The London Stock Exchange’s plans to relax reporting standards on its embattled junior market risk damaging shareholder trust and deterring already sceptical institutional investors, a group of investment bosses has warned. In a letter to LSE boss Julia Hoggett, spearheaded by the Quoted Companies Alliance (QCA), six fund managers said
Ali Lyon
Tuesday 14 July 2026 5:00 am | Updated: Monday 13 July 2026 7:41 pm
The London Stock Exchange’s plans to relax reporting standards on its embattled junior market risk damaging shareholder trust and deterring already sceptical institutional investors, a group of investment bosses has warned.
In a letter to LSE boss Julia Hoggett, spearheaded by the Quoted Companies Alliance (QCA), six fund managers said proposals to remove the need for Aim-listed firms to comply with a governance code were doomed to backfire and will make it harder for constituents to attract cash.
“If the changes proceed as currently set out, they will materially reduce investor engagement with AIM companies and significantly damage trust in the market,” the letter, seen by City AM, said.
“Such an outcome will not be to the benefit of the companies the QCA represents. In an already challenging investment environment, the proposed new wording risks further diminishing institutional investor interest in the market.”
The intervention – led by the QCA and signed by small-cap investors including Canaccord Genuity Asset Management, Downing and Trinity Bridge – follows the London’s Stock Exchange’s decision to consult on proposals to pare back red tape for Aim-listed firms.
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In its consultation document, the LSE proposed axing its so-called “comply or explain” rules around governance. The approach forces constituents either to sign up to a raft of governance standards or explain to investors why they have opted against doing so. They also proposed axing the need for a working capital statement and easing the process for main market constituents to list on Aim.
Aim ‘an already challenging market’
The consultation forms part of a concerted push to breathe new life into the ailing Aim, which has been battling a years-long trend of de-listings and a drop-off in new initial public offerings. The number of companies on the market is now at its lowest level this century, after some 88 companies left last year to become a private company or as part of a takeover deal.
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The letter – which also boasts Toscafund, Amati Global Investors and Ownard Opportunities as signatories – praised the LSE’s overall vision for Aim, saying that together the package would help “build a more dynamic and frictionless market”.
But they added that those efforts would be undermined if officials ploughed ahead with the changes to governance standards, adding the move would compound problems in “an already challenging market”.
“Any perception that governance expectations on Aim are being materially weakened could further diminish institutional investor interest in the market,” the signatories added.
The paper argued that firms overwhelmingly felt “compelled to comply with standardised governance” rather than explain their approach, adding that “a ‘one size fits all’ corporate governance requirement does not support Aim companies or investors”.
A London Stock Exchange spokesperson said: “Stakeholders from across the Aim ecosystem have responded to our Aim rules consultation and an initial review indicates 70 per cent support our proposed changes to corporate governance disclosures.
“We recognise that to make Aim competitive, we must address the friction that has built up in the market over the years. This is something that companies, investors and advisers have been categorical about in their feedback. We are focused on ensuring that Aim is set up for continued success and will respond formally via an Aim notice once the review is complete.”
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