SPAC listings now also possible on Nasdaq Copenhagen

Nasdaq Copenhagen re-introduces rules on specific SPAC (Special Purpose Acquisition Company) admission requirements with effect from 12 April 2021. The revised rules are the same rules that came into effect on Nasdaq Stockholm on 1 February 2021 and has generally been re-introduced in the Nordic markets following strong market interest and the development in the SPAC market in the US.

On 8 April 2021, Nasdaq announced that the specific admission requirements for Special Purpose Acquisition Companies (“SPACs”) will come into force for Nasdaq Copenhagen on 12 April 2021. In January 2021, Nasdaq announced the (re)-introduction of specific admission requirements for SPACs to the harmonized Nordic Main Market Rulebook for Issuers of Shares, which we published a newsletter about on 28 January 2021.

According to the rules of the amended Nordic Main Market Rulebook for the Issuers of shares, SPACs have been admitted to trading and official listing from 1 February 2021 on Nasdaq Stockholm. From 12 April 2021 this will also be possible on Nasdaq Copenhagen.

A SPAC is an alternative to the conventional process for initial public offerings and admission for trading and official listing of an issuer’s shares on the regulated markets of Nasdaq in the Nordics. With a SPAC it is possible to list a special purpose acquisition company without any activity and business operations. By listing a SPAC it is possible raise funds through an initial public offering in order to acquire one or more businesses and indirectly take them public though a business combination – so called de-SPACing. SPACs are therefore sometimes referred to as ‘blank check’ companies since the investors do not invest in a company with particular assets, operations or financial history. However, a SPAC is typically formed by sponsors or investors with competences in a particular industry and with the intention to pursue deals in that area, but without a specific target business at the time of formation of the SPAC.

With the SPAC rules, Nasdaq Nordic intends to meet the interest from the market participants in Europe and provide an alternative to the SPAC market in the US. The new Nordic SPAC rules are in line with the rules and principles applied for Nasdaq’s US market.

Listing of a SPAC

The amended Nordic Main Market Rulebook allows SPACs to be listed on main market and the listing process is twofold, a) the initial listing of the SPAC and b) following the completion of an agreement on a business combination described under the SPAC requirements below.

Nasdaq’s initial listing process is similar to an ordinary IPO where the SPAC is required to publish an approved prospectus and shall satisfy the admission requirements in the Nordic Main Market Rulebook. However, requirements with respect to historical financial information and business operations are not applicable until a business combination is carried out. The normal rulebook requirement that the members of the management shall be employed by the issuer can also be deviated from, if the Exchange accepts that the issuer has shown that there is sufficient competence and experience available in order to manage a listed company.

SPAC requirements

The key requirements for SPACs set out in the Nordic Main Market Rulebook section 2.18 are as follows:

• At least 90 per cent of the gross proceeds from the IPO or a subsequent equity issue by the SPAC must be deposited in a blocked bank deposit account maintained by a financial institution independent from the issuer.
• The SPAC must complete one or more business combinations within 36 months from admission with an aggregate fair market value of at least 80 per cent of the value of the deposit account.
• Following any business combination, all the customary admission requirements in the Nordic Main Market Rulebook shall be satisfied.

Until the ‘80 per cent requirement’ mentioned just above is satisfied, the completion of any business combination by the SPAC is subject to:

• Approval by a majority of the directors who are independent of the issuer and the management of the SPAC,
• Approval by majority of the voting rights at a general meeting of shareholders,
• Notification of the Exchange about a proposed business combination prior to public disclosure hereof,
• Approval by the Exchange of satisfaction of all the customary admission requirements set out in the Nordic Main Market Rulebook after the initiation of a listing process related to the SPAC and the business combination.

Redemption right of shareholders

In addition, until the 80 per cent requirement mentioned above is satisfied, the SPAC rules in the Nordic Main Market Rulebook require that the SPAC’s articles of association shall grant the SPAC’s shareholders a right to redeem their shares into cash equal to their pro rata share of the aggregate amount then in the deposit account (net of taxes payable and amounts distributed to management for working capital purposes) provided a proposed combination is approved and consummated.

A SPAC can set a maximum limit of the SPAC’s total share capital, which may be redeemed by shareholders. The maximum limit may not be set lower than 10 per cent of the share capital. The SPAC shall include clear and transparent information in its prospectus on how redemption rights are processed if the SPAC should receive requests for exercise of redemption rights that in aggregate exceeds the maximum limit.

The right of conversion shall not apply to certain shareholders including founding shareholders of the issuer as well as members of the board of directors and the management and their related parties.

Timing and outstanding questions

The harmonized part of the Nordic Main Market Rulebook for issuers of shares will enter into force for Nasdaq Copenhagen on 12 April 2021.

Nasdaq has published a Q&A on SPAC listings on Nasdaq Nordic Main Market, which is available here.

Nasdaq is further planning to provide guidelines on disclosure of the target company and intended business combination.