NASDAQ Proposes the Listing of SPACS
 
March 10, 2008
 

On February 21, 2008, The NASDAQ Stock Market LLC filed with the SEC a rule proposing to permit the listing of special purpose acquisition companies, or SPACS. In the past, NASDAQ has denied listing to SPACS, whose business plan is to complete an IPO and engage in a subsequent, unidentified merger or acquisition. In changing its policy against the listing of SPACS, NASDAQ noted that recent SPAC offerings have included investor protections and the underwriters and sponsors of recent offerings do not raise the same concerns as the earlier offerings.

In addition to requiring that SPACS meet the NASDAQ initial listing requirements, SPACS must meet the following additional, more stringent criteria:

• Gross proceeds from the IPO must be deposited in an escrow account maintained by an insured depositary institution 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 equaling at least 80 percent of the value of the escrow account at the time of the initial combination.
• Until the company completes the business combination(s) using 80 percent of the cash value of the escrow account, 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.

http://www.complinet.com/file_store/pdf/rulebooks/NASDAQ_SR-NASDAQ-2008-013_Initial_Filing.pdf