AIM is an exchange regulated venue featuring an array of principles-based rules for publicly held companies. AIM's regulatory model is based on a comply-or-explain option that lets companies that are floated on AIM either comply with AIM's relatively few rules, or explain why it has decided not to comply with them. Aside from granting leeway in regard to regulatory compliance, the Exchange also mandates continuous oversight and advice by the issuer's underwriter , referred to as a Nominated Adviser Nomad. The role of Nomads is central to AIM's regulatory model, as these entities play the role of gatekeepers, advisers and regulators of AIM companies. In advising each firm as to which rules should be complied with and the manner in which existing requirements should be met, Nomads provide the essential service of allowing firms to abide by tailor-made regulation, reducing regulatory costs in the process. Theoretically, Nomads are liable for damages from tolerating misdemeanors on behalf of their supervised companies, including the loss of reputational capital. However, this heavy reliance on Nomads has been criticised as creating a conflict of interest, since Nomads receive fees from the companies they purportedly supervise while, in practice, managing to avoid liability for market misconduct.
AIM does not have these requirements which means that smaller, more entrepreneurial companies are less likely to be put off by floating on AIM. The companies on AIM are spread across 37 different sectors 90 different sub-sectors and come from 26 different countries. In fact, over companies listed on AIM are from outside of the United Kingdom, making it proportionally one of the most diverse exchanges in the world. Trading on AIM accounts for up to a quarter of all trading done by private shareholders.
AIM allows these companies to raise capital by listing on a public exchange with much greater regulatory flexibility compared to the main market. As of , 20 years after its launch, AIM boasted more than 3, companies that operate in more than countries globally. Companies seeking to do an initial public offering IPO and list on AIM are usually small companies that have exhausted their access to private capital but are not at the level required to undergo an IPO and list on a large exchange. The process for a company listing on AIM follows much the same path as a traditional IPO, just with less stringent requirements.