Special Purpose Acquisition Company (SPAC)

SEC adopted new rules related to filing and disclosure requirements for SPAC initial public offerings (IPOs), as well as mergers with private operating company (de-SPAC):

1) disclosure in SPAC IPOs related to the sponsors, affiliates and promoters

2) compensation that has been or will be awarded on completion of a de-SPAC transaction

3) terms of lock-up agreements, conflicts of interest and potential sources of dilution.

4) nature and amounts of each source of potential dilution

5) conflicts of interest

6) financial statement requirements for a de-SPAC transaction

7) use of projections for all reporting entities. ?

These rules will become effective on July 1, 2024, tagging using inline XBRL in filings made after June 30, 2025.

As part of its oversight role, the audit committee should understand management’s plan for complying with the new disclosure reporting requirements:

• measures taken to educate relevant personnel about the new rules
• mechanisms to monitor compliance with the new rules
• management’s process for monitoring new and emerging SEC rules that may be applicable to the company.

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