Special Purpose Acquisition Companies
229.1601 — (Item 1601)
Definitions.
229.1601 — (Item 1601) Definitions.
For the purposes of this subpart:
(a) De-SPAC transaction. The term de-SPAC transaction means a
business combination, such as a merger, consolidation, exchange of securities,
acquisition of assets, reorganization, or similar transaction, involving a
special purpose acquisition company and one or more target companies
(contemporaneously, in the case of more than one target company).
(b) Special purpose acquisition company (SPAC). The term special
purpose acquisition company (SPAC) means a company that has:
(1) Indicated that its business plan is to:
(i) Conduct a primary offering of securities that is not subject to the
requirements of § 230.419 of this chapter (Rule 419 under the Securities
Act);
(ii) Complete a business combination, such as a merger, consolidation, exchange
of securities, acquisition of assets, reorganization, or similar transaction,
with one or more target companies within a specified time frame; and
(iii) Return proceeds from the offering and any concurrent offering (if such
offering or concurrent offering intends to raise proceeds) to its security
holders if the company does not complete a business combination, such as a
merger, consolidation, exchange of securities, acquisition of assets,
reorganization, or similar transaction, with one or more target companies within
the specified time frame; or
(2) Represented that it pursues or will pursue a special purpose acquisition
company strategy.
(c) SPAC sponsor. The term SPAC sponsor means any entity and/or
person primarily responsible for organizing, directing, or managing the business
and affairs of a special purpose acquisition company, excluding, if an entity is
a SPAC sponsor, officers and directors of the special purpose acquisition
company who are not affiliates of any such entity that is a SPAC sponsor.
(d) Target company. The term target company means an operating
company, business or assets.
[89 FR 14158, Feb. 26, 2024]
229.1602 — (Item 1602) Registered offerings by special purpose acquisition companies.
(a) Forepart of registration statement and outside cover page of the
prospectus. In addition to the information required by § 229.501 (Item
501 of Regulation S-K), provide the following information on the outside front
cover page of the prospectus in plain English as required by § 230.421(d) of
this chapter:
(1) State the time frame for the special purpose acquisition company to
consummate a de-SPAC transaction and whether this time frame may be
extended.
(2) State whether security holders will have the opportunity to redeem the
securities offered and whether the redemptions will be subject to any
limitations.
(3) State the amount of the compensation received or to be received by the SPAC
sponsor, its affiliates, and promoters, the amount of securities issued or to be
issued by the SPAC to the SPAC sponsor, its affiliates, and promoters and the
price paid or to be paid for such securities, and whether this compensation and
securities issuance may result in a material dilution of the purchasers' equity
interests. Provide a cross-reference, highlighted by prominent type or in
another manner, to the locations of related disclosures in the prospectus.
(4) Disclose in the tabular format specified below at quartile intervals based on
percentages of the maximum redemption threshold: the offering price; as of the
most recent balance sheet date filed, the net tangible book value per share, as
adjusted, as if the offering and assumed redemption levels have occurred and to
give effect to material probable or consummated transactions (other than the
completion of a de-SPAC transaction); and the difference between the offering
price and such net tangible book value per share, as adjusted. Provide a
cross-reference, highlighted by prominent type or in another manner, to the
locations of related disclosures in the prospectus:
Table 1 to Paragraph (a) (4)
Net Tangible Book Value Per Share, as Adjusted
Offering Price of __
|
25% of Maximum redemption
|
50% of Maximum redemption
|
75% of Maximum redemption
|
Maximum redemption
|
---|---|---|---|---|
Instruction 1 to paragraph (a)(4). If the offering includes an
over-allotment option, include separate rows in the tabular disclosure showing
the information required by this paragraph (a)(4) with and without the exercise
of the over-allotment option.
(5) State whether there may be actual or potential material conflicts of interest
between the SPAC sponsor, its affiliates, or promoters; and purchasers in the
offering. Provide a cross-reference, highlighted by prominent type or in another
manner, to the locations of related disclosures in the prospectus.
