spac filing requirements

– If SPAC intends to register new securities as part of transaction, SPAC must also file a proxy/prospectus on Form S-4 (or F-4) – The continuing company may be able to qualify as a foreign private issuer (“FPI”) • Generally, the filing is made as soon as … When conducting a SPAC transaction, the target should assess the following technical accounting and SEC reporting considerations, which are discussed in this publication: • SEC Filing Requirements. • Proxy/Registration Statement Requirements: o Financial Statement Requirements. o Age of Financial Statements. The timing of these filings can affect the historical filing requirements of the future target financials, such as expanding the historical target financials from two to three years or requiring additional interim periods to be included and reviewed by an independent accounting firm pending the previous filings of the SPAC. All publicly traded companies need to file certain documents with the SEC, or Securities and Exchange Commission. Once all of the required paperwork is in, the company will present its IPO roadshow. SPAC pro-forma typically includes considerations for redemption rights of public shareholders’, and potential impact from any tax status change resulting from the SPAC merger. The SPAC Conference 2020 Hosted by DealFlow Events The largest forum for networking and discussion of special purpose acquisition companies and alternative IPO techniques. Listen to the Audio BUY AUDIO/BOOK KIT February 6 New York City Crowne Plaza Times Square REGISTER TODAY Registration includes a free one-month subscription to data and analytics… • SPAC must file proxy statement on Schedule 14A – If SPAC intends to register new securities as part of transaction, SPAC must also file a proxy/prospectus on Form S-4 (or F-4) – The continuing company may be able to qualify as a foreign private issuer (FPI) • Proxy statement or … A Form 8-K, with information equivalent to what would be required in a Form 10 filing of the target company (commonly referred to as the Super 8-K), must be filed with the US Securities and Exchange Commission (SEC) within four business days of closing. The Station: Lucid Motors, Joby Aviation take the SPAC path and Sergey Brin’s airship ambitions Kirsten Korosec 3 months The Station is a weekly newsletter dedicated to … In some cases, some of the interest earned from the trust can be used as the SPAC's working capital . These include both quantitative (number of shares and share price, investor base) and qualitative (audit committee experience and independence, independent director oversight) requirements. For example, if the target has not complied with mandatory CFIUS filing requirements, the parties must consider how to remediate the identified issues and disclose the non-compliance. A SPAC cannot use a Form S­8 to register any management equity plans until 60 days after completing a business combination and filing Form 10 information. company. Through June 30, 2020, the year was on pace to exceed the prior year once again and, through the date of this article, the amount of capital raised in SPAC IPOs in 2020 has already eclipsed all of 2019. The filings are required to be made public 15 days before the offering. SEC Filing Requirements As discussed above, before consummating a transaction, a SPAC will be required to file one of the following: • Proxy statement on Schedule 14A — Generally required for the SPAC to solicit votes life as a public company. Identifying acquirer, predecessor entity are among decisions the tax team of the combined company must make. O n June 28, 2018, the Securities and Exchange Commission (the “SEC") adopted a final rule, Inline XBRL Filing of Tagged Data, which substantially alters requirements related to the use of the eXentsible Business Reporting Language (“XBRL") format in operating companies' financial statement information and funds' risk/return summary information. This diligence would typically include performing an export control analysis to determine if the mandatory filing requirement would be triggered. The SPAC’s governing documents usually specify a timeframe by which it must acquire an operating “So SPAC fees are about a quarter of the money raised, three or four times as much as you’d pay in an IPO, albeit better disguised,” Levine writes. The seller will need to provide much necessary information to accommodate the SPAC’s filing with the SEC. If you take a look at the roughly dozen or so SPAC-related lawsuits that have been filed so far in 2021, you will quickly note that many of the lawsuits related to supposed post-merger shortfall compared to pre-merger projections. De-SPAC - Proposal to allow a De-SPAC 15 days post-closing of business combination to show compliance with shareholder requirements. substantial backlog of