The average number of daily shares traded in AIM company shares has exceeded 1 million for the first time in AIM’s 17 year history.
One of the key drivers in activity is AIM shares can now be held in Individual Savings Accounts (Isa’s), and the current 0.5% stamp duty (tax) on the purchase of shares will be abolished from April 2014.
AIM shares are now tax-advantaged investments which avoid capital gains tax, income tax, inheritance tax and, in the coming months, stamp duty. The benefit for companies considering an AIM flotation is a further reduction in the cost-of-capital and an increase in aftermarket liquidity, both of these have a potentially positive impacting valuations.
These considerable benefits to holding AIM shares follow relaxation of the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) rules introduced in the Finance Act 2012, which increased the limits on the size of qualifying companies from up to 50 employees to 250 employees and gross assets from of £7 million to £15 million. Making more companies able to qualify.
For Non UK companies considering floating on AIM the EIS and/or VCT funds raised can now be used anywhere in the world, provided the company has a UK ‘permanent establishment’. The ‘permanent establishment’ test can most easily be met by having someone in the UK who has the authority to ‘bind the company to contracts’, therefore, an office, branch, may not necessarily be required.
Macro factors too have positively influencing AIM which has already exceed the number of new listings during 2013 over last year. With the UK economy expected to grow by 1.6% this year, more than double the Government’s previous forecast, optimism among UK manufacturers increased during October at the fastest rate since April 2010, households’ optimism in the recovery improved for the 10th straight month in October and the FTSE 100 has been above 6,000 for the entire year.
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