The U.K. Financial Conduct Authority will shortly consult with the industry on amendments to its listing rules and related guidance to strengthen investor protections in Special Purpose Acquisition Companies.
The FCA will look at structural features and enhanced disclosure, including a minimum market capitalization and a redemption option, in order to provide appropriate investor protection, it said Wednesday in a statement.
Its proposals will help to ensure that the blank-check companies "operate within a framework of high regulatory standards and oversight." Where protections are in place, the FCA said it considers that the existing presumption of the listing being suspended when an acquisition target is announced is no longer required. The FCA intends "to consult on this basis, aligning this element of our rules more closely with other major jurisdictions," the statement said.
The consultation is expected to run for four weeks, with new rules and/or guidance set for release by early in the summer.
The announcement followed the publication earlier this month of the U.K. listing review, which noted that 248 SPACs were listed in the U.S. in 2020, raising £63.5 billion ($88 billion), while the U.K. market is "dormant," with only four vehicles listed last year and raising a total £30 million.
The review said that the trading suspension rule "is seen as a key deterrent for potential investors in U.K. SPACs," since it exposes investors to the possibility of being locked into their investment.
The FCA should consider developing rules and guidance on points including the information that SPACs must disclose to the market upon the announcement of a transaction related to a target company; the rights SPACs investors must have to vote on acquisitions prior to their completion; and the rights investors in SPACs must have to redeem their initial investment prior to the completion of a deal.
