SPACs Special Purpose Acquisition Companies
Special Purpose Acquisition Companies (SPACs) have grown again in popularity and The International Stock Exchange has introduced rules which allow them to be listed on its leading, international Exchange.
TISE’s rules have been designed to provide a regime that is superior to others by being both commercially attractive for management teams and yet also offering robust integrity for investors.
Key Benefits » Escrow flexibility » 36 month QA timeframe » Competitive fee regime
The key benefits of our rules for listing a SPAC are the flexibility afforded by the escrow requirements, combined with a 36 month timeframe for a Qualifying Acquisition (QA) and an extremely competitive and transparent fee regime.
|Minimum market capitalisation||£1,000,000|
|Funds to be held in Escrow||Capital raised less operating costs|
|Working capital||Must not exceed requirements over 12 months unless shareholder approval|
|Listing document approval||Exchange approval|
|Management team shareholding||Dislcosure of interests; minimum 12 month lock-in post QA|
|Permitted timeframe||36 months|
|Investment policy||Sufficiently detailed to allow adequate investor assessment|
|Acquisition approval||None unless different to listing document (majority of shareholders and directors)|
|Accounting requirements||Annual & where prepared, interim|
|Fees||Initial £5,000 / Annual £5,000|
|Suspension||First day after 36 months for QA|
|Liquidation||Special resolution for voluntary liquidation|
|Distribution||Within 60 days following end of 36 months for QA|
|Delisting||Suspended for distribution, then delisted|
Why a SPAC?
A SPAC is a cash shell which is used to raise money for a very specific objective. It is well suited to industries where there is an unknown element of risk associated with the target assets. A SPAC allows capital to be raised within a structure where investors and owners of the assets can receive shares in a transparent, listed vehicle which can react quickly to investment opportunities.
Permitted timeframe for QA – 36 months
A SPAC can resemble an investment fund. However, the costs associated with establishing a SPAC are generally lower than those applicable to a fund. For example, a SPAC does not require a fund management company to be established, which saves time and cost. In addition, a SPAC’s investment policies and objectives are not intended to achieve a spread of risk.
Their nature also means that – more than ever – investors are placing their faith in the management, which will usually sit on the board of directors of the listed SPAC and who will be incentivised through holding a minority shareholding in the SPAC.
TISE rules – more detail
TISE has specific rules for SPACs in Chapter 10 of the Listing Rules. In addition, TISE has rules for listing the equity of trading companies and investment vehicles which might be utilised by the enlarged group once the SPAC has made its QA if there is a demand to retain a listing.
To view the PDF flyer of this content click here.