1The guidance noted that these disclosure considerations may be relevant pursuant to the SPAC’s disclosure obligations under Regulation S-K, the requirements of Form S-4, Form F-4, Schedule 14A, Schedule 14C and Schedule TO, as applicable. Division of Corporation Finance Securities and Exchange Commission CF Disclosure Guidance: Topic No. particularly in areas where SPAC public shareholders’ interests may diverge from, or conflict with, the interests of SPAC sponsors, directors or officers. 11 provides guidance on appropriate disclosure with respect to a number of potential types of conflicts of interest and highlights the importance of appropriate disclosure on the material potential conflicts of interests of various transaction participants, including insiders, underwriters and investors in private financings by the SPAC. The SEC’s Division of Corporation Finance (CorpFin) issued CF Disclosure Guidance: Topic No. The SEC guidance begins with a look at disclosure concerns SPACs will face when going public, and conflicts of interest among the SPAC’s senior executives was a primary theme. SEC Division of Corporation Finance Issues SPAC Disclosure Guidance Paul, Weiss, Rifkind, Wharton & Garrison LLP USA January 4 2021 To complete the year- and term-end surge, just before Christmas, the Corp Fin staff issued CF Disclosure Guidance: Topic No. SEC’s Division of Corporate Finance, CF Disclosure Guidance: Topic No. 11 regarding disclosure considerations for special purpose acquisition companies in connection with their IPOs and subsequent business combinations, often referred to as de-SPAC transactions. 11 to provide its views regarding certain disclosure considerations for SPACs in connection with their initial public offerings and subsequent business combination transactions. CF Disclosure Guidance Topic: Special Purpose Acquisition Companies Dec. 22, 2020 The Division of Corporation Finance has posted CF Disclosure Guidance Topic: No. Bear in mind how worried the SEC has been about slipshod disclosures to investors when SPAC sponsors race against an acquisition deadline. The SEC could be taking a fire extinguisher to the red hot SPAC market. The SEC’s 2020 statements and guidance were relatively relaxed—the Commission focused largely on disclosure issues, including a statement from then-Chairman Jay Clayton to ensure that retail investors understand the incentives of SPAC sponsors, along with remarks by SEC officials during the 2020 SEC Speaks conference concerning risks created by potentially divergent incentives … Expect Heightened Due Diligence into SPAC Targets The Staff of the Division of Corporation Finance recently issued CF Disclosure Guidance : Topic 11 – Special Purpose Acquisition Companies (available here). The Staff of the Division of Corporation Finance recently issued CF Disclosure Guidance: Topic 11 – Special Purpose Acquisition Companies (available here). Over the past several months, the Securities and Exchange Commission (SEC) has increasingly focused on special purpose acquisition companies (SPACs), issuing a series of investor alerts, disclosure guidance, and public statements alerting the public and market participants to potential issues in SPAC transactions. In addition, the SEC may take action to further clarify or codify its position regarding disclosure obligations in SPAC transactions, and the liability of participants for such disclosure, whether through rule-making or Staff guidance. 11 to special purpose acquisition companies in connection with their initial public offerings and subsequent business combinations.. In addition, CF Disclosure Guidance Topic 11 (Topic 11), issued on December 22, 2020, outlines disclosure considerations for both SPAC IPOs and the subsequent transaction. Christopher Auguste, David Berg, … Given the proliferation of SPAC IPOs (about which we have previously posted) and de-SPACing transactions, and the complexity of the SEC rules related to former shell companies, like SPACs, it is no surprise that practitioners have encountered difficulties in navigating a number of the applicable rules. Coming out of this surge in SPAC offerings, the Division of Corporation Finance of the Securities and Exchange Commission (the “Staff”) published new disclosure guidance on December 22, 2020. A quick review of SEC staff requests listed in one comment letter last fall involving a SPAC merger gives insights into the agency’s skepticism: Just yesterday, the SEC’s Division of Corporation Finance released CF Disclosure Guidance Topic No. The explosion of SPAC transactions has drawn significant scrutiny from the SEC. 11, Special Purpose Acquisition Companies (Dec. 22, 2020), available at: SEC Division of Corporation Finance Issues SPAC Disclosure Guidance . Summary: This guidance provides the Division of Corporation Finance’s views about certain disclosure considerations for special