filings, particularly SPAC filings (both IPOs and merger proxy statement/registration statements) Recently two other groups within the Disclosure Operations section have received SPAC training and it is hoped that we will move closer to … After the IPO, a SPAC must promptly file an audited balance sheet under Item 8.01 of Form 8-K showing at least $ 5 million in net tangible assets (i.e., total assets less intangible assets and liabilities) to avoid classification as a blank-check company subject to the requirements of 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. For sponsors, compliance with regulatory requirements can determine the success or failure of a SPAC. Super 8-K Filing Requirements- A “Super 8-K” is an industry term used for an 8-K filed under Item 2.01 for the completion of a transaction and Item 5.06 of Form 8-K to report a change in shell status. SPAC units consist of one share of common stock and warrants (ranging from 0.25 warrants to multiple warrants) for a purchase price of $10 per unit. But, even if a filing is not required, a sponsor may face tough disclosure questions with respect to an S-4 (eg, if a deal falls within CFIUS’ voluntary jurisdiction, what is the likelihood that CFIUS may inquire about and potentially disrupt the transaction pre-closing?) Since the beginning of 2020 through July 22, 2020, 48 SPAC IPOs have been completed, Ongoing CFIUS risk can follow target founders that will roll over their ownership into the SPAC, and, in some cases, rollovers could trigger new filing requirements. A special purpose acquisition company (SPAC; / s p æ k /), also known as a "blank check company" is a shell corporation listed on a stock exchange with the purpose of acquiring a private company, thus making it public without going through the traditional initial public offering process. The reality of SPAC mergers. To fulfill many of the requirements for completing the De-SPAC transaction, the target company must supply all necessary information for the SPAC’s SEC filing, including audited historical financial statements, including compliance with Regulation S-X and associated disclosures. If a SPAC meets the definition of a blank check company, it would be required to comply with Rule 419 under the Securities Act of 1933, which requires investors' funds to be held in escrow, filing of a post-effective amendment upon execution of an acquisition agreement, and the return of the escrowed funds if an acquisition has not occurred within 18 months of the effective date of the initial registration statement. SPAC IPO Gross Proceeds, other than a portion of the underwriters’ commissions, are placed into a Trust Account for the benefit of investors. In addition, due to a SPAC’s That exceeds the total for … Supplemental Infor… A financial advisor's top 5 SPAC tax issues. From a capital markets perspective, 2020 has been defined by some as "The Year of the SPAC." National securities exchange initial listing requirements must be satisfied at the consummation of the SPAC transaction in order for SPAC shares listed on the exchanges to remain listed. If a correction or full restatement is required, SPAC/post-de-SPAC entities should also consider disclosure and filing requirements, as well as the impact on existing SEC filings … • Lastly, while the headline valuation is critical, the parties need to settle on a value that isn’t so high that it won’t be attractive to SPAC investors. SPACs must comply with recurring SEC filing requirements, despite having little-to-no operations—failure to file on time can affect the historical filing requirements of the future target financials. He suggested the SEC could issue a rule or provide guidance in this regard. Super 8-K, Super 8 K Filing, Super 8-k Free Trading, Reverse Merger Super 8-K, Super 8-K Requirements. … Modiv Acquisition Corp. (“MAC SPAC”) Announces Filing of Registration Statement. A special purpose acquisition company is formed by experienced business executives who are confident that their reputation and experience will help them identify a profitable company to acquire. Two important examples to highlight: 1) the SPAC is not afforded the one-year annual grace period for internal control compliance integration for the acquired entity, and 2) the acquired entity becomes the SEC reporting entity and must follow the rigid filing timelines as set forth by the SEC, with no delay in compliance afforded. Of course, audited financial statements will be a requirement. Indeed, we are already starting to see the chilling effect of the SEC’s scrutiny on this front. SPACs offer an appealing alternative to the costly and time-consuming traditional IPO process. Don't be surprised if you have to revise those historical financials – while also including additional disclosures – before filing them with the SEC. The SPAC would also