The London Stock Exchange (LSE) is preparing to delist more than 50 companies on the Alternative Investment Market (AIM).
The dormant firms have not completed any deals since their initial listing on the AIM and are believed to be cash shells that are simply sitting on funds raised by an initial stock market offering.
The Times reports that there are between 50 and 55 companies initially under scrutiny, as the LSE attempts to reduce the pressure on advisors caused by the rapid growth of the AIM in recent years.
The companies will be suspended for six months and then delisted by the stock exchange under the proposals, which allow companies to use their funds or move market during the suspension period.
This is the first mass action taken against companies suspected of exploiting the AIM and the LSE will publish the list of companies next week
The LSE’s head of the AIM, Martin Graham, announced in March 2005 that firms would have to raise a minimum of GBP 3 million or make a significant acquisition within 12 months of listing and the deadline expires at the end of this week.