purpose acquisition companies, commonly referred to as SPACs, in connection with their initial public offerings and … The guidance includes questions for SPACs to address, when relevant, in the IPO registration statement on the following topics of concern to the Staff: Conflicts of interest. Conflicts of interest SPAC sponsors, directors, and officers may not work exclusively on behalf of the SPAC to identify acquisition targets and may have fiduciary or … SPAC IPO Disclosure Considerations. “We encourage stakeholders to consider the risks, complexities, and challenges related to SPAC … CF Disclosure Guidance: Topic No. Expect Heightened Due Diligence into SPAC Targets This publication was updated on April 30, 2021, to reflect recent SEC statements. The SEC’s statements on SPACs have quickly progressed from a short bulletin educating investors on using SPAC vehicles to take companies public, to specific guidance strongly implying that the SEC staff is carefully scrutinizing disclosures related to SPAC transactions. This guidance highlights disclosure considerations for Reuters is reporting—exclusively—that the SEC is contemplating issuing more guidance that would “rein in growth projections” made by listed SPACs and clarify when the PSLRA would be available to protect SPAC projections, “according to three people with knowledge of the discussions.” According to Reuters, the SEC guidance “would escalate its crackdown on the deal frenzy”… See SEC Division of Corporation Finance, CF Disclosure Guidance: Topic No. 1. SEC reporting and disclosure requirements The Staff noted that in the limited circumstances described in S-K CDI 215.02 , it would not object if the combined company were to exclude management’s assessment of internal control over financial reporting in the Form 10-K covering the fiscal year in which the transaction was consummated Conflicts of interest SPAC sponsors, directors, and officers may not work exclusively on behalf of the SPAC to identify acquisition targets and may have fiduciary or … You might ask whether this guidance is really necessary. The SEC Division of Corporate Finance issued Disclosure Guidance Topic No. 11 provides guidance on appropriate disclosure with respect to a number of potential types of conflicts of interest and highlights the importance of appropriate disclosure on the material potential conflicts of interests of various transaction participants, including insiders, underwriters and investors in private financings by the SPAC. Printer-Friendly Version. SEC Provides Disclosure Guidance on SPAC IPO and Subsequent Business Combination Transactions. 11, which outlines considerations for issuers and their counsel in connection with both SPAC IPO registration statements as well as proxy statements/prospectuses prepared in connection with initial business combinations. The SEC’s Division of Corporation Finance (CF) recently provided its views about certain disclosure considerations for special purpose acquisition companies (SPACs) in connection with their initial public offerings and subsequent business combination transactions. The guidance covers several disclosure topics registrants should consider when going through an IPO. The SEC is eyeing potentially misleading earnings projections made by SPAC sponsors and is seeking clearer disclosures, with one official hinting Thursday that the agency may issue a … Topic No. Last year, in particular the second half of the year, saw a vibrant market for initial public offerings (“IPOs”) of special purpose acquisition companies (“SPACs”). In addition, the SEC may take action to further clarify or codify its position regarding disclosure obligations in SPAC transactions, and the liability of participants for such disclosure, whether through rule-making or Staff guidance. The Staff of the Division of Corporation Finance recently issued CF Disclosure Guidance: Topic 11 – Special Purpose Acquisition Companies (available here).This guidance highlights disclosure considerations for SPACs at both the IPO and business combination stages, with a focus on disclosures around conflicts of interest and the differing economic interests of SPAC sponsors, … On September 21, 2020, the Securities and Exchange Commission (the SEC) issued new guidance limiting the ability of the entity resulting from a combination between a private operating company and a reporting shell company (the Combined Entity), such as a special purpose acquisition company (SPAC), to satisfy the eligibility requirements for registering securities on short-form … Happy new year! If the agency were to issue guidance restricting the availability of the safe harbor for SPACs, it could significantly restrict SPAC’s use of target company projections in advance of de-SPAC mergers, and even further slow the already cooling SPAC market.
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