#D spac transaction drivers#
#D spac transaction registration#

As a result, certain private companies have favored the de-SPAC transaction structure over a traditional IPO. Many companies and investment bankers believe that the SPAC transaction structure allows private companies greater certainty regarding valuation and a quicker “going public” timeline than a traditional IPO while offering the ability to provide and use projections in the de-SPAC filings made with the Commission. SPACs are typically shell companies formed for the purpose of merging with or acquiring a private target company. The public comment period will remain open for 60 days following publication of the proposing release on the SEC's website or 30 days following publication of the proposing release in the Federal Register, whichever period is longer. Thus, investors deserve the protections they receive from traditional IPOs, with respect to information asymmetries, fraud, and conflicts, and when it comes to disclosure, marketing practices, gatekeepers, and issuers.” Functionally, the SPAC target IPO is being used as an alternative means to conduct an IPO.

#D spac transaction drivers#

Ultimately, I think it’s important to consider the economic drivers of SPACs. Today’s proposal would help ensure that these tools are applied to SPACs. Chairman Gensler was quoted as saying “or traditional IPOs, Congress gave the SEC certain tools, which I generally see as falling into three buckets: disclosure standards for marketing practices and gatekeeper and issuer obligations. The Commission’s goals appear to be twofold: first, to make the disclosures involved in de-SPAC transactions more analogous to those in a traditional IPO process and second, to more prominently highlight the potential conflicts of interest between the sponsor of a SPAC and its public shareholders. Remove “safe-harbor” protections under the Private Securities Litigation Reform Act of 1995, as amended (the “PSLRA”), relating to the use of projections in de-SPAC transactions, and impose heightened disclosure requirements in connection with the use of such projections.Ī known focus of Commission Chairman Gary Gensler since May 2021 when he discussed devoting significant Commission resources to addressing issues in de-SPAC transactions to the House Appropriations Committee, the proposed rules and amendments would require more fulsome and transparent disclosure in such transactions.

#D spac transaction registration#

Expose private target companies and their directors, as well as investment bankers involved in a de-SPAC transaction, to the same liability under Section 11 of the Securities Act of 1933, as amended (the “Securities Act”), for material misstatements or omissions in S-4 registration statements that such parties would have in a traditional IPO and.

Enhance disclosure requirements related to SPACs and de-SPAC transactions to more closely align with the requirements of companies engaging in a traditional initial public offering (“IPO”) process.The proposed new rules and amendments would, among other things, if adopted: Securities and Exchange Commission (the “Commission” or “SEC”) proposed new rules and amendments regarding special purpose acquisition companies (“SPACs”), shell companies, and disclosure related to projections.