An Indian Perspective on Special Purpose Acquisition Companies, GLA-TR-001
to the reduction in risk for subsequently disapproving shareholders.15 In the Indian context, SPACs can prove to be a great tool in publicly listing companies from the start- up ecosystems which show promise. Not only this, but since the SPAC route is undeniably cost effective and quicker, it can prove to be extremely beneficial for other companies to list publicly as well. 16 Since SPAC acquisitions occur at a pre- determined price, there can be higher levels of certainty in the market which can prove to be beneficial in the Indian context. Unlike IPOs which focus on past performance and track records of a company, in the SPAC route, a higher reliance is placed on future potential of companies making it possible for boosting the capital for companies that opt for the route.17 However, it is necessary to point out that although the SPAC route is beneficial, several regulatory concerns have also been raised over a short span of time and thus, the next portion of this report has been dedicated towards highlighting the potential as well as looming concerns of SPACs from the Indian context.
Current Mechanism for Governing Special Purpose Acquisition Companies in India In India, the concept of SPACs have been legally recognised vide the International Financial Services Centres Authority (Issuance and Listing of Securities) Regulations, 2021. 18 Regulation 2(s) defines a “special purpose acquisition company” as “a company which does not have any operating business and has been formed with Tomas De Heredia, Javier Fernandez- Galiano and Mayrin Garcia, ‘The SPACs Boom: Europe Picks Up the Pace’ (Deloitte Insights, 14 July 2021) <https://www2.deloitte.com/uk/en/insights/industry/financialservices/spacs-in-europe.html> accessed 17 September 2021. 16 James Surowiecki, ‘Why a SPAC Bubble is Actually Good for the Economy’ (Marker Medium, 30 November 2020) <https://marker.medium.com/why-aspac-bubble-is-actually-good-for-the-economy-4204d1b55d> accessed 19 September 2021. 17 Pranav Sayta, ‘SPAC and its Growing Relevance in India’ (E&Y, 10 May 2021) <https://www.ey.com/en_in/tax/spac-and-its-growing-relevance-inindia> accessed 19 September 2021. 18 International Financial Services Centres Authority (Issuance of Listing of Securities) Regulations, 2021 <https://ifsca.gov.in/Viewer/Index/202>. 15
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