UK Conduct Regulator Consults on Changes to Listing Rules For SPACs

Following its consultation earlier this year, the U.K. Financial Conduct Authority has published final changes to its listing rules for special purpose acquisition companies that will come into effect on August 10, 2021. SPACs are companies set up for the purpose of raising money from investors to fund the acquisition of an operating business. They have attracted much attention over the last year as an alternative way for target companies to go public without going through the traditional initial public offering process. The initial decision to adjust the U.K. approach to SPACs was one of the recommendations made by Lord Hill in the U.K. Listings Review.

The FCA confirms that it will remove the presumption that the listing of a SPAC would be suspended when it announces a potential target for acquisition or if details of the proposed acquisition have leaked, provided the SPAC meets certain investor protection criteria, including:

• Meeting a minimum threshold of £100 million in aggregate gross cash proceeds raised at its initial listing (excluding any funds that the founders or directors of the SPAC have provided). The FCA had proposed a threshold of £200 million.
• Having constitutional documents that impose a two-year time limit within which an acquisition must be completed, which may be extended by a maximum of one year on approval by shareholders, after which public funds should be returned to shareholders. The FCA will, however, be introducing an option to extend the two-year (or three-year) time limit by six months without shareholder approval in limited circumstances.
• Using any public funds raised to finance an acquisition or redeem shares from shareholders, as opposed to using them for the running costs of the company.
• Obtaining shareholder approval for any proposed acquisition, on the basis of sufficient disclosure of terms, as well as providing investors with a redemption option before an acquisition is complete.

In its supervisory approach, the FCA will also provide more comfort prior to admission to listing, instead of only at the point of an announcement, that an issuer is in a position where the presumption will be disapplied.

View the FCA's final rules and guidance.

View details of the FCA's consultation on the U.K. Listings Regime.

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