Final rules to protect investors in special purpose acquisition companies have been released by the U.K. Financial Conduct Authority.
In April, the FCA said it was considering proposals to add investor safeguards while also giving SPACs an alternative to providing detailed information required to avoid suspension.
Under the final rules and guidance that go into effect Aug. 10, the FCA said Tuesday that SPACs can avoid suspension if they provide a 'redemption' option so investors can exit before an acquisition is completed; ensure money raised from public shareholders is set aside; require shareholder approval for any proposed acquisition; and have a time limit on a SPAC's operating period if no acquisition is completed.
SPAC issuers not meeting the conditions will be subject to a presumption of suspension.
After public input, the FCA added more flexibility for larger SPACs, "provided they embed certain features that promote investor protection and the smooth operation of our markets," the FCA said in a news release.
The changes included lowering the minimum amount a SPAC would need to raise at initial listing to £100 million ($138 million) from £200 million, and adding an option to extend a two-year time-limited operating period by six months without shareholder approval, in circumstances where a deal is well advanced.
"SPACs continue to have risks and remain a more complex investment, which investors should ensure they can adequately assess and understand before investing," the FCA release said.