London, United Kingdom (PressExposure) March 25, 2013 -- There is renewed speculation that the government is considering easing the rules governing ISA's to allow these to include AIM companies shares.
The market still appears divided on this question with most market commentators in favor and a smaller number of die-hards against.
One of the major drawbacks with ISA's is that they may only include companies shares that have been listed on a Recognised Investment Exchange (RIE). This requirement means that the vast majority of companies listed on AIM (The Alternative Investment Market) are excluded as, for regulatory reasons, AIM is not an RIE.
The government is now consulting on allowing AIM company shares within ISA's. In January, Treasury Minister Lord Deighton said,"the government understands the need to encourage investment in growing businesses, and will publish a written consultation on expanding the list of qualifying investments for stocks and shares ISA's, to include shares traded on SME equity markets shortly."
In addition, a recent interview with Vince Cable, the Business Secretary, revealed that "There are areas where the government has already signaled it would like to move, such as AIM-listed companies shares being incorporated in ISA's''.
The arguments for including AIM company shares in ISA's include;
- AIM company shares are allowed in Sipps, so why not in ISA's?
- Shares quoted on riskier stock exchanges such as the Channel Islands Stock Exchange are eligible for ISA's. This seems ridiculous as companies that have adhered to much tighter regulatory requirements on AIM are excluded from ISA's.
- Any sensible investor is aware that shares can go down as well as up, and this applies across all stock markets, so why should AIM company shares be excluded from ISA's?
- From the Treasury point of view it's likely that any change would be tax-neutral.
- AIM has demonstrated its credentials since 1995 as one of the most successful growth stock markets in the world.
- A relaxation of the rules would benefit brokers, companies and private investors.
John Holland Managing Partner at Flotation Consultants, Holland Bendelow says, 'This initiative would seem to offer benefits to investors and to AIM companies, and such an initiative seems finally on the cards. The markets are now waiting for a formal announcement in the Chancellors budget with a degree of cautious optimism'.
Although a small number of market commentators have doubted the impact of a relaxation of the rules on ISA's on AIM companies, there now appears to be considerable momentum built behind easing the rules. An announcement is expected on 20th March.