The Financial Supervisory Commission (FSC) has denied companies the option of merging with special-purpose acquisition companies (SPACs) to list on the local stock market, commission Chairman Thomas Huang (黃天牧) told a meeting of the legislature’s Finance Committee on Tuesday.
The commission made its stance firm, even though Gogoro Inc (睿能創意) earlier this month announced plans to launch an initial public offering (IPO) on the NASDAQ via a merger with US-based Poema Global Holdings Corp.
The listing mechanism involving SPACs might not fit the local stock market, in which individual investors account for about 70 percent of all investors, while the majority of investors in the US stock market are institutional investors, who can take higher risks, Huang said
Photo: Fang Pin-chao, Taipei Times
Even the US Securities and Exchange Commission (SEC) has concerns about SPACs, he said.
Regulations in the US allow a SPAC to go public without any actual business or revenue, and a SPAC only exists to acquire a target company within two years, offering a way for a private company to go public and bypass the time and expense of an IPO, Securities and Futures Bureau Deputy Director Kuo Chia-chun (郭佳君) said.
This practice is in conflict with practices in Taiwan, as even by the loosest listing rules, the Taiwan Stock Exchange and Taipei Exchange must review financial reports of the companies seeking to go public, but a SPAC cannot produce financial reports as it does not have real operations, Kuo said.
The SEC is researching how to enhance protection for investors, after a SPAC exaggerated the profit potential of its target company, and until the US regulator has more comprehensive guidance or measures to protect investors, the FSC would not consider introducing the SPAC mechanism to the local market, Kuo said.
Singapore earlier this month unveiled its SPAC listing framework, making it the only Asian country that allows SPAC listings, and the FSC would also observe how Singapore fares, she said.
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