On 30 May 2019, the London Stock Exchange (the Exchange) announced a public censure and £300,000 fine for a PLC in relation to breaches of a number of AIM Rules for Companies (AIM Rules) arising from a variety of failings including misleading announcements, non-disclosure of related party transactions and inadequate board level challenge.  The fine was discounted from £450,000 for early settlement.


Relevant breaches included:

  • disclosure of misleading or incomplete information concerning the PLC’s expected trading performance and the progress of expansion plans in a notification dated 29 June 2017 (in breach of AIM Rule 10);
  • certain transactions between the PLC and former Board members from 2014 to 2016, such as the payment of consultancy fees and a personal loan, which had not been announced as related party transactions at the relevant time (in breach of AIM Rules 13 and/or 19)
  • dealing by the former Chairman during a close period, the notification of which was delayed and gave an incorrect transaction date (in breach of the applicable AIM Rules 10, 17 and 21 in force at the time);
  • a failure to ensure each of the PLC’s directors accepted collective and individual responsibility for:
    • challenging the accuracy of the expected 2017 EBITDA figure; and
    • undertaking sufficient scrutiny or consideration of certain payments to Board members (in breach of AIM Rule 31);
  • a failure to ensure that the PLC’s procedures and controls were sufficient to monitor the progress of its expansion or any impact on expected 2018 trading performance (in breach of AIM Rule 31);
  • a failure to provide timely or accurate information to the PLC’s Nomad (including in respect of the settlement status of legal claims which impacted on the 2017 EBITDA figure) or to seek the Nomad’s advice and guidance where appropriate (in breach of AIM Rule 31).

On 1 August 2017, the PLC announced that its revised expected 2017 EBITDA was approximately £2 million, rather than £5 million to £5.4 million as previously announced.  Following this announcement, three Board members stepped down from the Board with immediate effect, including the Chairman.  Significant remedial action has since been undertaken by the PLC, including in respect of governance and financial processes and procedures.


The Exchange considers this to be a particularly egregious case both in terms of the nature and scale of the breaches, which arose in connection with “a pattern of unacceptable conduct by the Board”.  The Exchange highlighted that, but for the new Board’s fully co-operative approach to the investigation, the fine would have been substantially higher.

The Exchange is sending a clear message to companies about its expectations that all Board members take both individual and collective responsibility for ensuring that robust procedures and controls are in place.  In addition, members of the Board are expected to pose an effective challenge to fellow directors who are “exerting disproportionate influence.” The role of independent Non-Executives is particularly important in holding management to account.  Where Board members fall short of this expectation, published censures and fines of this magnitude or greater could be a sign of things to come.