In the guidance, the Division emphasized the importance of clear disclosures regarding potential conflicts of interest among the
When preparing to conduct an IPO, the Division recommended that a
- conflicts of interest relating to fiduciary or contractual obligations to other entities;
- financial incentives of sponsors, directors, officers and their affiliates for the completion of the business combination transaction;
- the amount of control over approval of a business combination transition maintained by sponsors, directors, officers and their affiliates;
-
whether shareholders may redeem shares in the event that there is an extension of the time period which the
SPAC has to complete a business combination transaction; - services provided by the underwriter and fees paid in exchange for such services;
- securities owned by sponsors, directors, officers and their affiliates, and related conflicts of interest; and
- compensation of sponsors, directors, officers and their affiliates, including whether such compensation is contingent on the completion of the business combination transaction.
When negotiating a business combination transaction, the Division encouraged a
- any additional financing needed for the completion of the transaction;
- material terms of conversion for any convertible securities;
- material factors considered by the board of directors in its consideration of approving the transaction;
-
any potential waivers to the
SPAC's policy for addressing conflicts of interest; - potential benefits to the sponsors, directors, officers or their affiliates from the transaction; and
- compensation of the underwriter for completion of the transaction.
Primary Sources
- SEC CF Disclosure Guidance, Topic No. 11: Special Purpose Acquisition Companies
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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