FCA proposes relaxed listing rules for SPACs

The UK’s Financial Conduct Authority (FCA) has recently proposed altering how special purpose acquisition companies (SPACs) are allowed to list, in an attempt to gain global interest for the City of London following Brexit.

Following a spike in so-called “blank cheque” firms on Wall Street and in Europe, the UK financial watchdog is keen for London to not be left behind.

SPACs currently list on an exchange and are obligated to use any proceeds to purchase a company inside a specific timeframe. The FCA stated it was proposing a new waiver on the present ruling that trading within a listed SPAC should now be suspended at the designated point where it has identified an enterprise to buy.

The current suspension in force is designed to preserve market integrity until a point in time when further information on the selected company is made readily available, but can potentially trap investors who are part of the SPAC for months.

The new easing would now see suspension waived in circumstances when a £200m minimum had been raised when SPACs initially list. The FCA added that the aim of the proposal is to attract a greater number of institutional investors.

The watchdog also commented that cash then raised from any public shareholders should be efficiently ring-fenced for acquisitions, and for any proposed takeover, shareholder approval would be a requirement.

Investors seeking guidance on the amendments to legislation and sound financial advice in Shropshire and other parts of the UK can look to professional wealth management firms for support.

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