(b) Prospectus summary. The information required by § 229.503(a) (Item
503(a) of Regulation S-K) must include a brief description of the following in
plain English as required by § 230.421(d) of this chapter:
(1) The manner in which the special purpose acquisition company will identify and
evaluate potential business combination candidates and whether it will solicit
shareholder approval for the de-SPAC transaction;
(2) The material terms of the trust or escrow account and the amount or
percentage of the gross offering proceeds that the special purpose acquisition
company will place in the trust or escrow account;
(3) The material terms of the securities being offered, including redemption
rights, and whether the securities are the same class as those held by the SPAC
sponsor and its affiliates;
(4) The period of time in which the special purpose acquisition company intends
to consummate a de-SPAC transaction and its plans in the event that it does not
consummate a de-SPAC transaction within this time period, including whether, and
if so, how, it may extend the time period; any limitations on extensions,
including the number of times; the consequences to the SPAC sponsor of not
completing an extension of this time period; and whether security holders will
have voting or redemption rights with respect to such an extension;
(5) Any plans to seek additional financings and how the terms of additional
financings may impact unaffiliated security holders;
(6) In a tabular format, the nature and amount of the compensation received or to
be received by the SPAC sponsor, its affiliates, and promoters, the amount of
securities issued or to be issued by the SPAC to the SPAC sponsor, its
affiliates, and promoters and the price paid or to be paid for such securities,
and, outside of the table, the extent to which this compensation and securities
issuance may result in a material dilution of the purchasers' equity interests;
and
(7) Any actual or potential material conflict of interest between the SPAC
sponsor, its affiliates, or promoters; and purchasers in the offering, including
those that may arise in determining whether to pursue a de-SPAC transaction.
(c) Dilution. Disclose in a tabular format for the same quartile intervals
as in paragraph (a)(4) of this section: the offering price; net tangible book
value per share, as adjusted, determined in the same manner as in paragraph
(a)(4); and the difference between the offering price and such net tangible book
value per share, as adjusted. The tabular disclosure must show: the nature and
amounts of each source of dilution used to determine net tangible book value per
share, as adjusted; the number of shares used to determine net tangible book
value per share, as adjusted; and any adjustments to the number of shares used
to determine the per share component of net tangible book value per share, as
adjusted. Outside of the table, describe each material potential source of
future dilution following the registered offering by the special purpose
acquisition company, including sources not included in the table with respect to
the determination of net tangible book value per share, as adjusted. Provide a
description of the model, methods, assumptions, estimates, and parameters
necessary to understand the tabular disclosure.
[89 FR 14158, Feb. 26, 2024]
229.1603 — (Item 1603) SPAC sponsor; conflicts of interest.
(a) SPAC sponsor, its affiliates, and promoters. Provide the following
information about the SPAC sponsor, its affiliates, and promoters of the special
purpose acquisition company:
(1) State the SPAC sponsor's name and describe the SPAC sponsor's form of
organization.
(2) Describe the general character of the SPAC sponsor's business.
(3) Describe the experience of the SPAC sponsor, its affiliates, and any
promoters in organizing special purpose acquisition companies and the extent to
which the SPAC sponsor, its affiliates, and the promoters are involved in other
special purpose acquisition companies.
(4) Describe the material roles and responsibilities of the SPAC sponsor, its
affiliates, and any promoters in directing and managing the special purpose
acquisition company's activities.
(5) Describe any agreement, arrangement, or understanding between the SPAC
sponsor and the special purpose acquisition company, its officers, directors, or
affiliates with respect to determining whether to proceed with a de-SPAC
transaction.
(6) Disclose the nature ( e.g., cash, shares of stock, warrants and
rights) and amounts of all compensation that has been or will be awarded to,
earned by, or paid to the SPAC sponsor, its affiliates, and any promoters for
all services rendered or to be rendered in all capacities to the special purpose
acquisition company and its affiliates and the amount of securities issued or to
be issued by the SPAC to the SPAC sponsor, its affiliates, and any promoters and
the price paid or to be paid for such securities. Disclose any circumstances or
arrangements under which the SPAC sponsor, its affiliates, and promoters,
directly or indirectly, have transferred or could transfer ownership of
securities of the SPAC, or that have resulted or could result in the surrender
or cancellation of such securities. In addition, disclose the nature and amounts
of any reimbursements to be paid to the SPAC sponsor, its affiliates, and any
promoters upon the completion of a de-SPAC transaction.
(7) Identify the controlling persons of the SPAC sponsor. Disclose, as of the
most recent practicable date, the persons who have direct and indirect material
interests in the SPAC sponsor, as well as the nature and amount of their
interests.
