ESMA issues a public statement on SPACs prospectus disclosures and investors protection
On 15 July 2021, the European Securities and Market Association ("ESMA") has issued a public statement on the prospectus disclosure and investor protection considerations raised by special purpose acquisition companies ("SPACs").
European capital markets have lately witnessed unprecedented activity related to SPACs initial public offerings (“IPO”). These shell companies are set-up by sponsors with the view to have their securities traded on trading venues and subsequently acquire an existing and non-listed business through a business combination (also referred to as the “de-SPAC”).
ESMA notes that SPAC transactions are various and complex, most often involving different company laws and market practices, and that specific risks and costs are embedded with this structure. The guidelines published aim at promoting uniform disclosures and scrutiny from national competent authorities (“NCAs”) in order to strengthen the comprehensibility and comparability of SPACs prospectuses for investors, without however being binding rules.