The European Securities and Markets Authority (ESMA) has issued a public statement on SPAC information disclosure and investor protection issues

The European Securities and Markets Authority (ESMA) has issued a public statement on SPAC information disclosure and investor protection issues
The European Securities and Markets Authority (ESMA) has issued a public statement on SPAC information disclosure and investor protection issues.
Due to the increasing activity of SPACs in the EU, ESMA has issued a public statement to promote coordinated scrutiny activities by national competent authorities (NCA) when a prospectus is required. A prospectus will generally need to approved by a NCA in the framework of the admission to trading of the SPAC shares on a regulated market and/or in relation to any offering to the public of such shares. ESMA has also raised disclosure concerns aimed at preserving investor protection where no prospectus is needed, specifically relating to the De-SPAC (i.e., the business combination of the SPAC with a target)
Although IPO prospectus content may differ depending on the applicable company law and market practices, ESMA understands that NCAs should focus on the following disclosure requirements, among others:
NCAs should also require additional information not expressly established by the Prospectus Regulation, to allow investors to make an informed assessment of the issuer and the securities, including information on future remuneration of the sponsor and their role after the De-SPAC; possible changes to the corporate governance after this milestone; and possible scenarios that may arise if the sponsor fails to suceed on the De-SPAC (including the winding up of the issuer and de-listing of the shares).
ESMA also points out the importance of proper application of product governance requirements under MIFID II by manufacturers and distributors of SPAC shares and warrants. ESMA understands that the structure of SPACs’ transactions is complex and may not be an appropriate investment for all investors. Therefore, manufacturers and distributors should assess whether retail clients should be excluded.
ESMA and NCAs will continue to monitor SPACs’ activity in the EU to assess further initiatives aimed at preserving investor protection.
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