.jpg)
Singapore Exchange (SGX) is seeking market feedback on a proposed regulatory framework for the listing of Special Purpose Acquisition Companies (SPACs) on its Mainboard.
“SPAC listings have attracted interest in major markets due to their speed to market and ability to offer price certainty in valuing target companies. In reviewing the viability of SPACs, we note that recent SPACs developments have brought to the fore certain risks, in particular excessive dilution and the rush to de-SPAC. We are therefore proposing measures to address these risks, with the aim of creating credible listing vehicles that will increase investor choice and result in successful, value-creating combinations for their shareholders,” said Tan Boon Gin, CEO of Singapore Exchange Regulation (SGX RegCo).
To seek a balanced regime that effectively safeguards investors’ interests against certain concerns posed by the unique features of SPACs, while meeting the capital raising needs of the market, feedback from the market is sought on aspects including:
Broad admission criteria
1. 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.
2. A minimum IPO price of S$10 a share.
3. 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.
4. 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
1. Founding shareholders and/or the management team must hold minimum equity at IPO of between 1.5% to 3.3%, depending on the SPAC market capitalisation then.
2. Moratorium on the shareholding interests held by the key parties such as the founding shareholders and controlling shareholder(s) at various junctures.
Business combination requirement:
1. Three-year permitted time frame from IPO date to complete the business combination.'
2. 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.
3. Resulting business combination will have to meet the initial Mainboard listing criteria.
4. 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.
5. 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.
6. Appoint:
(a) an accredited Issue Manager as Financial Advisor to advise on the business combination; and
(b) an independent valuer to value the target company.
7. Shareholders’ circular on the business combination must contain prospectus-level disclosures including on key areas such as:
(a) financial position and operating control;
(b) character and integrity of the incoming directors and management;
(c) compliance history;
(d) material licences, permits and approvals required to operate the business; and
(e) resolution of conflicts of interests.
The consultation will be open till 28 April 2021 and is found here.
