In August 2021, the Luxembourg Stock Exchange (“LxSE”) published guidelines for the listing of special purposes acquisition companies (“SPACs“) on its markets, which complement the general admission rules set out in the rules and regulations of the LxSE.
The LxSE encourages sponsors and other professional intermediaries to respect the following five recommendations during the SPACs structuring process:
- Placing of funds in an escrow account with a regulated financial institution
In order to ensure the protection of investors, all capital invested will now be held in an escrow account until the acquisition is complete. Additionally, an order of priority shall be documented with regard to outgoing payments.
- Redemption rights of shareholders
All shareholders of the SPAC shall be granted redemption rights. The issuer should describe the conditions under which such rights shall be exercised.
- De-SPAC process
The business combination with the target company should be approved by the majority of shareholders. The issuer should also provide shareholders all the information required to make an informed decision on the exercise of redemption rights.
- Business strategy
The admission to trading prospectus should provide details on the business strategy, including the target industries and geographical locations of where the issuer is seeking opportunities.
There should be a defined timeframe for the consummation of the business combinations.
The LxSE highlighted that the aforementioned guidelines are not exhaustive and that the LxSE reserves the right to consider any other features of the SPACs in the course of its assessment of the transaction.