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Special Purpose Acquisition Companies (SPAC)

SEC Adopts Final Rules On SPACS, Shell Companies And The Use Of Projections – Part 7

On January 24, 2024, the SEC adopted final rules enhancing disclosure obligations for SPAC IPOs and subsequent de-SPAC business combination transactions.  The rules are designed to more closely align the required disclosures and legal liabilities that may be incurred in de-SPAC transactions with those in traditional IPOs.  The new rules spread beyond SPACs to shell companies and blank check companies in general.  The compliance date for the new rules is July 1, 2025.

In the first blog in this series, I provided background on and a summary of the new rules – see HERE.  The second blog began a granular discussion of the 581-page rule release starting with partial coverage of new Subpart 1600 to Regulation S-K related to disclosures in SPAC IPO’s and de-SPAC transactions – see HERE.  The third blog in the series continued the summary of Subpart 1600 and in particular the new dilution disclosure requirements – see HERE.  Part 4 continued a review of

SEC Adopts Final Rules On SPACS, Shell Companies And The Use Of Projections – Part 6

On January 24, 2024, the SEC adopted final rules enhancing disclosure obligations for SPAC IPOs and subsequent de-SPAC business combination transactions.  The rules are designed to more closely align the required disclosures and legal liabilities that may be incurred in de-SPAC transactions with those in traditional IPOs.  The new rules spread beyond SPACs to shell companies and blank check companies in general.  The compliance date for the new rules is July 1, 2025.

In the first blog in this series, I provided background on and a summary of the new rules – see HERE.  The second blog began a granular discussion of the 581-page rule release starting with partial coverage of new Subpart 1600 to Regulation S-K related to disclosures in SPAC IPO’s and de-SPAC transactions – see HERE.  The third blog in the series continued the summary of Subpart 1600 and in particular the new dilution disclosure requirements – see HERE.  Part 4 continued a review

SEC Adopts Final Rules On SPACS, Shell Companies And The Use Of Projections – Part 5

On January 24, 2024, the SEC adopted final rules enhancing disclosure obligations for SPAC IPOs and subsequent de-SPAC business combination transactions.  The rules are designed to more closely align the required disclosures and legal liabilities that may be incurred in de-SPAC transactions with those in traditional IPOs.  The new rules spread beyond SPACs to shell companies and blank check companies in general.  The compliance date for the new rules is July 1, 2025.

In the first blog in this series, I provided background on and a summary of the new rules – see HERE.  Last week’s blog began a granular discussion of the 581-page rule release starting with partial coverage of new Subpart 1600 to Regulation S-K related to disclosures in SPAC IPO’s and de-SPAC transactions – see HERE.  The third blog in the series continued the summary of Subpart 1600 and in particular the new dilution disclosure requirements – see HERE.  Part 4 continued a

SEC Adopts Final Rules On SPACS, Shell Companies And The Use Of Projections – Part 4

On January 24, 2024, the SEC adopted final rules enhancing disclosure obligations for SPAC IPOs and subsequent de-SPAC business combination transactions.  The rules are designed to more closely align the required disclosures and legal liabilities that may be incurred in de-SPAC transactions with those in traditional IPOs.  The new rules spread beyond SPACs to shell companies and blank check companies in general.  The compliance date for the new rules is July 1, 2025.

In the first blog in this series, I provided background on and a summary of the new rules – see HERE.  Last week’s blog began a granular discussion of the 581-page rule release starting with partial coverage of new Subpart 1600 to Regulation S-K related to disclosures in SPAC IPO’s and de-SPAC transactions – see HERE.  The third blog in the series continued the summary of Subpart 1600 and in particular the new dilution disclosure requirements – see HERE.  This week’s blog will

SEC Adopts Final Rules On SPACS, Shell Companies And The Use Of Projections – Part 3

On January 24, 2024, the SEC adopted final rules enhancing disclosure obligations for SPAC IPOs and subsequent de-SPAC business combination transactions.  The rules are designed to more closely align the required disclosures and legal liabilities that may be incurred in de-SPAC transactions with those in traditional IPOs.  The new rules spread beyond SPACs to shell companies and blank check companies in general.  The compliance date for the new rules is July 1, 2025.

In the first blog in this series, I provided background on and a summary of the new rules – see HERE.  Last week’s blog began a granular discussion of the 581-page rule release starting with partial coverage of new Subpart 1600 to Regulation S-K related to disclosures in SPAC IPO’s and de-SPAC transactions – see HERE.  This week’s blog will continue a review of new Subpart 1600 to Regulation S-K.

