A Special Purpose Acquisition Company (SPAC) is a shell company founded for the sole purpose of acquiring a non-listed target company. – thus taking this company public. The SPAC first raises capital through an initial public offering (IPO). The SPAC then invests this raised capital in the acquisition of a target company, whereby the latter is listed on the stock exchange as part of the acquisition (De-SPAC).
SPACs as financial vehicles have been in existence for decades, but only in the recent past gained widespread attention by market participants. This is why SIX has closely monitored these developments and the demand around SPACs for its market and – in response to a regulatory need - developed a new dedicated listing standard. Companies seeking a listing as a SPAC are principally subject to the same listing requirements as other listed companies at SIX Swiss Exchange, but adapted to the specific characteristics of a SPAC while upholding an appropriate degree of investor protection. Regulatory disclosure requirements for SPACs at IPO as well as at the time of de-SPAC aim to provide investors with the relevant details for them to take informed investment decisions.
According to Christian Reuss, Head SIX Swiss Exchange, “The SPAC listing standard will complement our ongoing efforts to offer new products and services for current and future issuers. For companies that are ready to go public, SPACs provide an additional option to do so.“
Regulatory specifications
Only stock corporations under Swiss law can be listed as special-purpose acquisition companies (SPAC) on SIX Swiss Exchange. The purpose of a SPAC is to purchase an acquisition target directly or indirectly. The SPAC’s duration is limited to a maximum of three years. The issue proceeds raised in an IPO (initial public offering) must be deposited in an escrow account at a bank. The SPAC must grant all shareholders a fundamental right to return the shares acquired in the IPO. The board of directors, management, founders, and sponsors of SPACs must conclude binding lock-up agreements with a lock-up period of at least six months. Instead of shares, the SPAC can offer investors portions of a convertible bond in the IPO. The requirements of Art. 11 and 12 LR do not apply to SPACs. The issuer of a SPAC does not have to meet the listing requirement of the minimum duration for the existence of an issuer (“track record requirement”) or to have prepared corresponding annual financial statements for the three full fiscal years prior to the listing application. The capital resources of SPACs are determined including the IPO shares or convertible bond regardless of their respective recognition as equity or debt in accordance with the accounting standard LR in conjunction with Art. 15 LR.
A SPAC must disclose additional quantitative and qualitative information in the prospectus in accordance with the Swiss Financial Services Act (Finanzdienstleistungsgesetz, FIDLEG) that is prepared with regard to the IPO. The quantitative information particularly relates to disclosures on the dilutive effect, for example due to warrants, and on the costs to be borne by a public shareholder if the shares are returned.
The requirements for maintaining a SPAC’s listing are based on Art. 49–56 LR. In addition, there are different or supplementary regulations for issuers of SPACs; for example, the approval of the IPO share subscribers is required for a de-SPAC. Along with the invitation to the investor meeting in connection with voting on a de-SPAC, the issuer must also publish appropriate information on the intended de-SPAC. In addition to the members of the board of directors and the management, sponsors and founding shareholders of the SPAC are also considered to be persons subject to reporting requirements as defined in Art. 56 (2) LR and must accordingly disclose their management transactions. This requirement continues to apply after the completion of the de-SPAC until 1 month after the end of the lock-up agreement.
Further explanation regarding the new SPAC listing standard are available here.
The Directive on the Listing of SPACs is available here.