need to recalculate the value of the warrants for the Form 10-Ks and Form 10-Qs before and after the SPAC’s IPO. SPAC mania has come to a screeching halt. What exactly does that mean? Companies must also suspend use of any registration statement where the use of such form is dependent on the timely filing of periodic reports, until such reports have been timely filed for the required time period (e.g., Form S-3, to the extent a post-de-SPAC combined company is otherwise eligible to use Form S-3, and Form S-8, which cannot be used until the late periodic report is filed). While the filing requirements for a SPAC deal are not trivial, the target doesn’t have to disclose historical financials or offer a lengthy list of business risks, according to the Harvard Law School Forum on Corporate Governance. – Size requirement for business combination (e.g., 80% of net assets) – No compensation to founders SPACs often have Audit Committee and corporate governance structures similar to other operating companies Underwriters play a large role in pre-IPO structuring of SPAC Significant percentage of IPO proceeds (95%+) are placed in a tax rules, withholding taxes, and added compliance and tax filing requirements. SPAC Capital Structure has been largely standardized. The SEC requires that a public company file Form 10 type information on the private entity within four days of completing the reverse merger transaction (a super 8-K). One of these required forms for domestic issuers is the 8-K. SPACs also protect the … Anticipating regulatory requirements. NEWPORT BEACH, Calif.-- ( BUSINESS WIRE )- … If you are looking for a concise guide to the SEC filing & disclosure requirements applicable to a de-SPAC transaction, check out the 31-page memo from Grant Thornton. This Form 8-K is known as a “Super 8-K” and must contain all the information that would be required in a Form 10 registration statement. What exactly does that mean? More than 550 SPACs have filed to go public on U.S. exchanges in the year to date, seeking to raise a combined $162 billion, according to data compiled by Bloomberg. However, COVID-19 has seemingly brought them back to life as pandemic-driven market volatility continues to disrupt and complicate the traditional path to an IPO. Since a SPAC’s shareholders are required to vote on the transaction, the SPAC may file either (1) a proxy statement on Schedule 14A or (2) a combined proxy and registration statement on Form S-4 (note that (1) and (2) are collectively referred to herein as a “proxy/registration statement”). But post-SPAC IPO, those historical financials must now comply with Regulation S-X and the US GAAP requirements for a public company. SPAC Transactions Will Have Significant Near-Term Impact on Capital Markets April 14, 2021 SEC statement may require financial restatements and will pause SPAC market activity Virtually every SPAC offering involves an offering of units composed of common stock and … However, they are not exempt from the SEC’s filing and reporting requirements, 2 which are especially challenging when the private operating company target is a foreign business historically reporting under IFRS ® Standards. IPO proceeds are held in the trust account until a SPAC consummates a business combination or liquidates. The filing, pending SEC … Missed the Conference? Once the SPAC’s shareholders approve the transaction, the acquisition will close, and the combined company has four business days to file a special Form 8-K (“Super 8-K”) that includes all the information that would have been required if the target were filing an initial registration statement on Form 10. If a SPAC lists its securities on an exchange, it is required to complete an initial business combination within three years of its IPO. Following its IPO, the SPAC must comply with SEC reporting requirements, including filing periodic reports on Forms 10-Q and 10-K, as well as current reports on Form 8-K. The SPAC lifecycle has two main phases: (1) SPAC formation and initial public offering (IPO) and (2) the SPAC merger, or de-SPAC. The regulatory requirements for a SPAC transaction are quite consistent with those for a traditional IPO, and therefore are quite involved. There are a number of important legal issues … Regardless of the phase, to ensure a successful transaction when forming a public entity, finance and accounting leaders must implement the necessary processes, create the appropriate documentation, and mobilize the right team members at the proper times. SPACs can bring private companies into the public markets more quickly than a traditional IPO, but there can be risks associated with speeding up the process. March 24, 2021 06:44 AM Eastern Daylight Time. Discover the 8-K filing requirements here, including who needs to file, when to file, what filing with the SEC actually means