Date: 17th March 2022
Author: BETTER FINANCE, CFA Institute

Although SPACs - Special Purpose Acquisition Companies - have existed for quite some time, their sudden popularity over the last few years has drawn the attention of investors and regulators alike. In their latest joint report, BETTER FINANCE and CFA Institute shed light on the debate around SPACs also known as “blank cheques companies”. Based on the input from professional and retail investors and the overall findings of their joint study, BETTER FINANCE and CFA Institute believe that SPACs represent an important tool for the growth of EU capital markets, providing an alternative to traditional IPOs and a faster way for companies to go public. However, safeguards should be in place. The report discusses ways to preserve investor protection for retail investors and calls for more transparency on SPACs in the EU market. It introduces ways to address information disclosure and incentive structures in SPACs.  

17 March 2022 | In their latest joint report, BETTER FINANCE and CFA Institute shed light on the debate around SPACs also known as “blank cheques companies”. Most stakeholders contributing to the latest joint study agree that retail investors should only be able to invest in Special Purpose Acquisition Companies or SPACs on secondary markets, thereby restricting access. In addition, the study finds that there is also a demand for greater transparency of information on conflicts of interest and the governance of SPACs to incentivise increased retail participation.

The report argues that as it stands information disclosure for SPACs leaves a lot to be desired. Even though SPACs are governed by the EU Prospectus Regulation and MiFID II rules on product governance requirements and thereby provide information on their target markets, seeing the nature of the product, the disclosure of information regarding the expertise of the sponsors and the operating team is more important.

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