FCA advises strengthening investor protection in SPACs
The FCA published a consultation document (CP21 / 10) on the proposed changes to its Special Listing List Rules (SPAC). CP21 / 10 contains the FCA’s proposals to change the rules to allow an alternative approach to publicly traded SPACs that have structural features that involve significant investor protection and that disclose sufficient information to mitigate the main risks of investors.
Currently, a SPAC list is generally suspended when an acquisition target is identified. The suspension aims to maintain the integrity of the market for a period when limited information about a future business can lead to the disordered trading of shares in a SPAC. However, the suspension will lead investors to be trapped in a SPAC the moment a target is announced, perhaps a few more months before it is reached. The FCA suggests that top-level SPACs are not subject to this requirement.
The proposals aim to encourage a wider range of SPAC offerings, offering a better choice of investment opportunities and offering alternative routes for public companies to public markets. Feedback will be requested by May 28, 2021.