On March 30, 2022, the Securities Exchange Commission (“SEC”) published its long-awaited proposed rules and rule amendments applicable to special purpose acquisition companies (“SPACs”) for comment by May 31. The stated purpose of the proposed rules, which would impose significant changes to the rules affecting SPACs, is to “more closely align the required financial statements of private operating companies in transactions involving shell companies with those required in registration statements for an initial public offering.” If adopted in their current form, the proposed rules would:
- expressly state whether they believe the proposed de-SPAC transaction and any associated financing (including a PIPE transaction) is fair or not to unaffiliated public investors; and
- describe the bases for that opinion in reasonable detail, including valuations of the private company, projections, third-party opinions and the dilutive effect on common shareholders of the de-SPAC and any financing transactions.
Given the implications of these changes as currently proposed, parties engaged in SPAC IPO and/or de-SPAC transactions should continue to pay close attention during the notice and comment period.
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