Special Acquisition Companies: A Timeless Financial Tool Vis-À-Vis The Modern Regulatory Gap
- IJLLR Journal
- Mar 3
- 1 min read
Harshit Madaan, National Law Institute University, Bhopal
Nikhil Kumar Jha, National Law Institute University, Bhopal
Ankit Singh, National Law Institute University, Bhopal
ABSTRACT
Special Purpose Acquisition Companies (SPACs) have emerged as a significant alternative to the traditional Initial Public Offering (IPO) mechanism, offering companies a faster and more flexible route to access public capital markets. In recent years, SPACs experienced unprecedented global growth, particularly during the COVID-19 pandemic when market uncertainty and delays in conventional IPO processes prompted companies to explore alternative listing structures. This paper examines the evolution, structure, and regulatory treatment of SPACs, with a particular focus on the challenges associated with their operation in India. It traces the historical development of SPACs from early blank check companies in the United States to their modern form and analyses their distinctive characteristics, including sponsor involvement, trust accounts, shareholder redemption rights, and private investment in public equity (PIPE) financing.
The study further evaluates the current Indian regulatory landscape, highlighting legal obstacles under the Companies Act, 2013, SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, and foreign exchange laws that hinder domestic SPAC listings. Through a comparative analysis of regulatory frameworks in jurisdictions such as the United States, Canada, Singapore, Hong Kong, and the United Arab Emirates, the paper demonstrates how tailored regulations can balance investor protection with market efficiency. It concludes by emphasizing the need for India to establish a dedicated SPAC regulatory framework to facilitate capital formation, prevent capital migration to foreign markets, and strengthen the country’s position in global financial markets.
