In brief
Almost two long years following the announcement of proposed rules revising the framework for regulating initial public offerings (IPOs) and business combinations of special purpose acquisition companies (SPACs), the US Securities and Exchange Commission (SEC) adopted in a three-two vote final rules on the topic. While much has changed in the SPAC market since the SEC's proposed rules were announced - notably a cooling in the face of regulatory and economic headwinds - the final rules largely enact the SEC's proposals from March 2022. A detailed discussion of that proposal can be found here.
Notable deviations from the SEC’s original proposal include:
- Declining to create a new Rule 140a under the Securities Act of 1933, as amended (“Securities Act”), that would have deemed underwriters in a SPAC IPO to be underwriters in a subsequent business combination where such underwriters also take steps to facilitate such subsequent transaction.
- Determining not to adopt a safe harbor under the Investment Company Act of 1940, as amended (“Investment Company Act”), for certain SPACs.
- Removing a requirement that a SPAC state whether it reasonably believes that its business combination and any related financing transactions are fair or unfair to the SPAC’s unaffiliated security holders.
The final rules will become effective 125 days following their publication in the Federal Register.