The London Stock Exchange has censured and fined Sensyne Health plc £580,000 (discounted to £406,000 for early settlement) for failing to maintain effective controls to enable compliance with the AIM Rules, and for failing to comply with AIM’s related party rules in respect of bonus payments made to its directors.
In November 2018, three months after its admission to AIM, the company resolved to award one-off cash awards, described as ‘post IPO bonuses’, of £850,000 and £200,000 to its CEO and CFO respectively. The bonuses were paid in December 2018.
The company failed to properly consult its nominated adviser (nomad) before paying the bonuses – it only gave the nomad limited information via text message and implied that the proposals were not yet finalised. The nomad nonetheless advised against paying the bonuses. In August 2019 the nomad became aware that the company still intended to pay the bonuses when it received the company’s draft remuneration report (and was unaware they had in fact already been paid). Believing it was still only a proposal, the nomad advised the company that the bonuses would likely be treated as related party transactions under AIM Rule 13 and would therefore require: (i) consultation with it in respect of the required fair and reasonable statement; and (ii) notification of the transactions without delay. The true status of bonuses only became clear to the nomad a month later. Details were then notified to the market in October 2019 but the nomad did not make a fair and reasonable statement in respect of them.
The London Stock Exchange concluded that:
- the company’s conduct involved serious failures to properly understand its AIM Rule obligations, to properly engage with its nomad (and deal with it openly and transparently) and to ensure that it had in place sufficient procedures and controls to comply with the AIM Rules, in breach of AIM Rule 31; and
- given that the value of the bonuses exceeded the related party class tests, the company failed to seek the advice of its nomad, to make a disclosure without delay and to satisfy the requirement for a fair and reasonable statement from the nomad, in breach of AIM Rule 13.
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