Equity Capital Markets Update: Practical Repercussions of a Breach of the ESM Rules  

19 July 2018

It is important that ESM-listed companies are mindful of the ESM Rules and potential breaches that may easily occur. This article describes a recent disciplinary notice for a listed company and illustrates the severity of the sanctions that can be imposed on an ESM-listed company that falls foul of the ESM Rules.


On 5 October 2017, an AIM-listed company was publicly censured and fined £85,000 for breaches of the AIM Rules for Companies (AIM Rules) relating to disclosure of information. This disciplinary notice is relevant to Irish PLCs listed on the Enterprise Securities Market (ESM) as ESM Rules for Companies (ESM Rules) are aligned to AIM Rules by reason of the compatible dual admission regime between the ESM and the AIM.

The Breach

Exchange and Management Resource Solutions plc (EMRS) notified the London Stock Exchange (LSE) of a proposed reverse takeover that was to be funded through a debt facility. Certain EMRS directors later became aware of concerns that the facility might not become available and they failed to notify EMRS’s Finance Director or its Nominated Adviser (“Nomad”). The Finance Director later became aware of the issues and informed the Nomad, leading to the company’s securities being suspended from the market.

The LSE found that the company had breached:

  • AIM Rule 10 (ESM Rule 10), by not referring to the funding issues in its notifications. An AIM-listed company must take reasonable care to ensure that any information it notifies is not misleading, false or deceptive and does not omit anything likely to affect the import of such information.
  • AIM Rule 31 (ESM Rule 31), by not informing its Nomad of the funding issues and by not seeking the Nomad's advice on obligations under the AIM Rules. An AIM-listed company must seek advice from its nominated adviser regarding its compliance with these rules whenever appropriate and take that advice into account.
  • AIM Rule 22 (ESM Rule 22), by not co-operating with the LSE during its investigation into the events. Where the LSE requires an AIM-listed company to provide it with information, the company must ensure that such information is correct, complete and not misleading.

Corporate Responsibility

At the time of the disciplinary action, all directors involved in the transaction, other than the Finance Director, had left the board. The LSE took into account the fact that the Finance Director had informed the Nomad immediately on becoming aware of the issue and that changes had been made to address those issues. The LSE made clear in its ruling that the company bears corporate responsibility for its actions and must ensure that its directors are collectively and individually responsible for AIM Rule compliance.


It is important for ESM-listed companies to note this disciplinary notice and to be wary of the pitfalls in relation to notification of information. Where a company breaches the ESM Rules, ESM’s market operator, Euronext Dublin, may censure that company (privately or publicly) or suspend or cancel the admission of the company’s securities. Euronext Dublin may also censure an ESM company’s director where the contravention is due to a failure by a director to discharge their responsibilities under the ESM Rules. Although Euronext Dublin (unlike the LSE) cannot fine such a company, the sanctions are sufficiently serious that ESM quoted companies should discuss and seek advice on any potential issues from their ESM Advisers in good time.

For more information on the potential for breach of ESM rules and the likely impact on ESM-listed companies, contact a member of our Equity Capital Markets team. 

The content of this article is provided for information purposes only and does not constitute legal or other advice.

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