Comment: SEC’s proposed rule on SPACs

In our letter to the SEC’s Proposed Rule on special purpose acquisition companies (SPACs), shell companies, and projections, we commend the Commission’s efforts to enhance disclosures for the benefit of investors and to codify existing interpretive guidance and current practice for a business combination transaction between a SPAC and a private operating company (a de-SPAC transaction). What’s more, we encourage the Commission to continue outreach with investors and other affected stakeholders on the utility of information that is disclosed in filed documents in order to facilitate SPAC IPOs and de-SPAC transactions before finalizing rulemaking in this area.

We also present some ideas that are designed to help clarify the proposed guidance, touching on such topics as

• Whether a private operating company would be required to file a registration statement under its own unique Central Index Key and whether a private operating company would be considered an “issuer” under certain rules and standards;
• Possible codification of the concepts in Staff Legal Bulletin 18, “Exchange Act Rule 12h-3,” in the event that a de-SPAC merger transaction registration statement is declared effective but shareholders do not support the transaction; and
• Certain accommodations to the post-business combination entity if that entity loses smaller reporting company (SRC) status after the re-determination of SRC status.

Further, we ask the SEC to clarify the transition rules to avoid diverse practices in the future.

To read our comments in full, download our comment letter here.