Securities Law

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An Indian Perspective on Special Purpose Acquisition Companies, GLA-TR-001

Recommendations to Solve Regulatory Concerns of Special Purpose Acquisition Companies

In light of the aforesaid discussions and potential as well as looming concerns of SPACs highlighted from an Indian context, this part of the report is focused on providing recommendations from firstly; a regulatory perspective that will ensure that sufficient regulatory safeguards are suggested; and secondly, from the perspective of providing suggestions to solve the concerns of SPACs themselves.

Securities Law

The first reform required in terms of securities law and its application over SPACs is that the SEBI ICDR Regulations will have to be amended to be made more SPAC- friendly. Currently, SPACs can only raise capital through an IPO in stock exchanges which are a part of the International Financial Services Centre giving it limited scope for raising capital. If amendments can be made in the SEBI ICDR Regulations which are pari materia to the International Financial Services Centres Authority (Issuance of Listing of Securities) Regulations 2021 with a few exceptions, then SPAC IPOs can be introduced in all stock exchanges permitting all institutional and retail investors to invest in them. This means introducing SPAC specific eligibility, IPO process, offer timings, disclosures, offer document, issue size, pricing, underwriting, offer period, application, allotment and postmerger or post combination regulations in SEBI ICDR Regulations. In pursuance of the above amendment, it is necessary that Regulation 6 of the SEBI ICDR Regulations also introduce an “exception” clause in the regulation for SPACs which will exempt them from preceding year requirements since separate eligibility requirements will already be brought in a separate Chapter as stated above.