CGIX AND THE ALTERNATIVE INVESTMENT MARKET

AIM is the London Stock Exchange's international market for smaller growing companies. Since its launch in 1995, over 2,500 companies have joined AIM - raising more than £34bn in the process, both through initial public offerings (IPOs) and further capital raisings. One advantage of the AIM market is that participating companies do not need a particular financial track record or trading history to become a member. There is also no minimum requirement in terms of size or number of shareholders. This more flexible approach reflects the fact that AIM was designed specifically for smaller growing companies, and has helped AIM to become the leading global growth market. AIM companies are not bound by the full Listing Rules of the UK Listing Authority and have their own set of rules, the AIM Rules.

Unlike shares traded on the Main Market, shares traded on AIM are unquoted for tax purposes. Consequently, there are certain tax incentives available which make investments in AIM companies attractive to both individual and institutional investors. Shares in qualifying AIM companies are classed as 'business assets' and these attract significantly higher rates of taper relief. The relief reduces a chargeable gain assessable to CGT depending on how long the investment is held for, and the scales of relief depend upon whether the investment is a 'business' or 'non-business' asset. To gain the maximum taper relief, shares must be held for a minimum of two years prior to their disposal. Note that this only applies to shares bought after 6th April 2000.

Since August 2006, Financial Software Limited has been gathering and maintaining the data required for our software module, CGiX, to assess the CGT relief for investors with shares in qualifying AIM companies. Our aim was to find out which AIM companies actually qualify for this relief and the qualifying period. We have experienced many obstacles during our quest, as this data is not readily available from sources such as the London Stock Exchange or the Inland Revenue. The method chosen for gathering this information was contacting these AIM companies directly, and requesting the relevant information. We have in total sent 900/1600 letters and so far received 300 responses. Such a low response rate is as expected as many companies have to go through the lengthy process of contacting their tax advisors and some of the smaller companies have since gone into receivership. Financial Software continues to chase these companies on a regular basis. To speed up the process we have also been in contact with several reputable financial advisory firms who are in a position to help us in gathering this data process.