The Securities and Exchange Commission of Pakistan (SECP) has proposed changes to the Public Offering Regulations to explore the concept of ‘special purpose acquisition company (SPAC) to provide a viable and sustainable ecosystem and a more conducive regulatory environment for capital formation in the country through primary market.
The draft of the proposed amendments has been posted by the regulator on its website to seek public comments on the suggested changes.
SPAC is a new concept for Pakistan’s capital market but is prevalent in many countries, including the US, Canada, Malaysia, etc. Under the SPAC structure, a company comprising a group of persons or professionals raises funds from the public to use them for the purpose of mergers or acquisitions within a permitted time-frame, according to the SECP announcement.
“A SPAC’s life begins with its initial formation in the form of a company, followed by its IPO, its search for a target, a shareholder approval for merger/acquisition and finally, the close of an acquisition or else return of the SPAC’s proceeds back to its investors,” the regulator stated.
Under the proposed regulatory framework, SPAC will be a company or body corporate registered with the SECP, which will be formed by a group of persons meeting the fit and proper criteria. The paid-up capital requirements for SPAC will be Rs1 million and it may raise at least Rs200 million through its public offering.