3 September 2021 was a historical date for capital markets in Singapore as the SGX made a bold and calculated decision to allow SPAC listings in Singapore after having first considered it in 2010.
SGX’s concerns about SPAC listings were not unfounded, especially with the increasingly negative publicity on SPAC listings in the US and the unimpressive take up rate for SPAC listings in Malaysia since its first SPAC listing in 2011. Part V of our earlier article "Ultimate Quick Guide to Proposed Framework for SPAC Listings in Singapore” sets out some of the shortcomings of SPAC listings.
Having weighed both risks and benefits and putting measures in place to address these risks, including requirements that increase founding shareholders’ skin in the game and their alignment with shareholders’ interests, new rules for SPAC listings in Singapore took effect on 3 September 2021.
In the table below, we set out a summary of the new rules for SPAC listings.
A. Summary of the New Rules for SPAC listings
Footnotes:
(1) Foreign-incorporated SPACs may be listed if they are able to demonstrate:
comparable shareholder protection and liquidation rights with that of Singapore- incorporated companies; and
that they will be subject to the Insolvency, Restructuring and Dissolution Act (IRDA) for liquidation procedures or have incorporated such equivalent provisions of the IRDA.
(2) Warrants in the SPAC will be detachable from the shares, allowing for shares and warrants to be traded separately. Warrants give the investors the right to buy shares in the issuer at a certain price before a certain date. The detachability of SPAC warrants from shares is a commercially attractive feature to investors as the warrants serve to "cushion” the risk of investing in the SPAC by the investors. Investors can now choose whether to trade the warrants or to retain them to enjoy any potential upsides upon exercise of the warrants.
(3) Additional moratorium of 6 months on 50% shareholdings will apply to the Key Persons if the resulting issuer:
has a minimum market capitalisation but is unable to meet the profits tests under the mainboard listing rules; or
is a mineral, oil or gas company; or
is a life science company.
(4) The default timeframe allowed for a de-SPAC is 24 months with an extension of 12 months subject to the following:
in the event a binding agreement for a business combination has been entered into, an extension subject to the fulfilment of conditions such as (i) the extension being legally permitted, (ii) a timely notification of extension to SGX, (iii) the extension being announced on SGXNET in a timely manner and (iv) confirmation by the issuer that there is no material adverse change to the financial situation since the date of prospectus issued in connection with its listing, that the extension is legally permitted and that quarterly investor updates on key milestones in completing the business combination will be provided via SGXNET; or
in the event no binding agreement for a business combination has been entered into and more time is required to seek a suitable business combination, an extension with approval from SGX and with 75% shareholder approval.
B. Roadmap of SPAC Timeline
Part III of our earlier article “Ultimate Quick Guide to Proposed Framework for SPAC Listings in Singapore” sets out how a SPAC works.
Based on the new rules for SPAC Listings in Singapore, we set out a roadmap on the timeline of SPAC from formation till de-SPAC or liquidation below.
Conclusion
The new rules are more relaxed than those proposed in the consultation paper, making it more attractive for companies and investors. Please refer to our earlier article “Ultimate Quick Guide to Proposed Framework for SPAC Listings in Singapore” for a summary of the listing requirements proposed earlier.
Given their recent rise in popularity, the introduction of the new rules for SPAC listings in Singapore is timely and well received by the industry players. It remains to be seen if this will reignite interest in the Singapore capital markets.
Prepared by Avant Law LLC
Avant Law LLC is a law firm in Singapore specialized in capital markets and mergers & acquisitions. Our corporate lawyers in Singapore are dual qualified in both Singapore laws and Malaysia laws.
For more information, please visit us at https://www.avantlawllc.com/
Disclaimer
This guide is solely for informational purposes only. It is not intended to be or nor should it be regarded as or relied upon as legal advice. Please do not act or refrain from acting based on anything you read on this guide. Avant Law LLC does not accept and fully disclaim responsibility for any loss or damage which may result from accessing or relying on this guide.