On February 21, the Nasdaq Stock Market, Inc. proposed a rule change to the Securities and Exchange Commission which would permit the listing of companies, commonly known as special purpose acquisition vehicles (SPACs), whose business plan is to complete an initial public offering and engage in a merger or acquisition with one or more unidentified companies within a specific period of time. SPACs will be subject to both NASDAQ’s initial listing requirements and additional requirements developed specifically for this entity.
The additional requirements include:
- Gross proceeds from the initial public offering must be deposited in an escrow account maintained by an insured depository institution as defined by the Federal Deposit Insurance Act or in a separate bank account established by a registered broker or dealer.
- Within 36 months of the effectiveness of its IPO registration statement, the company must complete one or more business combinations using aggregate cash consideration equal to at least 80% of the value of the escrow account at the time of the initial combination.
- So long as the company is in the acquisition stage, each business combination must be approved both by the company's shareholders and by a majority of the company's independent directors.
Following each business combination, the combined company must meet all of the requirements for initial listing.