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92 companies have delisted from London’s Alternative Investment Market (AIM) in just the past year (year to 15 October). This brings the total number of companies listed on AIM down to just 695, its lowest level in 23 years.
The continued fall in the number of companies on AIM comes as the Government considers scrapping Inheritance Tax (IHT) reliefs for investing in AIM shares in the Budget. Currently, heirs pay no IHT when inheriting AIM shares, providing they have been held for at least two years.
Scrapping IHT relief on AIM shares risks sharply reducing investment in small listed companies in the UK and could call the long-term viability of the market into question. Since the 2024 General Election alone, 26 companies have delisted from AIM*.
A major driver of the shrinking of AIM has been the lack of IPOs to replace companies leaving. The AIM market recorded just 10 IPOs in 2023/24 (year to 15 October).
Colin Wright, partner and UK group chairman, says there is hope that the AIM IPO market could come back to life if interest rate cuts accelerate.
"As AIM experiences a further glut of companies leaving the exchange, the Government needs to urgently address how it can help. Cutting IHT relief on AIM shares would do the opposite.
“With fewer companies now listed on AIM, and with fewer companies looking to join, the Government should be looking at maximising incentives for both companies and investors in small caps. The Financial Conduct Authority’s listing reforms may help, but over the medium term. Tax breaks are needed to help revive AIM, the upcoming budget is expected to do the reverse. No changes to the existing tax reliefs for AIM shareholders is probably the best we can hope for.”
Around 1 in 10 of delistings from AIM are, according to the companies themselves, due to the cost of complying with AIM regulations.
“We’ve been warning for some time that the cost of listing on AIM has become too expensive. Due diligence and ongoing reporting obligations have also become too onerous. This, evidently, is leaving little incentive for some companies to remain listed on the market.”
AIM market sees 23 year-low in number of companies listed
* Number of companies delisting from AIM between July 4th 2024 and October 15th 2024