(8) Describe any agreement, arrangement, or understanding, including any
payments, between the SPAC sponsor and unaffiliated security holders of the
special purpose acquisition company regarding the redemption of outstanding
securities of the special purpose acquisition company.
(9) Disclose, in a tabular format to the extent practicable, the material terms
of any agreement, arrangement, or understanding regarding restrictions on
whether and when the SPAC sponsor and its affiliates may sell securities of the
special purpose acquisition company, including the date(s) on which the
agreement, arrangement, or understanding may expire; the natural persons and
entities subject to such an agreement, arrangement, or understanding; any
exceptions under such an agreement, arrangement, or understanding; and any terms
that would result in an earlier expiration of such an agreement, arrangement, or
understanding.
(b) Conflicts of interest. Describe any actual or potential material
conflict of interest, including any material conflict of interest that may arise
in determining whether to proceed with a de-SPAC transaction and any material
conflict of interest arising from the manner in which the special purpose
acquisition company compensates a SPAC sponsor, officers, or directors or the
manner in which a SPAC sponsor compensates its officers and directors,
between:
(1) The SPAC sponsor or its affiliates; the special purpose acquisition company's
officers, directors, or promoters; or the target company's officers or
directors; and
(2) Unaffiliated security holders of the SPAC.
(c) SPAC officer and director fiduciary duties. Briefly describe the
fiduciary duties of each officer and director of the special purpose acquisition
company to other companies to which they have fiduciary duties.
[89 FR 14158, Feb. 26, 2024]
229.1604 — (Item 1604) De-SPAC transactions.
(a) Forepart of registration statement and outside cover page of the
prospectus. In addition to the information required by § 229.501 (Item
501 of Regulation S-K), provide the following information on the outside front
cover page of the prospectus in plain English as required by § 230.421(d) of
this chapter:
(1) State the determination, if any, of the board of directors (or similar
governing body) of the special purpose acquisition company disclosed in response
to § 229.1606(a) (Item 1606(a) of Regulation S-K) and, if applicable, that the
special purpose acquisition company or the SPAC sponsor has received a report,
opinion, or appraisal referred to in § 229.1607(a) (Item 1607(a) of Regulation
S-K).
(2) Describe briefly any material financing transactions that have occurred since
the initial public offering of the special purpose acquisition company or will
occur in connection with the consummation of the de-SPAC transaction.
(3) State the amount of the compensation received or to be received by the SPAC
sponsor, its affiliates, and promoters in connection with the de-SPAC
transaction or any related financing transaction; the amount of securities
issued or to be issued by the SPAC to the SPAC sponsor, its affiliates, and
promoters and the price paid or to be paid for such securities in connection
with the de-SPAC transaction or any related financing transaction; and whether
this compensation and securities issuance may result in a material dilution of
the equity interests of non-redeeming shareholders who hold the securities until
the consummation of the de-SPAC transaction. Provide a cross-reference,
highlighted by prominent type or in another manner, to the locations of related
disclosures in the prospectus.
(4) State whether, in connection with the de-SPAC transaction, there may be any
actual or potential material conflict of interest, including any material
conflict of interest that may arise in determining whether to proceed with a
de-SPAC transaction and any material conflict of interest arising from the
manner in which the special purpose acquisition company compensates a SPAC
sponsor, officers, and directors or the manner in which a SPAC sponsor
compensates its officers and directors, between: on one hand, the SPAC sponsors,
their affiliates, SPAC officers, SPAC directors, or promoters, target company
officers or target company directors; and, on the other hand, unaffiliated
security holders of the SPAC. Provide a cross-reference, highlighted by
prominent type or in another manner, to the locations of related disclosures in
the prospectus.
