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SGX to Open Up Listings to Special Purpose Acquisition Companies (SPACs)

The Singapore Exchange (SGX) and SGX Regco announced on 31st March 2021 a consultation on the amendment of the Listing Rules to allow for Special Purpose Acquisition Companies (SPACs) to be listed on the Mainboard. This is a significant development for capital markets in the region and will help bolster Singapore as a leading gateway for fund raising. We look at the proposed criteria for listing.

The proposed requirements for the listing of SPACs on the Mainboard are as follows:

Broad admission criteria

  • A minimum S$300 million market capitalisation and at least 25% of the total number of issued shares to be held by at least 500 public shareholders at IPO.
  • A minimum IPO price of S$10 a share.
  • At least 90% of IPO proceeds 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 must be non-detachable from the underlying ordinary shares of the SPAC for trading on SGX.

Conditions for founding shareholders, management team and controlling shareholders

  • The founding shareholders and/or the management team must hold minimum equity at IPO of between 1.5% to 3.3%, depending on the SPAC's market capitalisation then.
  • Moratorium on the shareholding interests held by the key parties such as the founding shareholders and controlling shareholder(s) at various junctures.

Business combination requirements

  • A three-year permitted time frame from IPO date to complete 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.
  • 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.
  • 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 and/or completion of the business combination occurs prior to the consummation of the business combination, unless independent shareholders vote for the continued listing of the SPAC.
  • The issuer must appoint:
    • an accredited Issue Manager as Financial Advisor to advise on the business combination; and
    • an independent valuer to value the target company
  • 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.
This is a significant development for capital markets in the region and will help bolster Singapore as a leading gateway for fund raising. The consultation closes on 28 April 2021.