SEC Adopts Final Rules For SPACs

On January 24, 2024, almost two years after it was initially proposed, the U.S. Securities and Exchange Commission (the "Commission") adopted final rules regarding special purpose acquisition companies ("SPACs"), shell companies, and disclosure related to projections. A known focus of Commission Chairman Gary Gensler since May 2021 when he discussed devoting significant resources to addressing issues in de-SPAC transactions to the House Appropriations Committee, the rules and amendments require more fulsome and transparent disclosure.

The final rules will become effective 125 days after publication in the federal register.

Background

SPACs are typically shell companies formed for the purpose of merging with or acquiring a private target company. However, during the surge in SPAC formations and completions of de-SPAC transactions in the early 2020s, a variety of market observers raised concerns about, among other things, the nature and disclosure of SPAC