AIM is London Stock Exchange's (the 'Exchange's') market for smaller and growing companies. Launched in 1995, it is now firmly established as a leading growth market with the critical mass to provide firms from a wide range of countries and sectors with access to a diverse set of investors, who genuinely understand the needs of entrepreneurial businesses. AIM serves as a mechanism for companies seeking access to capital to realise their growth and innovation potential and since launch has helped over 3,100 companies raise over £67 billion through new and further capital raisings. AIM plays a vital role in the funding environment for small and medium-sized enterprises as they develop their businesses.

Dynamic, growing companies from across the world continue to be attracted to the benefits of being on AIM. AIM is home to 1,253 companies with a total market value of almost £65 billion, 20 per cent of which are incorporated overseas. Together, these companies comprise a unique global community of innovative businesses representing the future of the world economy. As well as being geographically diverse, AIM is able to support the financing needs of companies from over 40 different sectors. AIM is the only major growth market that has lived through two complete economic cycles. The fact that AIM companies raised £4.7 billion through further issues during 2009, a year of uncertainty and upheaval in capital markets worldwide, demonstrates how interest in small and mid-cap companies remains strong amongst the internationally focused investor community in London.

Joining a public market – be it AIM or the Main Market – is a way to grow and enhance your business. When considering the available financing options the following factors will often be viewed as the key benefits of admission to a public market:

• to provide access to capital for growth, enabling companies to raise finance for further development, both at the time of admission and through further capital raisings
• to create a market for the company's shares, broadening the shareholder base
• to place an objective market value on the company's business
• to encourage employees' commitment and incentivise their long-term motivation and performance, by making share schemes more attractive
• to increase the company's ability to make acquisitions, using quoted shares as currency
• to create a heightened public profile, stemming from increased press coverage and analysts' reports, helping to maintain liquidity in the company's shares
• to enhance the company's status with customers and suppliers.

Before joining AIM, businesses may have been venture capital-backed or be more established companies that have decided that AIM is the best way to take their business to the next stage of growth.

Whatever their background, there are many reasons why ambitious, growing companies continue to choose to join AIM. These are summarised in the information panel below.

Companies that choose to join a public market in London have a choice depending on their size, stage of development and capital raising requirements and should discuss the options available to them with their advisers. The Main Market is for larger more established companies and companies have the further option of two types of listing – a Premium Listing or a Standard Listing.

Companies with a Premium Listing are required to meet the UK's super-equivalent rules which are higher than the EU directive minimum requirements for a Standard Listing, and as a result benefit from access to a wider range of investors.

AIM's success is nderpinned by its regulatory environment, which has been specifically designed to meet the needs of smaller and growing companies while offering appropriate investor protection. AIM also benefits from being an integral part of the portfolio of markets offered by the Exchange. The entry criteria for AIM are tailored for growing companies with no trading record required, no minimum size criteria and there is no prescribed level of shares to be in public hands.

• Balanced regulation
  AIM's balanced regulatory environment, specifically tailored to support the needs of smaller companies
• International investor base
  Access to a wide and diverse range of institutional and retail investors
• Geographical reach and wide sector coverage
  The diversity of sectors and regional coverage on AIM, with companies from 40 different industries from over 28 countries
• Expert adviser network
  A large and experienced community of expert advisers to help companies join AIM and support them once they are trading on the market
• Visibility and profile
  With customers, suppliers, investors and other key stakeholders

• No minimum market capitalisation
• No trading record requirement
• No prescribed level of shares to be in public hands
• No prior shareholder approval for most transactions*
• Nominated Adviser required at all times
• Admission documents not pre-vetted by the Exchange or by the UKLA in most circumstances. The UKLA will only vet an AIM admission document where it is also a Prospectus under the Prospectus Directive

• Minimum market capitalisation
• Normally three-year trading record required
• Minimum 25 per cent shares in public hands
• Prior shareholder approval required for substantial acquisitions and disposals (Premium Listing only)
• Sponsors needed for certain transactions (Premium Listing only)
• Pre-vetting of prospectus by the UKLA

*unless the transaction is a reverse takeover or disposal resulting in a fundamental change of business

Once admitted to AIM, the ongoing responsibilities continue to remain straightforward and are aimed at encouraging growth. For example, there is no requirement to seek shareholder approval or prepare circulars except in circumstances where a transaction is classed as a reverse takeover or a disposal resulting in a fundamental change in business. Integral to both the admission process and life on AIM is that the company must work closely with their Nominated Adviser ('Nomad') to ensure that their actions are fair and reasonable for shareholders.

As AIM has grown, the Exchange has ensured that the market's regulatory framework has continued to evolve and develop to meet the changing needs of investors and companies. These changes have always balanced strong investor protection principles with the needs of smaller companies, allowing them to grow.

There are two sets of rulebooks, one for companies, and one for Nomads. The AIM Rules for Companies (the 'AIM Rules') are tailored to the needs of businesses joining AIM, and are designed to be easily understood. The development of the AIM rules has included the creation of specific guidance notes for particular sectors, such as oil & gas companies and investing companies.

