A SPAC or Special Purpose Acquisition Company is a listed vehicle without assets (i.e., shell companies) that seeks to merge with an unlisted company - allowing the latter to go public.

SPACs are long-established vehicles that recently gained increased interest from investors for various transactions (e.g., transitioning a company from a private company to a publicly traded company) drawing regulatory attention to the issues they raise.

Issues pre and post acquisition include conflicts of interest, disclosures, allocation, conflicted transactions, local offering restrictions, key person, periodic reporting, proxy, information or tender offer statement.

To address these issues regulators around the globe are keeping a close watch on SPACs.

In the US, the Securities and Exchange Commission (SEC), has, among others, (i) provided educational materials to investors looking to invest in these vehicles, (ii) cautioned investors against making investment decisions with respect to SPACs solely based on celebrity involvement, and (iii) provided guidance for sponsors relating to disclosure obligations.

Global standard-setting bodies are also taking action; a recent example is the IOSCO New SPAC Network launched in June of this year to facilitate information sharing and keep track of the developments in this area. IOSCO SPAC Network’s first meeting was held at the end of July to discuss the regulatory concerns raised by these investment vehicles.