Entire Section

  • Continuing Obligations

    • Escrow Account

      • 18B.16

        A SPAC must hold 100% of the gross proceeds of its initial offering (excluding proceeds raised from the issue of Promoter Shares and Promoter Warrants) in a ring-fenced escrow account domiciled in Hong Kong.

      • 18B.17

        The escrow account referred to in rule 18B.16 must be operated by a trustee or custodian whose qualifications and obligations are consistent with the requirements of Chapter 4 of the UT Code.

      • 18B.18

        The monies held in the escrow account referred to in rule 18B.16 must be held in the form of cash or cash equivalents.

        Note:    It is the SPAC’s responsibility to ensure that funds are held in a form that allows them to meet the requirement to give full redemption to shareholders under rules 18B.57 and 18B.74. The Exchange may publish guidance on the Exchange’s website, as amended from time to time, on its interpretation of “cash equivalents” for the purpose of this rule.
         

      • 18B.19

        Save as permitted under rule 18B.20, the monies held in the escrow account referred to in rule 18B.16 must not be released to any person other than to:
         
        (1)    meet redemption requests of the SPAC shareholders in accordance with rule 18B.59;
         
        (2)    complete a De-SPAC Transaction;
         
        (3)    return funds to SPAC shareholders in accordance with rule 18B.74; or
         
        (4)    return funds to SPAC shareholders upon the liquidation or winding up of the SPAC.
         
        Note:    Save as permitted under rule 18B.20, the expenses incurred by a SPAC before the De-SPAC Transaction must not be funded from the monies held in the escrow account referred to in rule 18B.16.
         

      • 18B.20

        Any interest, or other income earned, on monies held in the escrow account referred to in rule 18B.16 may be used by a SPAC to settle its expenses.

    • Warrants

      • 18B.21

        All warrants must, prior to the allotment, issue, or grant thereof by a SPAC, be approved:
         
        (1)    by the Exchange; and
         
        (2)    in the case of warrants proposed to be allotted, issued or granted by a SPAC after its listing, by SPAC shareholders in a general meeting.
         
        Note:    For the avoidance of doubt, SPAC Promoters and their close associates will be regarded by the Exchange as having a material interest in resolutions regarding the allotment, issue and/or grant of Promoter Warrants to them and must abstain from voting at the general meeting referred to in rule 18B.21(2).
         

      • 18B.22

        Each warrant allotted, issued or granted by a SPAC must:
         
        (1)    have an exercise price representing at least a 15% premium to the issue price of the SPAC Shares that it issued at its initial listing;
         
        (2)    have an exercise period that commences after the completion of a De-SPAC Transaction;
         
        (3)    expire not less than one year and not more than five years from the date of the completion of a De-SPAC Transaction, and must not be convertible into further rights to subscribe for securities which expire less than one year or more than five years after the date of the completion of a De-SPAC Transaction; and
         
        (4)    only result in the issuance of shares in a Successor Company upon exercise.
         

      • 18B.23

        The number of shares to be issued upon exercise of all outstanding warrants issued or granted by a SPAC must not, if all such rights were immediately exercised, whether or not such exercise is permissible, exceed 50% of the number of shares in issue at the time such warrants are issued.

        Note:    The reference to “the number of shares in issue” in this rule includes Promoter Shares issued by a SPAC.
         

      • 18B.24

        Rule 15.02 does not apply to a SPAC.

    • Promoter Shares and Promoter Warrants

      • 18B.25

        A SPAC must not apply to list Promoter Shares or Promoter Warrants.

      • 18B.26

        A SPAC Promoter who is allotted, issued or granted any Promoter Shares or Promoter Warrants by a SPAC must remain as the beneficial owner of those Promoter Shares or Promoter Warrants at the listing of the SPAC and for the lifetime of the Promoter Shares or Promoter Warrants.
         
        Note 1:    The Exchange would consider there to be a change in beneficial owner if a SPAC Promoter enters into any arrangement for another person to be entitled to the economic interest in the Promoter Shares or to have control over the voting rights attached to them (through voting proxies or otherwise).
         
