SPAC listing framework introduced by SGX

September 2021

SGX introduced its rules for the listing of Special Purpose Acquisition Companies (SPACs) on the Mainboard of the Singapore Exchange

Listing criteria for SPACs

(a)    A minimum of S$150 million market capitalisation and at least 25% of the total number of issued shares are to be held by at least 300 public shareholders at IPO

(b)    A minimum IPO price of S$5 a share

(c)     At least 90% of IPO proceeds must be placed in escrow until the acquisition of a target company or the business combination. Cash will be returned on a pro rata basis from the cash held in escrow to any shareholder who votes against the business combination or upon the liquidation of the SPAC

(d)    Any warrant (or other convertible securities) issued with the ordinary shares of the SPAC at IPO may be detachable from the underlying ordinary shares of the SPAC for trading on SGX but the maximum percentage dilution to shareholders arising from the conversion of warrants issued at IPO must be capped at 50%.

Founders, Management and Controlling Shareholders

(a)    The founding shareholders and the management team must hold a minimum level of equity at the time of the IPO of between 2.5% to 3.5%, depending on the SPAC market capitalisation then. Their aggregate shareholding interests should not exceed 20% of the SPAC’s issued share capital

(b)    Moratorium obligations are imposed on the shareholding interests held by the key parties such as the founding shareholders and controlling shareholder at various junctures

The Business Combination

(a)    The business combination must comprise at least one principal core business with a fair market value of at least 80% of the gross IPO proceeds in escrow

(b)    The resulting business combination must comply with Mainboard listing criteria

(c)     A period of two years is permitted from the IPO date to complete a business combination. The period may be extended if the SPAC has entered into a legally binding agreement for a business combination before the end of the two-year period, and the SPAC will have a further 12 months to complete the business combination, subject to a total overall maximum time frame of 36 months from the IPO date.

Issue Manager and Valuer

The SPAC must appoint:

(a)    an accredited Issue Manager as a financial advisor to advise on the business combination;  and

(b)    an independent valuer to value the target company for certain types of transactions. 

Board and Shareholder Vote

The business combination can only proceed with approval from a simple majority of the SPAC’s independent directors and a simple majority of the independent shareholders.

Shareholders’ Circular for a Business Combination

The shareholders’ circular on the business combination must contain prospectus-level disclosures including:

(a)    financial position and operating control

(b)    character and integrity of the incoming directors and management

(c)     compliance history

(d)    material licences, permits and approvals required to operate the business

(e)    resolution of conflicts of interests

(f)      specific disclosures in relation to SPACs set out in the Listing Rules

Liquidation of a SPAC

Liquidation of the SPAC may occur in certain situations such as in the event of a material change in the profile of the founding shareholders or management team critical to the successful founding of the SPAC unless 75% of the independent shareholders vote for the continued listing of the SPAC

The SPAC listing rules take effect on 3 September 2021.