FCA unveils plan to reform SPAC rules

UK markets regulator the Financial Conduct Authority (FCA) has unveiled proposed reforms to rules on special purpose acquisitions companies (SPACs) as it looks to help the UK tap into the trend which has taken off in the USA.

UK saw four SPAC listings, which raised just £30 million. This has led to numerous high-profile warnings that, without regulatory changes, the UK could be set to miss out on the lucrative SPAC-boom.

SPACs in the UK are classed as “reverse takeovers”, meaning that when a company is acquired all shares in the SPAC are suspended and trading is paused until a deal prospectus is published. This can be time-consuming and, due to the fact that investors who may be hoping to sell are locked in, and this has contributed to the unpopularity of SPACs among investors on the London Stock Exchange (LSE).

Under new proposals, SPACs will no longer be required to suspend the trading of shares when an acquisition is announced.

The FCA’s proposals, which will be open to a 4-week consultation, include revisions to listing rules and other related guidance designed to strengthen investor protection. The regulator says it is considering features such as redemption options for investors and a minimum market capitalisation in order to achieve greater protection.

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