Proposed U.S. Securities and Exchange Commission disclosure rules for blank-check companies may deter some SPAC-related transactions but make directors and officers liability insurers more comfortable offering coverage for the risks, reports Business Insurance.
Most observers say they do not expect the final rules, which will be issued sometime after the comment period closes at the end of this month, to differ much from the proposal.
“It’s unlikely to go through exactly as is,” but the SEC “may not be easily swayed” to make major changes, said Larry Fine, New York-based management liability coverage leader for Willis Towers Watson.
The proposed rules “do add significant disclosures and transaction complexity for SPACS and could discourage prospective SPAC sponsors and it could throw some cold water on any deSPAC transactions,” said Kevin LaCroix, executive vice president in Beachwood, Ohio, for RT ProExec, a division of R-T Specialty.
Removing the safe harbor provision would “strongly discourage private companies from going the deSPAC route vs. going the traditional IPO route,” said Derek Lakin, New York-based senior vice president and national SPAC practice co-leader for Lockton. It will “take away one of the main advantages of doing the SPAC,” he said.
However, strong proposed transactions will still be able to move forward, said Machua Millett, Boston-based SPAC leader at Marsh. Read more.
