The AIM junior stock market urgently needs greater fiscal incentives and fewer restrictions to stem net outflows of capital from small cap companies and enhance the economic benefits from the sector, says a report from Grant Thornton.
“The market has historically provided vital investment capital for many of the region’s most successful companies. If AIM is to continue as the world's leading platform for growth companies looking to raise capital, we need to lift unnecessary restrictions on the investment criteria by venture capital trusts and reverse the gradual erosion of fiscal incentives”, said Alison Seekings, Grant Thornton’s partner in East Anglia who specialises in AIM.
Tax incentives such as the Enterprise Investment Scheme (EIS), which enables small higher-risk companies raise finance by offering tax relief, has been important to the East of England where more funds have been raised than any other UK region except London and the south east in recent years.
“AIM has a great track record, but investment trends since 2002 show consistent net outflows from the UK small cap sector. Over the years, changes to incentives for investors in AIM securities have diminished their effectiveness and reduced investor confidence, for example by abolishing business asset taper relief and introducing ever tighter restrictions on the investment criteria for venture capital trusts,” Seekings added.
AIM-listed companies in the region include Cambridge-based Bango which provides technology to enable e-commerce on the mobile web. AIM companies contribute around £12 billion to gdp and employ around 250,000 people. A further £9 billion of GDP and 320,000 jobs are supported indirectly.
Photo : Alison Seekings