From 19 June 1995, smaller, perhaps owner managed, companies seeking investment for expansion have had the opportunity to engage in a new market which will facilitate capital injection by the issue of shares to investors.

The launch of the alternative investment market (AIM) by the London Stock Exchange comes at a time when concern remains at the level of corporate investment in the UK.

This is coupled with a need for innovation on the part of industry, and innovation by solicitors is essential for the future of our profession.Although solicitors must be registered to act as nominated advisers, for the majority of the profession the advent of this market offers an opportunity to give valued advice upon its operation and should not preclude retention of an upwardly mobile grateful client.

If you act for a small, growing and dynamic company with excellent prospects, the new public market is designed to enable it to raise capital and see its shares traded more widely with a view to growth.AIM is operated by the London Stock Exchange and although ordinary shares are most commonly traded, your client company may also have its preference shares and debt securities traded on the market.

The company need not demonstrate a long trading history and it need not have reached a regular size, but it will have to meet new regulations which are designed to ensure that as directors, they clearly understand their obligations as directors of a company traded on a regulated public securities market.

In order to join AIM, they require two principal advisers: a nominated adviser and a nominated broker.

The nominated adviser will ensure that the directors have been guided and fully advised on their responsibilities and obligations under the rules.

The adviser will be drawn from a register of firms kept by the exchange and will be experienced in bringing companies to public markets.

They are likely to be lawyers, brokers, accountants or bankers.

Whilst nominated advisers must be registered, they can outsource advice from other professionals who need not be registered where specialist advice is required to ensure compliance with the market.

An obvious example would be advice to directors as to their increased responsibilities, which ought properly to be given by solicitors.The client will have to prepare a prospectus which will be checked by the adviser and after admission to the market he or she will provide any further assistance your client needs.The client will also have to appoint a firm to act as his or her nominated broker.

The firm must be a member of the London Stock Exchange and i ts role is bringing buyers and sellers of shares together.Both the adviser and broker must be retained by the client at all times and they must agree a notice period when each is appointed to provide time to find a replacement.There are a number of conditions to be met but, for example, if you act for a company which is less than two years old, the directors and all employees must agree not to sell any interest they have in the company for at least one year from the date of joining.

The contents of the prospectus are detailed and extensive but the document is intended to provide the information investors would reasonably require to enable an informed assessment of the company to be made.

The company's involvement with the market continues once its company shares have been admitted, and it is required to meet certain ongoing obligations to ensure that investors may make decisions on the basis of full information.

For example, any change in directors' shareholdings or other significant shareholders, directors joining or leaving the board and information on dividends must be notified to the exchange.

In addition to publishing audited annual accounts and unaudited interim accounts, the company must notify the exchange of any change to its nominated adviser or broker.

Also, if the company makes an acquisition or disposal, consideration must be given to the effect on the price of its shares and if so, details forwarded to the exchange.

Whilst AIM imposes few rules, adherence is essential to assist investors' confidence in your client's company and credibility of the market on the whole.

If the company's adviser or broker resigns or is dismissed and is not replaced immediately, a one-month suspension of trading in the company's shares will ensue and, if at the end of this period a replacement has not been appointed, the company's trading facility on AIM will be cancelled.

It must be impressed upon your client that communication with investors is critical and their nominated adviser may assist with the timing and contents of regular statements on the company's progress.

They might also consider release of a preliminary announcement of their full year's results to the market ahead of the publication of their annual accounts.

The appeal of the company's shares will be enhanced in the eyes of investors if they are kept informed, and full disclosure will help the company to sustain effective relationships with shareholders.In essence, AIM introduces the users and suppliers of capital.

If the company requires long term capital, it will grant them contacts with investors who require their money to be in a readily realisable form.It is said that joining AIM will enhance the company's image.

It will certainly increase the client's responsibilities as director in the realm of keeping the market fully informed of the company's performance.

The London Stock Exchange believes that such participation will enable the financial community to place a value on the company and advance greater reassurance and confidence to its suppliers, customers and bankers.Taxation of securities on AIM will be favourable as they will not fall to be treated as quoted or listed for tax purposes.

They will therefore qualify for the various tax reliefs available for unquoted securities.

These reliefs include: income relief for losses on shares subscribed for; capital gains tax re-investment rollover relief; capital gains tax holdover relief for gifts of business assets; the enterprise investment scheme; inheritance tax business property relief; and venture cap ital trusts.In launching the new market, the Stock Exchange clearly seeks to promote trading of shares in companies hitherto not associated with offers for investment, such as family-owned businesses, management buy-out and buy-ins and companies which, whilst in their infancy, have obvious potential.

AIM was conceived following pressure from venture capitalists requiring a way of investing in companies and realising their profits more quickly.

It is anticipated that AIM will replace the unlisted securities market, which will be disbanded in l996.

If there is a growing demand for investment in small companies, the future for AIM, and for those who represent its constituent members, is bright.