07/27/2021 | Press release | Distributed by Public on 07/27/2021 03:12
On 30 April 2021, the FCA consulted on proposals to remove the presumption of suspension for SPACs that meet certain criteria which are intended to strengthen the protections for investors, while maintaining the smooth operation of the market. The proposed changes were designed to provide an alternative approach for SPACs that must otherwise provide detailed information about a proposed target to the market to avoid being suspended.
The additional investor safeguards that the FCA will require SPACs to provide in order to benefit from the alternative approach include:
SPAC issuers unable to meet the conditions, or those choosing not to, will continue to be subject to a presumption of suspension.
In response to feedback received, the main changes the FCA has made to its original proposals are to:
The final rules aim to provide more flexibility to larger SPACs, provided they embed certain features that promote investor protection and the smooth operation of our markets. Private companies listing in the UK via a SPAC will also still be subject to the full rigour of the FCA's listing rules and transparency and disclosure obligations.
SPACs continue to have risks and remain a more complex investment, which investors should ensure they can adequately assess and understand before investing. This includes understanding their capital structure, such as the risk of conflicts of interest, dilution from shares allocated to sponsors, and assessing the potential value and return prospects of any proposed acquisition target. Investors, particularly individual investors, should carefully consider all available information and risks before deciding whether to invest in a SPAC, regardless of whether a SPAC has structured itself to comply with our new rules and guidance.
The new rules and guidance come into force on 10 August 2021.