24 registration statement, but includes details about the merger and any projections shared by the private company with the SPAC. Enhanced Disclosures There are a number of rule changes that would require additional disclosure in the registration statement. The enhanced disclosure requirements focus on: » » the sponsor’s experience, the arrangements between the persons that control the sponsor, and all compensation that has or will be awarded to the sponsor or any affiliates or promoters; » » conflicts of interest between the unaffiliated security holders of the SPAC and the sponsor, its affiliates or the SPAC’s officers, directors or promoters; » » dilution that shareholders may experience in both the SPAC initial public offering and in the de-SPAC transaction; and » » the fairness of the consideration paid to the target equityholders and to the unaffiliated security holders of the SPAC, including: • a statement from the SPAC as to whether it reasonably believes that the de-SPAC transaction and any related financing are fair or unfair to unaffiliated security holders; and • disclosure of any outside report, opinion or appraisal relating to the fairness of the transaction. In addition the SEC proposal would require additional disclosure regarding projections in de-SPAC transactions, including disclosure of: » » the purpose for which the projections were prepared and the party that prepared them; » » the material bases of the disclosed projections and all material assumptions underlying the projections, and any factors that may materially impact such assumptions; and » » whether the disclosed projections still reflect the view of the board or management of the SPAC or target company as of the date of filing. Finally, the SEC proposal includes technical changes to the reporting requirements in de-SPAC transactions to harmonize the financial statement requirements with the analogous requirements for a traditional IPO. These changes are generally welcome.
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