Nominated Advisor (NOMAD): Role, Responsibilities, and Qualifications

August 24, 2024 3 min read Finance Banking Investments NOMAD Alternative Investment Market Financial Services London Stock Exchange Regulatory Compliance

Discover the role, responsibilities, and qualifications of a Nominated Advisor (NOMAD) in the Alternative Investment Market (AIM) in London, ensuring companies adhere to regulatory standards and successfully navigate the market.

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A Nominated Advisor (NOMAD) is a financial services firm authorized by the London Stock Exchange (LSE) to guide and regulate companies listed on the Alternative Investment Market (AIM). The NOMAD ensures that companies comply with AIM rules and regulations, offering continuous support from admission to ongoing adherence.

Responsibilities of a Nominated Advisor

Initial Public Offering (IPO)

The NOMAD assesses whether a company is appropriate for public listing and prepares it for an Initial Public Offering (IPO) on the AIM. This includes due diligence, preparing requisite documentation, and ensuring regulatory compliance.

Ongoing Compliance

Post-admission, a NOMAD ensures that the company continues to meet AIM requirements. This involves advising on corporate governance, public disclosures, and ensuring timely and accurate financial reporting.

Qualifications and Requirements

To be accredited as a NOMAD, a firm must demonstrate substantial expertise in advising public companies. Key qualifications include:

Experience: A minimum of two years of relevant experience in corporate finance.
Track Record: Successful guidance of at least three AIM admissions in the past two years.
Personnel: Employing a team of qualified and experienced professionals within the firm.

Special Considerations

Regulatory Scrutiny

NOMADs are subject to ongoing oversight by the LSE, ensuring they maintain high professional standards. Failure to do so can result in penalties or loss of NOMAD status.

Ethical Practices

NOMADs are expected to uphold ethical standards, avoiding conflicts of interest and ensuring transparency in their advisory roles.

Examples and Applicability

Many successful AIM-listed companies credit their NOMADs for effective market navigation. For example, a tech startup may rely on their NOMAD for strategic advice during rapid growth phases, ensuring compliance while maximizing market opportunities.

Historical Context

The NOMAD system was introduced in 1995 with the establishment of AIM, intended to provide a regulatory framework conducive to smaller, growing companies seeking public investment without the burdens of full main market compliance.

Sponsors vs. NOMADs

Sponsors play a similar role in the main market of the LSE, but NOMADs specialize exclusively in the AIM with tailored regulatory expertise.

Alternative Investment Market (AIM): A sub-market of the LSE allowing smaller companies to float shares with a more flexible regulatory system.
Initial Public Offering (IPO): The process by which a private company offers shares to the public for the first time.

FAQs

Can a company change its NOMAD?

Yes, companies can change their NOMADs, but they must ensure continuous compliance with AIM rules during any transition.

What happens if a NOMAD ceases operations?

Companies must promptly appoint a new NOMAD to remain listed on AIM.

Is having a NOMAD mandatory for AIM-listed companies?

Yes, all AIM-listed companies are required to have a NOMAD at all times.

References

London Stock Exchange (LSE) guidelines on NOMADs
AIM Rules for Companies, London Stock Exchange

Summary

A Nominated Advisor (NOMAD) plays a critical role in the Alternative Investment Market (AIM) in London. By ensuring regulatory compliance and providing continuous advisory services, NOMADs facilitate the successful listing and growth of AIM companies. Their expertise is integral to maintaining market integrity and investor confidence.