SRA Financial Services (Scope) Rules: acting as nominated adviser on an AIM admission is prohibited
Kingsley Ruiz LLP is an SRA-authorised firm in London that is not authorised by the FCA. Its corporate department acts for Tidemark Robotics plc, which is seeking admission of its shares to the Alternative Investment Market (AIM) of the London Stock Exchange. The board asks the firm to take on several roles in the transaction.
Which role is Kingsley Ruiz LLP prohibited from taking by the SRA Financial Services (Scope) Rules?
Choose one answer to see the reasoning.
Worked answer
Correct answer A: Acting as nominated adviser to the issue of Tidemark's shares for admission to AIM.
THE RULE TO REMEMBER
An SRA firm not regulated by the FCA must not act as sponsor to a London Stock Exchange issue or as nominated adviser to an AIM issue (SRA Financial Services (Scope) Rules, rule 4.1).
SRA Financial Services (Scope) Rules: acting as nominated adviser on an AIM admission is prohibited
The SRA Financial Services (Scope) Rules apply to SRA-authorised firms that are not regulated by the FCA. Rule 4 (corporate finance) provides that a firm must not act as sponsor to an issue of securities to be admitted for dealing on the London Stock Exchange, or as nominated adviser to an issue in respect of securities to be admitted for dealing on AIM. Kingsley Ruiz is not FCA-authorised, so it cannot act as Tidemark's nominated adviser, whatever other conditions it meets. The firm can still act as Tidemark's legal adviser on the admission: advising on the articles, carrying out legal due diligence, advising directors on their duties and preparing corporate approvals are professional legal services and are not prohibited by the Scope Rules.
Why B is wrong: Advising on articles of association is ordinary legal work and not prohibited by the Scope Rules.
Why C is wrong: Legal due diligence is a professional legal service, not a prohibited corporate finance role.
Why D is wrong: Advising directors on their statutory duties is legal advice and not within rule 4.
Why E is wrong: Drafting board minutes and resolutions is legal work, not a prohibited role under the Scope Rules.
A little more practice done.
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