        Note 2:    If a SPAC Promoter departs from a SPAC, or where there is a change in beneficial ownership contrary to this rule, the SPAC Promoter must surrender the relevant Promoter Shares and Promoter Warrants it beneficially owns to the SPAC and the SPAC must cancel those Promoter Shares and Promoter Warrants.
         
        Note 3:    In exceptional circumstances (e.g. the revocation of the licence of a SPAC Promoter resulting in the departure of the transferor SPAC Promoter), the Exchange may waive this rule, based on the merits of an individual case, to permit the transfer of Promoter Shares or Promoter Warrants between SPAC Promoters of the same SPAC. This is on the condition that the transfer is subject to approval of a resolution on the matter by shareholders at a general meeting. SPAC Promoters and their close associates would be regarded by the Exchange as having a material interest and must abstain from voting on such a resolution.
         

      • 18B.27

        A SPAC must only allot, issue or grant Promoter Shares or Promoter Warrants to a SPAC Promoter.
         
        Note:   A SPAC may allot, issue or grant these securities to a limited partnership, trust, private company or other vehicle to hold on behalf of a SPAC Promoter provided that such an arrangement does not result in a transfer of beneficial ownership of the securities to a person other than the SPAC Promoter.
         

      • 18B.28

        A SPAC must not register, certify or otherwise facilitate the transfer of title of any Promoter Shares or Promoter Warrants to a person other than the SPAC Promoter to whom they were originally allotted, issued or granted.
         
        Note  1:    A SPAC may register, certify or otherwise facilitate the transfer of legal title of these securities to a limited partnership, trust, private company or other vehicle to hold on behalf of the SPAC Promoter to which they were originally allotted, issued or granted provided that such an arrangement does not result in a transfer of beneficial ownership of the securities to a person other than that SPAC Promoter.
         
        Note 2: The Exchange may waive this rule in accordance with Note 3 to rule 18B.26.
         

      • 18B.29

        (1)    A SPAC must not allot, issue or grant any Promoter Shares to SPAC Promoters that represent more than 20% of the total number of shares the SPAC has in issue as at the date of its listing.
         
        Note  1:    The Exchange is willing to consider, on a case by case basis, requests to issue rights to a SPAC Promoter entitling it to receive additional ordinary shares of the Successor Company after completion of the De-SPAC Transaction (“earn-out rights”) on the following conditions:
         
        (a)    the total number of ordinary shares of the Successor Company to be issued under (i) such earn-out rights (“earn-out shares”) and (ii) all Promoter Shares must, altogether, represent an amount not more than 30% of the total number of shares that the SPAC had in issue as at the date of its listing;
         
        (b) the earn-out rights must only be convertible into earn-out shares subject to the satisfaction of objective performance targets. If those performance targets are determined by changes in the price of the Successor Company’s shares, such targets must be (i) at least 20% higher than the issue price of the SPAC Shares at listing of the SPAC; and (ii) satisfied by reference to the volume weighted average price of the Successor Company’s shares (calculated based on the Exchange’s daily quotations sheets) over a period of not less than 20 trading days within a 30 consecutive trading day period, with such period commencing at least 6 months after the listing of the Successor Company;
         
        (c) the listing document produced for the SPAC’s initial listing must disclose any proposed earn-out rights to be issued to a SPAC Promoter upon the completion of the De-SPAC Transaction, including details of such earn-out rights, e.g. the performance targets;
         
        (d) any instruments or other securities representing the earn-out rights must only carry the earn-out rights, and must not entitle their holder to any other rights such as voting and dividend rights;
         
        (e) the material terms of the earn-out rights negotiated and agreed between the parties to the De-SPAC Transaction must be disclosed in the announcement referred to in rule 18B.44 and the listing document referred to in rule 18B.49;
         
        (f) SPAC shareholders granting approval for the earn-out rights at the general meeting called to approve the De-SPAC Transaction referred to in rule 18B.53, with such earn-out rights included in the resolution approving the De-SPAC Transaction. For the avoidance of doubt, the requirement in rule 18B.54 shall apply and the SPAC Promoter and its close associates must abstain from voting on the relevant resolution; and
         
        (g) if the De-SPAC Transaction does not complete, the earn-out rights are cancelled and become void.
         
