With effect from 10 August 2021, the UK Financial Conduct Authority is implementing its Listing Rule changes and guidance for UK Special Purpose Acquisition Companies.
The FCA is proceeding with its keystone proposal to remove the general presumption that the FCA will suspend the listing of a SPAC when it identifies a potential acquisition target and will be satisfied that a suspension of a listing is not required, if the UK SPAC has certain optional features built into its structure and makes certain disclosures to protect investors. As this feature of the Listing Rules (LR5.6.8) was seen as a deterrent to listing a SPAC in London, the move is designed to attract more SPAC listings to London while maintaining protection for investors. If a SPAC chooses not to meet the criteria for avoiding suspension or cannot do so, it will continue to be subject to the presumption of suspension.
The factors that a UK SPAC must meet to reverse the FCA’s presumption of suspension of listing were announced in FCA Policy Statement 21/10, dated 27 July 2021 and are briefly set out below. The most notable of the changes from the consultation set out in FCA CP21/10, is the FCA’s new express willingness to engage with applicants during the eligibility and review process ahead of listing to provide soft comfort that the SPAC is within the FCA guidance which disapplies the presumption of suspension. This is a helpful reversal of the consultation-stage position that the FCA would only confirm whether a SPAC met the criteria to avoid suspension once it had identified its target.
Alongside the specific criteria in the FCA’s SPACs policy statement, a SPAC with shares admitted to trading on a UK market will be treated in a similar way to a commercial company for the purposes of the application of the UK Market Abuse Regulation.
On AIF and other regulatory regimes, the FCA has declined to comment on the treatment of SPACs under such regimes, and a SPAC therefore needs to be assessed against such regimes. However, the FCA is clear that its rules are not intended to change the underlying analysis. Note that in Europe, SPACs have not been considered AIFs by various regulators.
UK SPACs will continue to be subject to the UK Prospectus Regulation and the Transparency Rules in the Disclosure Guidance and Transparency Sourcebook together with potentially the UK AIF, UK PRIIPs and UK MIFIR regimes and also ESG laws and regulations, among others. A number of specific issues concerning the scope of the UK regulatory environment for SPACs were raised with the FCA during the consultation process by industry groups. However, the FCA response does not comment or create guidance at this stage and any emerging industry consensus on these topics is therefore likely to be important.
Please contact your usual Allen & Overy contact if you have any questions.