Implementation of SPACs in India – Key Regulatory challenges
Special Purpose Acquisition Vehicles ( SPACs ) have emerged as a promising option to raise public funding from offshore markets. They are especially suited for start-ups, who otherwise find it difficult to excite the conservative Indian retail investors. This has become all the more critical as there is evidence that private funding may be drying up and it may be a while before it returns as a substantial source of capital for start-ups. With SPACs, the start-up gets listed through a reverse merger with a listed shell company, i.e., the SPAC, which acquires the start-up. Indian laws also need to be suitable amended to facilitate overseas fundraising by startups. SPACs regulatory evolution- globally Globally, SPAC regulations have evolved over the past many years. SPAC structures are more shareholder friendly and have ample fail-safe measures to prevent fraud. Lock-in periods ensure that founders have some “skin in the game” and minimize agency costs. Successful SPAC listings...