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Singapore Exchange (SGX) allows SPACs to be listed on the mainboard

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02 September 2021

Singapore Exchange Regulation has issued its finalised rules for the listing of Special Purpose Acquisition Companies (SPACs) on the Mainboard of the Singapore Exchange. The new rules will take effect on 3 September 2021. 

The new rules will allow for the listing of SPACs that meet the criteria as set out below. 

Listing criteria for SPACs

The broad admission criteria are: 

  • A minimum of SGD150 million market capitalisation and at least 25% of the total number of issued shares to be held by at least 300 public shareholders at IPO.
  • A minimum IPO price of SGD5 a share.
  • At least 90% of IPO proceeds must be placed in escrow pending the acquisition of a target company (known as the business combination). Cash will be returned on a pro rata basis from the amount in escrow to any shareholder voting against the business combination or upon the liquidation of the SPAC.
  • Any warrant (or other convertible securities) issued with the ordinary shares of the SPAC at IPO may be detachable from the underlying ordinary shares of the SPAC for trading on SGX but the maximum percentage dilution to shareholders arising from the conversion of warrants issued at IPO must be capped at 50%.

The following are the conditions for the founding shareholders, management team and controlling shareholders:

  • The founding shareholders and/or the management team must hold minimum equity at IPO of between 2.5% to 3.5%, depending on the SPAC market capitalisation then. Their aggregate shareholding interests should not exceed 20% of the SPAC’s issued share capital.  
  • There will be a moratorium on the shareholding interests held by the key parties such as the founding shareholders and controlling shareholder(s) at various junctures.

Requirements for the business combination

The following are the requirements for the business combination:

  • The business combination must comprise at least one principal core business with a fair market value forming at least 80% of the gross IPO proceeds in escrow.
  • The resulting business combination will have to meet the initial Mainboard listing criteria.

There will be a two-year permitted time frame from the IPO date to complete the business combination. However, the time frame may be extended if the SPAC has entered into a legally binding agreement for a business combination before the end of the two-year period. In that instance, the SPAC will have up to not more than a further 12 months from the relevant date to complete the business combination, subject to a total overall maximum time frame of 36 months from the IPO date. 

In addition, the SPAC must appoint: 

  • an accredited Issue Manager as a financial advisor to advise on the business combination; and
  • an independent valuer to value the target company for certain types of transactions.  

The business combination can only proceed with approval from a simple majority of the SPAC’s independent directors and a simple majority of the independent shareholders. The shareholders’ circular on the business combination must contain prospectus-level disclosures including on key areas such as: 

  • financial position and operating control; 
  • character and integrity of the incoming directors and management; 
  • compliance history; 
  • material licences, permits and approvals required to operate the business; and 
  • resolution of conflicts of interests.  

Additional disclosure information specific to SPACs (as set out in the amended Listing Rules) must also be set out in the prospectus. 

Liquidation of the SPAC may occur under certain conditions including when a material change in the profile of the founding shareholders and/or management team critical to the successful founding of the SPAC occurs, unless 75% of the independent shareholders vote for the continued listing of the SPAC.