DealLawyers.com Blog

Here’s something that Meredith posted last week on TheCorporateCounsel.net Blog:

Yesterday, the SEC posted this notice & request for comment for a proposed NYSE rule change that would amend Section 102.06 of the NYSE Listed Company Manual to extend the period for which a SPAC can remain listed if it has signed a definitive agreement with respect to a Business Combination. As described below, this would better align NYSE’s approach with Nasdaq’s:

Section 102.06e of the Manual provides that the Exchange will promptly commence delisting procedures with respect to any listed SPAC that fails to consummate its Business Combination within (i) the time period specified by its constitutive documents or by contract or (ii) three years, whichever is shorter.

Section 102.06e requires the Exchange to promptly commence delisting procedures even for listed SPACs that have entered into a definitive agreement with respect to a Business Combination within three years of their listing date, but that are unable to complete the transaction before the three-year deadline established by 102.06e. As a practical matter, any such NYSE-listed SPAC would need to liquidate, transfer to a market that provides a longer period of time to complete the Business Combination, or face delisting.

The Exchange notes that Nasdaq’s SPAC listing requirements include a three-year limitation that is substantially similar to that included in the Exchange’s SPAC listing standard. However, Nasdaq appeal panels have granted additional time to SPACs that appeal their delisting for failure to consummate a Business Combination within three years in circumstances where the SPAC has a definitive agreement and requests additional time beyond the three years provided by the applicable rule to enable it to consummate its merger.

Accordingly, the amendment would provide that NYSE will commence delisting procedures with respect to any SPAC that fails to:

(i) enter into a definitive agreement with respect to its Business Combination within (A) the time period specified by its constitutive documents or by contract or (B) three years, whichever is shorter or

(ii) consummate its Business Combination within the time period specified by its constitutive documents or by contract or forty-two months, whichever is shorter.

The SEC is seeking comments on the proposal.

– John Jenkins