New Subpart 1600 of Regulation S-K

The SEC has adopted new Subpart 1600 to

SEC Adopts Final Rules On SPACS, Shell Companies And The Use Of Projections – Part 2

On January 24, 2024, the SEC adopted final rules enhancing disclosure obligations for SPAC IPOs and subsequent de-SPAC business combination transactions.  The rules are designed to more closely align the required disclosures and legal liabilities that may be incurred in de-SPAC transactions with those in traditional IPOs.  The new rules spread beyond SPACs to shell companies and blank check companies in general.

In last week’s blog, I provided background on and a summary of the new rules – see HERE.  This week’s blog begins a granular discussion of the 581-page rule release and its vast implications to not only the SPAC market, but shell company reverse mergers in general.  This week in particular, I will begin coverage of new Subpart 1600 to Regulation S-K related to disclosures in SPAC IPO’s and de-SPAC transactions.

New Subpart 1600 of Regulation S-K

The SEC has adopted new Subpart 1600 to Regulation S-K to: (i) set forth disclosure obligations for

SEC Adopts Final Rules On SPACS, Shell Companies And The Use Of Projections – Part 1

On January 24, 2024, the SEC adopted final rules enhancing disclosure obligations for SPAC IPOs and subsequent de-SPAC business combination transactions.  The rules are designed to more closely align the required disclosures and legal liabilities that may be incurred in de-SPAC transactions with those in traditional IPOs.  The new rules spread beyond SPACs to shell companies and blank check companies in general.

The SEC is specifically requiring enhanced disclosures with respect to compensation paid to sponsors, conflicts of interest, dilution, and the determination, if any, of the board of directors (or similar governing body) of a SPAC regarding whether a de-SPAC transaction is advisable and in the best interests of the SPAC and its shareholders.  The SEC has also adopted rules that deem any business combination transaction involving a reporting shell company, including a SPAC, to involve a sale of securities to the reporting shell company’s shareholders, and has amended several financial statement requirements applicable to transactions involving

2023 Changes To Delaware Corporate Law

Each year the Delaware legislature passes several amendments to the Delaware General Corporation Law (DGCL) which impact not only public and private companies incorporated in Delaware, but elsewhere, as many states follow the DGCL.  This year the most significant changes relate to reduced stockholder approval provisions.  Effective August 1, 2023, the DGCL has been amended to: (i) eliminating the need for stockholder approval for forward stock splits in certain cases; (ii) reducing the voting threshold for certain reverse stock splits or changes to authorized shares; (iii) allowing for the disposition of treasury stock for less than par value; (iv) simplifying the process for ratifying defective corporate actions; (v) simplify notices to stockholders following action taken by consent; (vi) expanding certain appraisal rights; and (vii) establishing “safe harbor” provisions from the stockholder approval requirement for certain dispositions of pledged assets.

Shareholder Voting Requirements for Certain Amendments to the Certificate of Incorporation – DGCL Section 242

One of the reasons Delaware

SEC Spring 2023 Regulatory Agenda

On June 13, 2023, the SEC published its semiannual Spring 2023 regulatory agenda (“Agenda”) and plans for rulemaking.  The Agenda is published twice a year, and for several years I have blogged about each publication.  Although items on the Agenda can move from one category to the next, be dropped off altogether, or new items pop up in any of the categories (including the final rule stage), the Agenda provides valuable insight into the SEC’s plans and the influence that comments can make on the rulemaking process.

The Agenda is broken down by (i) “Pre-rule Stage”; (ii) Proposed Rule Stage; (iii) Final Rule Stage; and (iv) Long-term Actions.  The Proposed and Final Rule Stages are intended to be completed within the next 12 months and Long-term Actions are anything beyond that.  The number of items to be completed in a 12-month time frame is 55, which is in-line with the average items under Gary Gensler’s regime (and much higher than

SPAC Director And Sponsor Fiduciary Obligations

A year following the Delaware Chancery Court’s decision in Multiplan Corp. Stockholders Litigation (f/k/a Churchill Capital Corp III), the court again issued an opinion supporting a breach of fiduciary duty cause of action against SPAC directors and sponsors and confirming that a de-SPAC transaction should be reviewed using the “entire fairness” standard.  In the January 2023 case of Delman v. Gigacquisitions3, LLC, et al. the Delaware Court denied a motion to dismiss by SPAC sponsors and directors, upholding their potential liability.  Interestingly, the Delman motion was in front of the same vice-chancellor as was Multiplan.  My blog on the Multiplan Corp. Stockholders Litigation (f/k/a Churchill Capital Corp III) case and its ramifications can be read HERE.

In addition to confirming the inherent conflict of interest of SPAC sponsors and directors, the cases will undoubtedly cause practitioners and market participants to implement new policies and procedures related to proxy statement disclosures, diligence, board discussions, financial valuations, capital raising

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