The United States Securities and Exchange Commission (SEC) is taking a significant step towards enhancing transparency in the world of special purpose acquisition companies (SPACs). In a recent announcement, the SEC stated that it would require more disclosure from these so-called 'blank check' companies, in an effort to protect investors and ensure they have access to all the information necessary to make informed decisions.
SPACs have gained tremendous popularity in recent years, attracting both public and private companies seeking an alternative route to go public. Essentially, SPACs are shell companies created with the sole purpose of raising capital through an initial public offering (IPO). Once the SPAC goes public, it then seeks to acquire an operating company within a specified period, typically two years.
