and cross sector knowledge to help the business be agile in a fast-moving market.

The changes in AIM rules can be viewed as part of the strategic contribution that A NED can make – assessing which code will be of the minimum disruption to implement and will also allow the business to grow according to its strategic targets.

These changes need not constrict or prevent NEDs from continuing to have an active impact on AIM boards, but can ensure that good corporate governance is built into the business’s structure, and is assessed accordingly alongside other objectives and targets.

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