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News & Updates

By John Mahtani, former Warner Bros executive and CEO of Media Tech SPAC plc

The rules for SPACs are changing – a move that could breathe fresh life into the London market.

New regulation that came into force last week provides extra flexibility for large Special Purpose Acquisition Companies while offering greater protection for investors.

The changes relate to the thorny issue of automated trading suspensions. SPACs that raise at least £100m at IPO will no longer have their shares suspended once an acquisition target is announced provided that they meet a number of criteria promoting investor protection.

This addresses the quandary of investors being locked in at the most pivotal stage of a SPAC’s lifecycle, unable to access their capital and exit their position until a prospectus has been published, and brings the LSE into line with other major exchanges.

Under the new regime, to avoid share suspension, SPACs are to provide investors with a ‘redemption’ option so they can exit before an acquisition is completed. They must also, among other measures, ensure money raised from public shareholders is ringfenced and that shareholder approval is sought for any proposed acquisition.

In return, where a transaction is well advanced, SPACs now have an option to extend the time limit to complete an acquisition by six months without requiring shareholder approval. These measures provide additional safeguards and benefits for investors while giving greater flexibility to the SPAC and enhancing its appeal as well as ensuring trading is more efficient on the London market......

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