The SEC Division of Corporation Finance has issued guidance focused on disclosure considerations for special purpose acquisition companies (SPACs) in connection with IPOs and subsequent business combination transactions.
The SEC Division of Corporate Finance issued Disclosure Guidance Topic No. 11 to special purpose acquisition companies in connection with their initial public offerings and subsequent business combinations.
The economic interests of the entity or management team that forms the SPAC (‘sponsors’) and the directors, officers and affiliates of a SPAC may differ from the economic interests of the public shareholders; this can lead to conflicts of interest. The SEC has expressed its expectations that SPACs consider and present clear disclosures regarding potential conflicts of interests to investors.
Disclosure Guidance Topic No. 11 – Special Purpose Acquisition Companies
The disclosure guidance provides the SEC staff views regarding the important conflict of interest guidance that may be relevant to investors.
The guidance provides a list of questions for SPACs to consider when evaluating disclosure obligations under the federal securities law related to conflicts of interest, potentially differing economic interests of the SPAC sponsors, directors, officers and affiliates and the interests of other shareholders and other compensation-related matters.
The SEC staff views provide the following considerations when preparing to conduct an IPO or present a business combination transaction to shareholders.
Disclosure considerations – IPO
Disclosure considerations – Business combinations