SEC sets new rules to protect SPAC-related investors
SEC Adopts New Rules and Amendments to Enhance Disclosure in SPAC Initial Public Offerings (IPOs) and Subsequent Business Combination Transactions between Special Purpose Acquisition Companies and Target Companies and Provide More Protection to Investors。
The U.S. Securities and Exchange Commission (SEC) passed new rules and amendments to strengthen the disclosure of SPAC initial public offerings (IPOs) and subsequent business combination transactions between special purpose acquisition companies and target companies, and provide more protection for investors。
SPAC IPOs and de-SPAC transactions can be used as a means for private companies to access the public market.。Given the complexity of these transactions, the Commission seeks to enhance investor protection in SPAC IPOs and de-SPAC transactions, including full disclosure and responsible use of forecasts.。The rules also more broadly address investor protection for shell companies and short-check companies (including SPACs).。
Among other things, the new rules and amendments require enhanced disclosure regarding conflicts of interest, SPAC sponsor compensation, dilution, and other information that is important to investors in SPAC IPOs and de-SPAC transactions.。
The rules also require registrants to provide investors with more information about the target company, helping investors make more informed voting and investment decisions in going to SPAC deals.。
These rules make the information required to be disclosed and the legal liability that may arise in a de-SPAC transaction more consistent with the information and legal liability in a traditional IPO.。For example, in some cases, the rules require the target company to sign a registration statement submitted by the SPAC (or other shell company) in connection with a de-SPAC transaction。This would make the target company a "co-registrar" and liable for disclosure in that registration statement。
In addition, these rules make the safe harbor for forward-looking statements under the Private Securities Litigation Reform Act of 1995 inapplicable to certain companies with bad checks, including SPAC.。
In the case of de-SPAC transactions, these rules include disclosure requirements in relation to the forecast, which include the disclosure of all significant bases for the forecast and all significant assumptions on which the forecast is based.。The rules also update and expand guidance on the use of forecasts in all SEC filings.。
These rules will take effect 125 days after publication in the Federal Register。
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