(b) Prospectus summary. The information required by § 229.503(a) (Item
503(a) of Regulation S-K) must include a brief description of the following in
plain English as required by § 230.421(d) of this chapter:
(1) The background and material terms of the de-SPAC transaction;
(2) The determination, if any, of the board of directors (or similar governing
body) of the special purpose acquisition company disclosed in response to
§ 229.1606(a) (Item 1606(a) of Regulation S-K), the material factors that the
board of directors (or similar governing body) of the special purpose
acquisition company considered in making such determination, and any report,
opinion, or appraisal referred to in § 229.1607(a) (Item 1607(a) of Regulation
S-K);
(3) In connection with the de-SPAC transaction, any actual or potential material
conflict of interest between:
(i) The SPAC sponsor, SPAC officers, SPAC directors, SPAC affiliates or
promoters, target company officers, or target company directors; and
(ii) Unaffiliated security holders of the SPAC;
(4) In a tabular format, the terms and amount of the compensation received or to
be received by the SPAC sponsor, its affiliates, and promoters in connection
with the de-SPAC transaction or any related financing transaction, the amount of
securities issued or to be issued by the SPAC to the SPAC sponsor, its
affiliates, and promoters and the price paid or to be paid for such securities
in connection with the de-SPAC transaction or any related financing transaction;
and, outside of the table, the extent to which that compensation and securities
issuance has resulted or may result in a material dilution of the equity
interests of non-redeeming shareholders of the special purpose acquisition
company;
(5) The material terms of any material financing transactions that have occurred
or will occur in connection with the consummation of the de-SPAC transaction,
the anticipated use of proceeds from these financing transactions and the
dilutive impact, if any, of these financing transactions on non-redeeming
shareholders; and
(6) The rights of security holders to redeem the outstanding securities of the
special purpose acquisition company and the potential dilutive impact of
redemptions on non-redeeming shareholders.
(c) Dilution. Disclose in a tabular format that includes intervals
representing selected potential redemption levels that may occur across a
reasonably likely range of outcomes: the offering price disclosed pursuant to
§ 229.1602(a)(4) (Item 1602(a)(4)) in the initial registered offering by the
SPAC; as of the most recent balance sheet date filed, the net tangible book
value per share, as adjusted, as if the selected redemption levels have
occurred, and to give effect to, while excluding the de-SPAC transaction itself,
material probable or consummated transactions and other material effects on the
SPAC's net tangible book value per share from the de-SPAC transaction; and the
difference between such offering price and such net tangible book value per
share, as adjusted. The tabular disclosure must show: the nature and amounts of
each source of dilution used to determine net tangible book value per share, as
adjusted; the number of shares used to determine net tangible book value per
share, as adjusted; and any adjustments to the number of shares used to
determine the per share component of net tangible book value per share, as
adjusted. Outside of the table, describe each material potential source of
future dilution that non-redeeming shareholders may experience by electing not
to tender their shares in connection with the de-SPAC transaction, including
sources not included in the table with respect to the determination of net
tangible book value per share, as adjusted.
(1) With respect to each redemption level, state the company valuation at or
above which the potential dilution results in the amount of the non-redeeming
shareholders' interest per share being at least the initial public offering
price per share of common stock.
(2) Provide a description of the model, methods, assumptions, estimates, and
parameters necessary to understand the tabular disclosure.
[89 FR 14158, Feb. 26, 2024]
229.1605 — (Item 1605) Background of and reasons for the de-SPAC transaction; terms of the de-SPAC transaction; effects.
(a) Provide a summary of the background of the de-SPAC transaction. Such summary
must include a description of any contacts, negotiations, or transactions that
have occurred concerning the de-SPAC transaction.
(b) State the material terms of the de-SPAC transaction, including but not
limited to:
(1) A brief description of the de-SPAC transaction;
(2) A brief description of any related financing transaction, including any
payments from the SPAC sponsor to investors in connection with the financing
transaction;
(3) A reasonably detailed discussion of the reasons of the SPAC and the target
company for engaging in the de-SPAC transaction and reasons of the SPAC for the
structure and timing of the de-SPAC transaction and any related financing
transaction;
(4) An explanation of any material differences in the rights of SPAC and target
company security holders as compared with security holders of the combined
company as a result of the de-SPAC transaction;
(5) A brief statement as to the accounting treatment of the de-SPAC transaction;
and
(6) The Federal income tax consequences of the de-SPAC transaction to the SPAC,
the target company, and their respective security holders.
(c) Describe the effects of the de-SPAC transaction and any related financing
transaction on the special purpose acquisition company and its affiliates, the
SPAC sponsor and its affiliates, the target company and its affiliates, and
unaffiliated security holders of the special purpose acquisition company. The
description must include a reasonably detailed discussion of both the benefits
and detriments of the de-SPAC transaction and any related financing transaction
to the special purpose acquisition company and its affiliates, the SPAC sponsor
and its affiliates, the target company and its affiliates, and unaffiliated
security holders of the special purpose acquisition company. The benefits and
detriments of the de-SPAC transaction and any related financing transaction must
be quantified to the extent practicable.
