SPACs: Singapore Exchange (SGX) Introduces Updated SPAC Listing Guidelines

Singapore Exchange (SGX) recently revealed that they’ve created updated rules that will allow Special Purpose Acquisition Companies (SPACs) to list on its Mainboard “effective 3 September 2021.”

Tan Boon Gin, CEO of Singapore Exchange Regulation (SGX RegCo), noted that SGX’s SPAC framework should give firms an alternative capital fundraising option with more certainty on both price and execution.

Tan added that they want the SPAC process to “result in good target companies listed on SGX, providing investors with more choice and opportunities.” Tan also mentioned that “to achieve this, you can expect us to focus on the sponsors’ quality and track record.” Tan further noted that they have “introduced requirements that increase sponsors’ skin in the game and their alignment with shareholders’ interest.”

An SGX listing under the SPAC framework “must have” the following features:

  • Minimum market capitalisation “of S$150 million”
  • De-SPAC must take place “within 24 months of IPO with an extension of up to 12 months subject to fulfilment of prescribed conditions”
  • Moratorium on Sponsors’ shares from IPO to de-SPAC, “a 6-month moratorium after de-SPAC and for applicable resulting issuers, a further 6-month moratorium thereafter on 50% of shareholdings.”
  • Sponsors must subscribe to “at least 2.5% to 3.5% of the IPO shares/units/warrants depending on the market capitalisation of the SPAC”
  • De-SPAC can proceed “if more than 50% of independent directors approve the transaction and more than 50% of shareholders vote in support of the transaction”
  • Warrants issued to shareholders “will be detachable and maximum percentage dilution to shareholders arising from the conversion of warrants issued at IPO is capped at 50%”
  • All independent shareholders are “entitled to redemption rights”
  • Sponsor’s promote “limit of up to 20% of issued shares at IPO”

More than 80 respondents offered feedback, which is perhaps the highest response rate to an SGX consultation “in recent times,” the announcement revealed. It also noted that respondents included financial institutions, investment banks, private equity and venture capital funds, corporate finance firms, private investors, lawyers, auditors and stakeholder associations “whose views have been carefully considered in arriving at the framework.”

As confirmed in the announcement, SGX will continue to work cooperatively with the Securities Investors Association (Singapore) in order to “increase retail investors’ understanding of SPACs through collaborative efforts including the conduct of educational programs.”

SGX will “separately partner Singapore Institute of Directors to educate future directors of SPACs on the responsibilities and duties expected of them,” the update noted.

SGX’s responses to the feedback received and the updated rules may be accessed here.

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