PS21/10: Investor protection measures for special purpose acquisition companies: Changes to the Listing Rules

Read PS21/10 (PDF)[2]

Why we are changing our rules

A SPAC is a type of company formed to raise money from investors, which it then uses to acquire another operating business.

Our Listing Rules state that we may suspend the listing of any securities if the smooth operation of the market is, or may be, temporarily jeopardised or it is necessary to protect investors. For a shell company, including a SPAC, there is a general presumption that we will suspend listing when it announces a potential acquisition target, or if details of the proposed acquisition have leaked. This is to protect investors from disorderly markets as a result of insufficient information being publicly available at that stage, which could impair the process of proper price formation.

Our changes remove the presumption of suspension for SPACs that meet certain criteria intended to strengthen the protections for investors. The changes provide an alternative approach for SPACs that must otherwise provide detailed information about a proposed target to the market to avoid being suspended.

Our changes aim to make markets function well and promote market integrity and consumer protection by providing more flexibility to larger SPACs that embed certain features that promote investor protection and the smooth operation of our markets. SPACs remain a more complex investment, however, so investors should carefully consider all available information and risks before deciding whether to invest in a SPAC.

This policy statement confirms these final rules and explains where changes have been made to our original proposals in response to feedback. It also confirms amendments to our Technical Note on cash shell companies.

Who this applies to

This policy statement will be of interest to:

• prospective investors in SPACs, including institutional and individual investors
• prospective issuers of SPACs considering a UK listing and prospective acquisition targets
• law firms, investment banks and other advisors and intermediaries who may assist in creating and advising on SPAC offers
• exchanges or venue operators who admit SPACs to their markets
• intermediaries who may facilitate investments into a SPAC, including providing execution and/or marketing services, whether at initial public offering or in secondary markets 
• trade associations representing the various market participants noted above
• wider financial market participants, such as research analysts

Next steps

The new rules and guidance[3] come into force on 10 August 2021.