(d) Disclose any material interests in the de-SPAC transaction or any related
financing transaction: held by the SPAC sponsor or the special purpose
acquisition company's officers or directors, including fiduciary or contractual
obligations to other entities as well as any interest in, or affiliation with,
the target company; or held by the target company's officers or directors that
consist of any interest in, or affiliation with, the SPAC sponsor or the special
purpose acquisition company.
(e) State whether or not security holders are entitled to any redemption or
appraisal rights. If so, summarize the redemption or appraisal rights. If there
are no redemption or appraisal rights available for security holders who object
to the de-SPAC transaction, briefly outline any other rights that may be
available to security holders.
[89 FR 14158, Feb. 26, 2024]
229.1606 — (Item 1606) Board determination about the de-SPAC transaction.
(a) Board determination. If the law of the jurisdiction in which the
special purpose acquisition company is organized requires its board of directors
(or similar governing body) to determine whether the de-SPAC transaction is
advisable and in the best interests of the special purpose acquisition company
and its security holders, or otherwise make any comparable determination,
disclose that determination.
(b) Factors considered in board determination. Discuss the material
factors the board of directors (or similar governing body) of the special
purpose acquisition company considered in making any determination disclosed in
response to paragraph (a) of this section. To the extent considered, such
factors must include, but need not be limited to, the valuation of the target
company, financial projections relied upon by the board of directors (or similar
governing body), the terms of financing materially related to the de-SPAC
transaction, any report, opinion, or appraisal referred to in § 229.1607(a)
(Item 1607(a) of Regulation S-K), and the dilution described in § 229.1604(c)
(Item 1604(c) of Regulation S-K).
(c) Approval of security holders. State whether or not the de-SPAC
transaction is structured so that approval of at least a majority of
unaffiliated security holders of the special purpose acquisition company is
required.
(d) Unaffiliated representative. State whether or not a majority of the
directors (or members of similar governing body) who are not employees of the
special purpose acquisition company has retained an unaffiliated representative
to act solely on behalf of unaffiliated security holders for purposes of
negotiating the terms of the de-SPAC transaction and/or preparing a report
concerning the approval of the de-SPAC transaction.
(e) Approval of directors. State whether or not the de-SPAC transaction
was approved by a majority of the directors (or members of similar governing
body) of the special purpose acquisition company who are not employees of the
special purpose acquisition company. If any director (or member of a similar
governing body) of the special purpose acquisition company voted against, or
abstained from voting on, approval of the de-SPAC transaction, identify such
persons, and indicate, if known after making reasonable inquiry, the reasons for
the vote against the transaction or abstention.
[89 FR 14158, Feb. 26, 2024]
229.1607 — (Item 1607) Reports, opinions, appraisals, and negotiations.
(a) Report, opinion, or appraisal. Disclose the information required by
paragraph (b) of this section if the special purpose acquisition company or SPAC
sponsor has received any report, opinion (other than an opinion of counsel) or
appraisal from an outside party or an unaffiliated representative referred to in
§ 229.1606(d) (Item 1606(d) of Regulation S-K) materially relating to:
(1) Any determination disclosed in response to § 229.1606(a) (Item 1606(a) of
Regulation S-K);
(2) The approval of the de-SPAC transaction;
(3) The consideration or the fairness of the consideration to be offered to
security holders of the target company in the de-SPAC transaction; or
(4) The fairness of the de-SPAC transaction to the special purpose acquisition
company, its security holders, or SPAC sponsor.