AIM provides a robust and proven platform for companies seeking to raise growth capital, both through an IPO at the time of admission, and through further fundraisings. The total of £67 billion raised by AIM companies since the market's launch is evenly split between new capital raised by companies joining the market, and further capital-raisings by existing AIM companies.

This track record reflects AIM companies' ability to access London's large and highly receptive investor base. As a result, AIM, along with private equity, has come to represent a vital link in the global risk capital 'funding ladder', supporting innovation, enterprise and job creation.

Institutional and retail investors invest in AIM companies. Given the variance of market capitalisations on AIM the market appeals to a wide range of investors. For example, larger international investment firms can be found on the shareholder registers of the larger AIM companies and specialist investors, such as Venture Capital Trusts, invest in many of the smaller companies.

In terms of industries, the 40 sectors represented on AIM reflect the full spectrum of business activity across the world (see sectoral chart above). A feature of AIM that is increasingly evident is the growing diversity of companies ranging from software to mining and computer services to real estate and support services. AIM also provides an opportunity for an increasingly important global theme, renewable energy, and is ideally positioned to support the financing of exciting growth stories within the cleantech sector. This diversity underlines AIM's continuing appeal to growing companies in all industries.

The increasing scope, profile, size and maturity of AIM have confirmed the validity of the underlying premise upon which AIM is built – that ambitious smaller and growing companies require markets that are specifically designed for their needs. While AIM was initially launched to meet these needs among UK businesses, the market has become increasingly international, underlining the similarities between growing companies all over the world.

As a result, some 520 international companies incorporated outside the UK have joined AIM since it was founded, and 241 of these remain on the market today. In recent years, AIM's international momentum has been maintained by strong interest from companies in emerging markets in Asia Pacific, India and Central/Eastern Europe, alongside the market's longstanding and continuing success among companies in territories such as Australia and Canada.

AIM is supported by a large and highly experienced community of expert advisers, ranging from Nomads and brokers to accountants, lawyers and public relations and investor relations firms. The outstanding success of AIM is largely due to the dedication and professionalism of these advisers.

Each company applying to AIM must appoint and retain a Nomad to guide it through the admission process and to advise it during its time as a public company. The Exchange sets strict criteria for becoming an approved Nomad, in order to safeguard the integrity of the market, and to ensure that existing and prospective AIM companies have access to the high-quality advice they deserve. More details on the various advisers to AIM companies are provided in the next chapter.

Admission to AIM provides international visibility and credibility for companies not only with their customers and suppliers but with a wider set of stakeholders including investors, advisers and analysts. Proactive communication with investors and focused investor relations activities can have a positive impact on the visibility and liquidity of a company's stock.

The Exchange has made it possible for some companies whose securities have been traded upon an 'AIM Designated Market' for at least 18 months prior to the date of admission to AIM to apply to be admitted to AIM without having to publish an admission document. These companies are known as 'quoted applicants'.

Instead of publishing an admission document, a company qualifying as a quoted applicant is required to make a detailed pre-admission announcement at least 20 business days prior to its expected admission date. The supplement to the pre-admission announcement requires additional disclosures, which include a confirmation that the company has adhered to any legal and regulatory requirements of the AIM Designated Market; a description of any significant changes in the company's financial or trading position; and a statement by its directors that they have no reason to believe that the working capital available to it will be insufficient for at least 12 months from the date of admission.

Although a full AIM admission document is not required, other material information needs to be included in the announcement, and therefore a similar level of due diligence and preparation for admission needs to be undertaken as for a standard admission. It is advisable for a quoted applicant's proposed Nomad to speak to the AIM regulation team at the earliest opportunity to discuss whether a company is able to take advantage of this route to AIM.

Today, trading in AIM securities is encouraged and supported through a number of indices that have been developed to improve investors' ability to benchmark and trade AIM securities in a variety of ways. The FTSE AIM Index Series includes the FTSE AIM UK 50 Index, FTSE AIM 100 Index, FTSE AIM All-Share Index and FTSE AIM All-Share Supersector Indices.

The Supersector indices provide investors with 18 industry-based benchmark tools, helping them to identify macroeconomic opportunities for investment and trading, and to differentiate between the performance of Main Market and AIM companies in a given Supersector. These help to boost institutional interest and investment in AIM. A further innovation came in 2009, with the launch of the FTSE Environmental Opportunities UK AIM Index, designed to help investors identify and gain exposure to companies in six environment-related sectors.

The Exchange is committed to maintaining and extending AIM's attractiveness to issuers and investors in the UK and worldwide. With this in mind, the Exchange is continuing to work closely with policymakers and regulators at a national and European level. Our objective is to ensure AIM continues to deliver its distinctive offering to the growing businesses that will be the global multinationals of tomorrow.

If you are an ambitious and growing company – whatever your business, wherever you are based and whatever your sphere of activity – then AIM is an attractive route to a public quote on one of the world's most prestigious markets.