The SGX and SGX Regco announced today a consultation on the amendment of the Listing Rules to allow for Special Purpose Acquisition Companies (SPACs) to be listed on the Mainboard. This is a significant development for capital markets in the region and will help bolster Singapore as a leading gateway for fund raising. We look at the proposed criteria for listing.

The Singapore Exchange (SGX) and SGX Regco announced today a consultation on the amendment of the Listing Rules to allow for Special Purpose Acquisition Companies (SPACs) to be listed on the Mainboard.

The proposed requirements for the listing of SPACs on the Mainboard are as follows:

Broad admission criteria

• A minimum S$300 million market capitalisation and at least 25% of the total number of issued shares to be held by at least 500 public shareholders at IPO.
• A minimum IPO price of S$10 a share.
• At least 90% of IPO proceeds placed in escrow pending the acquisition of a target company (known as the business combination). Cash will be returned on a pro rata basis from the amount in escrow to any shareholder voting against the business combination or upon the liquidation of the SPAC.
• Any warrant (or other convertible securities) issued with the ordinary shares of the SPAC at IPO must be non-detachable from the underlying ordinary shares of the SPAC for trading on SGX.

Conditions for founding shareholders, management team and controlling shareholders

• The founding shareholders and/or the management team must hold minimum equity at IPO of between 1.5% to 3.3%, depending on the SPAC's market capitalisation then.
• Moratorium on the shareholding interests held by the key parties such as the founding shareholders and controlling shareholder(s) at various junctures.

Business combination requirements

• A three-year permitted time frame from IPO date to complete the business combination.
• The business combination must comprise at least one principal core business with a fair market value forming at least 80% of the gross IPO proceeds in escrow.
• The resulting business combination will have to meet the initial Mainboard listing criteria.
• The business combination can only proceed with approval from a simple majority of the SPAC’s independent directors and a simple majority of the independent shareholders.
• Liquidation of the SPAC may occur under certain conditions including when a material change in the profile of the founding shareholders and/or management team critical to the successful founding of the SPAC and/or completion of the business combination occurs prior to the consummation of the business combination, unless independent shareholders vote for the continued listing of the SPAC.
• The issuer must appoint:
  • an accredited Issue Manager as Financial Advisor to advise on the business combination; and
  • an independent valuer to value the target company
• The shareholders’ circular on the business combination must contain prospectus-level disclosures including on key areas such as:
  • financial position and operating control;
  • character and integrity of the incoming directors and management;
  • compliance history;
  • material licences, permits and approvals required to operate the business; and
  • resolution of conflicts of interests.