SEC Issues Statements on Special-Purpose Acquisition Companies

On March 31, 2021, the staff of the SEC’s Division of Corporation Finance issued a statement to address “certain accounting, financial reporting and governance issues that should be carefully considered before a private operating company undertakes a business combination with a special purpose acquisition company.” Specifically, the statement discusses SPAC issues related to (1) shell company restrictions, (2) books and records and internal control requirements, and (3) initial listing standards of national securities exchanges. In addition, on this same day, SEC Acting Chief Accountant Paul Munter issued a statement on financial reporting and auditing considerations for companies merging with SPACs

On April 8, 2021, John Coates, acting director of the SEC’s Division of Corporation Finance, issued a statement on SPACs, initial public offerings, and liability risk under the securities laws. In his statement, Coates notes that the SEC staff will “continue to be vigilant about SPAC and private target disclosure so that the public can make informed investment and voting decisions about these transactions.”

On April 12, 2021, the staff of the SEC’s Division of Corporation Finance and the Office of the Chief Accountant issued a statement that discusses (1) “potential accounting implications of certain terms that may be common in warrants included in SPAC transactions” and (2) “financial reporting considerations that apply if a registrant and its auditors determine there is an error in any previously-filed financial statements.”