(b) Preparer and summary of the report, opinion, appraisal, or
negotiation. For each report, opinion, or appraisal referred to in
paragraph (a) of this section or any negotiation or report described in response
to § 229.1606(d) (Item 1606(d) of Regulation S-K) concerning the terms of the
transaction:
(1) Identify the outside party and/or unaffiliated representative;
(2) Briefly describe the qualifications of the outside party and/or unaffiliated
representative;
(3) Describe the method of selection of the outside party and/or unaffiliated
representative;
(4) Describe any material relationship that existed during the past two years or
is mutually understood to be contemplated and any compensation received or to be
received as a result of the relationship between:
(i) The outside party, its affiliates, and/or unaffiliated representative;
and
(ii) The special purpose acquisition company, the SPAC sponsor and/or their
respective affiliates;
(5) If the report, opinion, or appraisal relates to the fairness of the
consideration to be offered to security holders of the target company in the
de-SPAC transaction, state whether the special purpose acquisition company or
SPAC sponsor determined the amount of consideration to be paid to the target
company or its security holders, or the valuation of the target company, or
whether the outside party and/or unaffiliated representative recommended the
amount of consideration to be paid or the valuation of the target company;
and
(6) Furnish a summary concerning the negotiation, report, opinion, or appraisal.
The summary must include but need not be limited to: the procedures followed;
the findings and recommendations; the bases for and methods of arriving at such
findings and recommendations; instructions received from the special purpose
acquisition company or SPAC sponsor; and any limitation imposed by the special
purpose acquisition company or SPAC sponsor on the scope of the
investigation.
Instruction 1 to paragraph (b): The information called for by paragraphs
(b)(1) through (3) of this section must be given with respect to the firm that
provides the report, opinion, or appraisal or participates in the negotiation
rather than the employees of the firm that prepared the report, opinion, or
appraisal or participated in the negotiation.
(c) Exhibits. All reports, opinions, or appraisals referred to in
paragraphs (a) and (b) of this section must be, as applicable, filed as exhibits
to the registration statement or schedule or included in the schedule if the
schedule does not have exhibit filing requirements.
[89 FR 14158, Feb. 26, 2024]
229.1608 — (Item 1608) Tender offer filing obligations.
If the special purpose acquisition company files a Schedule TO (§ 240.14d-100 of
this chapter) pursuant to § 240.13e-4(c)(2) of this chapter (Rule 13e-4(c)(2))
for any redemption of securities offered to security holders, such Schedule TO
must provide the information required by General Instruction L.2. to Form S-4,
General Instruction I.2. to Form F-4, and Item 14(f)(2) of Schedule 14A
(§ 240.14a-101 of this chapter), as applicable, in addition to the information
otherwise required by Schedule TO. Such redemption must be conducted in
compliance with all other provisions of §§ 240.13e-4 (Rule 13e-4) and 240.14e-1
through 240.14e-8 (Regulation 14E) of this chapter.
[89 FR 14158, Feb. 26, 2024]
229.1609 — (Item 1609) Projections in de-SPAC transactions.
(a) With respect to any projections disclosed in the filing (or any exhibit
thereto), disclose the purpose for which the projections were prepared and the
party that prepared the projections.
(b) Disclose all material bases of the disclosed projections and all material
assumptions underlying the projections, and any material factors that may affect
such assumptions. The disclosure referred to in this section should include a
discussion of any material growth or reduction rates or discount rates used in
preparing the projections, and the reasons for selecting such growth or
reduction rates or discount rates.
(c) If the projections relate to the performance of the special purpose
acquisition company, state whether or not the projections reflect the view of
the special purpose acquisition company's management or board of directors (or
similar governing body) about its future performance as of the most recent
practicable date prior to the date of the disclosure document required to be
disseminated to security holders. If the projections relate to the target
company, disclose whether or not the target company has affirmed to the special
purpose acquisition company that its projections reflect the view of the target
company's management or board of directors (or similar governing body) about its
future performance as of the most recent practicable date prior to the date of
the disclosure document required to be disseminated to security holders. If the
projections no longer reflect the views of the special purpose acquisition
company's or the target company's management or board of directors (or similar
governing body) regarding the future performance of their respective companies
as of the most recent practicable date prior to the date of the disclosure
document required to be disseminated to security holders, state the purpose of
disclosing the projections and the reasons for any continued reliance by the
management or board of directors (or similar governing body) on the
projections.
[89 FR 14158, Feb. 26, 2024]
229.1610 — (Item 1610) Structured data requirement.
Provide the disclosure required by this subpart in an Interactive Data File in
accordance with §§ 232.405 (Rule 405 of Regulation S-T) and 232.301 (the EDGAR
Filer Manual) of this chapter.
[89 FR 14158, Feb. 26, 2024]