From 10 August 2021, the UK’s listing regime will provide greater flexibility for larger special purpose acquisition companies (SPACs) that have in place sufficient measures to protect investors and the smooth operation of the market.

Background

Earlier this year, the FCA consulted on proposals to relax, for certain larger SPACs, the current presumption of suspension that applies when a SPAC announces a target acquisition.  The consultation followed the UK Listing Review, which had noted that this presumption of suspension is a significant deterrent to the growth of the SPAC market in the UK.  (Click here for our overview of the proposals in the FCA consultation.) 

FCA policy statement

The FCA has now published a policy statement confirming that the changes it consulted on will take effect from 10 August. 

Modification of the conditions for dis-applying the presumption of suspension

While the changes will largely be implemented as proposed in the consultation, there are two significant modifications, reflecting feedback on the consultation.

Size threshold: At the date of its initial listing, the aggregate gross cash proceeds received by the SPAC for the shares issued to public shareholders will have to be at least £100 million, not £200 million as originally proposed.  This lower threshold will still be sufficiently high to require a SPAC to attract institutional investors and with them their professional level of scrutiny, while at the same time being more appropriate to the size of likely targets.

Time limit for making an acquisition: A SPAC will, without shareholder approval, be able to extend, by six months, the permitted period (two years from admission to listing, or three years with shareholder approval) for finding and acquiring a target.  This additional six months will only be available in limited circumstances and is intended to provide more time for a SPAC to conclude a reverse takeover where a transaction is well-advanced.

Modification of supervisory approach

The FCA has confirmed that it will modify the supervisory approach proposed in its consultation.  It will work to provide more comfort to a SPAC before listing that it satisfies the conditions necessary to dis-apply the presumption of suspension.  It will therefore work with a SPAC and its advisers to ensure that this comfort is achieved as part of vetting the prospectus and assessing eligibility for listing.  At the point of announcement of an acquisition, the FCA will not expect to revisit its previous assessment, provided the SPAC can confirm that it still satisfies the conditions.

Summary of the conditions for dis-applying the presumption of suspension

The table below sets out, in summary, the various conditions that a SPAC will need to satisfy to dis-apply the presumption of suspension under the new regime. 

Where a SPAC is unable, or does not wish, to satisfy these conditions, the current regime will continue to apply and the SPAC will continue to be subject to a presumption of suspension.  The FCA will only agree that suspension is unnecessary if it is satisfied that there is sufficient publicly available information about the proposed transaction.