Charles J. Clark, David A. Curtiss, and Ele Klein are Partners at Schulte Roth & Zabel LLP. This post is based on a Schulte memorandum by Mr. Clark, Mr. Curtiss, Michael S. Didiuk, Mr. Klein, and Adriana Schwartz. Related research from the Program on Corporate Governance includes SPAC Law and Myths (discussed on the Forum here) by John C. Coates, IV.
The adopting release also provides guidance on potential underwriter liability in De-SPACs and the applicability to SPACs of the Investment Company Act of 1940.
On Jan. 24, 2024, the Securities and Exchange Commission (“SEC”) adopted long-awaited rule changes (“Final Rules”) applicable to special purpose acquisition companies (“SPACs”) and provided related guidance in its adopting release (“Adopting Release”).[1] The Final Rules largely codify the substance of the rules proposed by the SEC on March 30, 2022 (“Proposed Rules”), which were intended to enhance investor protections in SPAC initial public offerings (“IPOs”) and initial business combinations (“De-SPACs”).[2] We previously summarized the Proposed Rules, available here.[3] While the SEC largely adopted the Proposed Rules in substance, this Alert highlights the key modifications and changes from the Proposed Rules, as well as the potential impact of guidance the SEC provided on underwriter liability and the application of the Investment Company Act of 1940, as amended (“ICA”) to SPACs instead of adopting those controversial portions of the Proposed Rules.
