Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Friday, February 22, 2008

Nasdaq Seeks SEC Approval to List SPACs

Nasdaq announcced it will seek SEC approval of a rule change to list special purpose acquisition companies (SPACs)and subject them both to NASDAQ's initial listing requirements as well as additional criteria developed specifically for this type of entity. No other market has yet adopted such criteria, although the Wall St. Journal reports that the NYSE is considering a similar move.

In addition to having to satisfy all applicable initial listing standards, NASDAQ will require that acquisition vehicles also meet the following criteria:

Gross proceeds from the initial public offering (IPO) must be
deposited in an escrow account maintained by an insured depository
institution as defined by the Federal Deposit Insurance Act or in a
separate bank account established by a registered broker or dealer.

Within 36 months of the effectiveness of its IPO registration
statement, the company must complete one or more business
combinations using aggregate cash consideration equal to at least
80% of the value of the escrow account at the time of the initial

So long as the company is in the acquisition stage, each business
combination must be approved both by the company's shareholders and
by a majority of the company's independent directors. Following each
business combination, the combined company must meet all of the
requirements for initial listing.

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