The SPAC Spectacle: A Comparative Study Of Regulatory Responses To Blank-Check Companies In Developed And Emerging Markets
- IJLLR Journal
- Jun 10
- 2 min read
Bhawana Dayal Jaiswal, B.A.LL.B., DES's Shri Navalmal Firodia Law College (Forgusson College), Pune
Aditya Kumar, LL.M., Symbiosis Law School, Pune
ABSTRACT
Special Purpose Acquisition Companies (SPACs) rose rapidly to become a global phenomenon, posing a stark trilemma for global regulators: do they support capital market innovation while preserving the integrity of the market and protecting investors from speculative excess? This article makes a comparative analysis of the regulatory reactions to the SPAC phenomenon in three jurisdictions that span the spectrum from “reactive correction” to “proactive design” to “cautious deliberation”: the United States, Singapore and India. The study employs a qualitative comparative case study approach that draws on the theories of public interest and regulatory capture, and it analyses key regulatory documents such as the final rules issued by the SEC in 2024, the SEC framework for SPACs in Singapore in 2021, and consultation papers published by the SEC. This analysis includes the following significant regulatory parameters: sponsor compensation, redemption rights of the shareholders, disclosure requirements, warrant dilution controls, and liability at the de-SPAC stage. The results show that there are some differences with regard to the same concerns. The United States adopted an ex post approach, with SPACs following the same liability requirements as traditional IPOs, and the PSLRA safe harbour for forward- looking statements was eliminated. One key difference in the approach is that Singapore has an ex ante prescriptive approach with minimum capitalisation requirements and compulsory moratoriums to shape the quality of the listings market. India, which puts on a pedestal the protection of retail investors and systemic stability, has not adopted a formal SPAC framework, but rather, it has insisted that abstention is a valid policy option. The authors conclude that the regulatory response to financial innovation is context dependent and depends on legal traditions, economic development needs, and the demographics of investors. There is no single SPAC model that is transplantable. The tripartite typology (reactive, proactive and cautious) provides a normative perspective on how to react in the future in a situation involving disruptive financial instruments.
Keywords: Special Purpose Acquisition Companies (SPACs), Blank-Check Companies, De-SPAC Transactions, Comparative Securities Law, SEC, SGX, SEBI, Regulatory Trilemma, Investor Protection, Financial Regulation, Regulatory Capture.