and how to get help. What are the key legal issues that arise in SPACs? SEC Filing Requirements Proxy statement on Schedule 14A — Generally required for the SPAC to solicit votes from its shareholders to consummate... Combined proxy and registration statement on Form S-4 — Generally required if the SPAC is registering additional... Download the full issue. When available, copies of the prospectus related to the proposed initial offering by LMF Acquisition may be obtained for free by visiting Edgar on the SEC's website at … Ongoing CFIUS risk can follow target founders that will roll over their ownership into the SPAC, and, in some cases, rollovers could trigger new filing requirements. If a correction or full restatement is required, SPAC/post-de-SPAC entities should also consider disclosure and filing requirements, as well as the impact on existing SEC filings and commercial agreements, including registration rights agreements, debt facility agreements, and other agreements. From my perspective, a dialing-down of SPACs’ use of target company projections would not necessarily be all bad. Just last month, special purpose acquisition companies celebrated a head-turning milestone by breaking their 2020 issuance record in … If a SPAC seeks to extend the time period, it may be required to seek shareholder approval. Speed is often touted as a key benefit for merging with a SPAC. If the SPAC successfully completes an acquisition, the private operating company target succeeds to the SPAC’s public filing status and, as a result, the target effectively becomes a … involved in SPAC transactions and evolving views, we recommend regular consultation with accounting and legal advisers. Six months of ICFR preparation is rarely enough so active preparation and coordination with your attorney and the SEC Staff is critical. Public company reporting requirements and obligations Ensure necessary cash retained outside trust account or can be withdrawn therefrom Portion of interest earned on escrowed funds available to SPAC Extremely important given trend toward 100% of IPO proceeds escrowed in trust account The following tables summarize the scope of the basic financial statement requirements for all registered offerings.3 Note that much of the basic information can be incorporated by reference for issuers eligible to use Form S-34 and for certain issuers filing a registration statement on Form S-15 or Form S-11. The Return Of The SPAC. Since the beginning of 2016, each year has set a record in terms of total number of SPAC IPOs and the amount of capital raised in those IPOs. The March 31, 2021 Division of Corporation Finance guidance makes it clear that SPAC management teams must be aware of shell company restrictions and SEC filing requirements, books and records and internal controls requirements, and initial listing standards of the national securities exchanges, such as the New York Stock Exchange and Nasdaq. Since the SPAC is only a shell company, the founders become the selling point when sourcing funds from investo… Upon completion of the reverse merger transaction and filing of the Form 10 information, the once private company is now public. Although there has been a boom in companies going public through SPAC … Thus, we can expect the SEC to focus its enforcement actions on de-SPAC companies that fail to satisfy filing and disclosure requirements and deadlines or that fail to comply with the accounting standards expected of a publicly traded company. SEC Raises Questions on SPACs Use of Form S-3 Registration Statements By: Carol Anne Huff, Arnold and Porter* The Securities and Exchange Commission has begun issuing comments to former SPACs as part of the process of reviewing registration statement filings that may indicate a change in the Staff’s position on when former SPACs can use short-form registration statements on … The four largest SPAC IPOs in the UK (J2 Acquisition, Landscape Acquisition Holdings, Ocelot Partners and Wilmcote Holdings) represented 99.1 per cent of total funds raised by UK SPACs in 2017. SPAC will also be required to provided pro forma financial information to be prepared according to age, form and content requirements of SEC’s Regulation S-X, article 11. Filings include the company’s prospectus, financial data, industry data and a company analysis. Mr. Munter notes that many SPAC acquisition targets may be at an earlier stage in their development compared to companies that pursue a traditional underwritten IPO. SEC rules require that SPACs file a special Form 8-K within four business days following completion of a De-SPAC transaction. A SPAC generally has two years to complete a deal or face liquidation. The SPAC still has to meet certain SEC filing requirements and be ready for the IPO to avoid delays.

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