(Reuters) – The UK has eased the rules for special purpose companies to attract more lists to London, just as global regulators have set the clock on SPACs, which may already be peaking in popularity.
Following a sharp increase in activity in SPACs, or "blank check" companies on Wall Street and more recently in the European Union and emerging markets, the United Kingdom is anxious not to leave London.
SPAC listings on a stock exchange and must use the proceeds to buy an existing or target company within a certain time frame. This process provides a faster path to an IPO because it bypasses the long process that leads to an IPO.
Under previous UK rules, shares in SPAC were suspended when a target company was identified, effectively capturing investors and enabling them to participate in the UK market.
The Financial Conduct Authority in April had proposed easing the rules and refraining from repealing if a SPAC raised at least £ 200 million ($ 275.66 million) from its float.
On Tuesday, the watchdog cut this to 1
"The final rules aim to provide greater flexibility for larger SPACs, provided that they embed certain functions that promote investor protection and a smooth functioning of our markets," the FCA said in a statement.
To ensure that investors are protected, the FCA also stated that investors have a redemption right prior to a proposed acquisition and a shareholder vote. The new rules will enter into force on 10 August.
Earlier on Tuesday, the International Organization of Securities Commission, which includes national regulators such as the FCA and the US Securities and Exchange Commission, said it had set up a group to monitor the SPAC.
"While SPACs may offer alternative sources of funding and provide opportunities for investors, they may also give rise to concerns about the legislation," IOSCO said in a statement.
Earlier this month, the European Securities and Markets Authority released detailed guidance on which SPACs should tell investors about the risks, business strategy and criteria for selecting target companies.
In the United States, the SEC has increased its investigation into the acquisition of blank checks, citing potential conflicts of interest that arise when banks act as insurers and advisers on the same business, sources told Reuters. Catalog