SPAC Spin-Offs Archives - Page 3 of 3

SPAC Shareholder Litigation – First Fire

On January 3, 2022, the Delaware Court of Chancery denied a motion to dismiss a shareholder lawsuit against a SPAC’s sponsor, its directors, and financial advisor claiming among items, breach of fiduciary duty. The facts supporting the claim mirror common factual scenarios in SPAC and de-SPAC (acquisition transaction) transactions where the post SPAC public company has a decline in stock value. As such, the case is being closely watched by SPAC sponsors and boards of directors.

Background on SPACs

A special purpose acquisition company (SPAC) is a blank check company formed for the purpose of effecting a merger, share exchange, asset acquisition, or other business combination transaction with an unidentified target. Generally, SPACs are formed by sponsors who believe that their experience and reputation will facilitate a successful business combination and public company. SPACs are often sponsored by investment banks together with a leader in a particular industry (manufacturing, healthcare, consumer goods, etc.) with the specific intended purpose of effecting

February 8, 2022

Public Market Listing Standards

One of the bankers that I work with often once asked me if I had written a blog with a side-by-side comparison of listing on Nasdaq vs. the OTC Markets and I realized I had not, so it went on the list and with the implementation of the new 15c2-11 rules, now seems a very good time to tackle the project. I’ve added NYSE American to the list as well.

Quantitative and Liquidity Listing Standards

Nasdaq Capital Markets

To list its securities on Nasdaq Capital Markets, a company is required to meet: (a) certain initial quantitative and qualitative requirements and (b) certain continuing quantitative and qualitative requirements. The quantitative listing thresholds for initial listing are generally higher than for continued listing, thus helping to ensure that companies have reached a sufficient level of maturity prior to listing. NASDAQ also requires listed companies to meet stringent corporate governance standards.

Requirements

Equity Standard

Market Value of

Listed Securities

Standard

Net

November 9, 2021

OTCQX And OTCQB Rule Changes

In September 2021, the OTCQB and OTCQX tiers of OTC Markets instituted amendments to their rules, to, among other things, align with the market changes resulting from amended Rule 15c2-11.

The OTC Markets divide issuers into three (3) levels of quotation marketplaces: OTCQX, OTCQB and OTC Pink Open Market. The OTC Pink Open Market, which involves the highest-risk, highly speculative securities, is further divided into three tiers: Current Information, Limited Information and No Information. Companies trading on the OTCQX, OTCQB and OTC Pink tiers of OTC Markets have the option of reporting directly to OTC Markets under its Alternative Reporting Standards. The Alternative Reporting Standards are more robust for the OTCQB and OTCQX in that they require audited financial statements prepared in accordance with U.S. GAAP and audited by a PCAOB qualified auditor in the same format as would be included in SEC registration statements and reports.

Companies that report to the SEC under Regulation A and foreign companies that

October 19, 2021

SEC Chair Gary Gensler Testifies To Congress

On September 14, 2021, SEC Chairman Gary Gensler gave testimony to the U.S. Senate Committee on Banking, Housing and Urban Affairs highlighting the priorities of the SEC under his rule. After giving the obligatory opening statements on the size and impact of the U.S. capital markets, Gensler broke down the SEC agenda into four topics including market structure, predictive data analytics, issuers and issuer disclosure and funds and investment management.

Market Structure

Chair Gensler began his speech market structure by talking about the U.S. Treasury Market, which I found interesting mainly because I do not recall any speech or testimony by recent SEC chairpersons that focused on the topic (albeit I haven’t read them all, but I’ve read a lot!). During Covid, the Treasury Market suffered from liquidity issues prompting the SEC to consider rule and process changes, including those related to clearing, that could make the Treasury Markets more resilient and competitive. The SEC is also considering Treasury trading

September 28, 2021

SPAC Nasdaq Listing Standards

I’ve written quite a bit about SPAC’s recently, but the last time I wrote about SPAC Nasdaq listing requirements, or any attempted changes thereto, was back in 2018 (see HERE). Since that time, Nasdaq has a win and recently a loss in its ongoing efforts to attract SPAC listings.

Background on SPACs

Without reiterating my lengthy blogs on SPACs and SPAC structures (see, for example, HERE and HERE), a special purpose acquisition company (SPAC) is a blank check company formed for the purpose of effecting a merger, share exchange, asset acquisition, or other business combination transaction with an unidentified target. Generally, SPACs are formed by sponsors who believe that their experience and reputation will facilitate a successful business combination and public company.

The provisions of Rule 419 apply to every registration statement filed under the Securities Act of 1933, as amended, by a blank check company that is issuing securities which fall within the definition of

August 10, 2021

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SPAC Shareholder Litigation – First Fire

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OTCQX And OTCQB Rule Changes

SEC Chair Gary Gensler Testifies To Congress

SPAC Nasdaq Listing Standards

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