        Note 2: A SPAC Promoter must notify the Successor Company in writing as soon as a performance target for the conversion of all or part of the earn-out rights are met.
         
        Note 3: A Successor Company must announce a notification referred to in Note 2 to this rule as soon as practicable following its receipt.
         
        Note 4: A Successor Company must publish an announcement, as soon as practicable, upon the issuance of the earn-out shares.
         
        (2) If the Promoter Shares are convertible, they must only be converted into ordinary shares of the Successor Company and such conversion must be on a one-for-one basis. Promoter Shares must only be convertible at or after the completion of a De-SPAC Transaction.
         
        Note:   If the SPAC conducts any sub-division or consolidation of shares and, as a result of which, the number of shares into which they are convertible is required to be adjusted, the Exchange will accept a change in the number of Promoter Shares if it is satisfied that any such adjustment is on a fair and reasonable basis, and will not result in the SPAC Promoter being entitled to a higher proportion of Promoter Shares or SPAC Shares than it was originally entitled to as at the date of the listing of the SPAC.
         

      • 18B.30

        (1)    Promoter Warrants must not be issued at a price that is less than 10% of the issue price of SPAC Shares at the SPAC’s initial offering.
         
        (2) Each Promoter Warrant must not entitle the holder, upon exercise, to receive more than one share in the Successor Company.
         
        (3) Promoter Warrants must not contain terms that are more favourable than the terms of other warrants issued or granted by the SPAC.
         
        Note:   Examples of more favourable terms include: (a) an exemption from the forced exercise of the warrants if the shares of the Successor Company trade above a prescribed price (unless such exemption is also provided to other warrant holders); (b) an option to exercise on a cashless basis (unless such option is also provided to other warrant holders); and (c) a warrant to share conversion ratio that is more favourable than that of the other warrants issued or granted by the SPAC.
         

      • 18B.31

        Promoter Warrants must not be exercisable during the period ending 12 months from the date of the completion of a De-SPAC Transaction.

    • Material Change in SPAC Promoters and SPAC Directors

      • 18B.32

        In the event of a material change in: (1) any SPAC Promoter who, alone or together with its close associates, controls or is entitled to control 50% or more of the Promoter Shares in issue (or where no SPAC Promoter controls or is entitled to control 50% or more of the Promoter Shares in issue, the single largest SPAC Promoter); (2) any SPAC Promoter referred to in rule 18B.10(1); (3) the eligibility and/or suitability of a SPAC Promoter referred to in (1) or (2); or (4) a director referred to in rule 18B.13, the continuation of the SPAC following such a material change must be approved by:
         
        (a)    a special resolution of the shareholders of the SPAC at a general meeting (on which the SPAC Promoter(s) and their respective close associates must abstain from voting) within one month from the date of the material change; and
         
        (b) the Exchange.
         
        Note  1:    For the purpose of rule 18B.32(1) and (2), a material change includes but is not limited to:
         
        (a)    the departure or addition of a SPAC Promoter; and
         
        (b) a change in control of a SPAC Promoter.
         
        Note  2:    For the purpose of rule 18B.32(3), a material change includes but is not limited to:
         
        (a)    the suspension or revocation of a SPAC Promoter’s licence(s) issued by the Commission; and
         
        (b) breaches of laws, rules and regulations and any other matters bearing on the integrity and/or competence by a SPAC Promoter.
         
        Note  3:    For the purpose of rule 18B.32(4), a material change includes but is not limited to the suspension or revocation of such director’s licence(s) issued by the Commission and/or resignation of such director, unless a replacement director is appointed within six months of the event to ensure compliance with rule 18B.13. Such an appointment can be one that is made to fill a casual vacancy and is subject to an election by SPAC shareholders at the first annual general meeting following the appointment.
         
        Note  4:    The Exchange retains the discretion to determine whether an event constitutes a material change. This may depend upon the manner in which a SPAC is managed and controlled, and the nature of the change (e.g. a simultaneous change in multiple SPAC Promoters that, in aggregate, hold 50% or more of the Promoter Shares would constitute a material change). If there is any uncertainty as to whether an event constitutes a material change, a SPAC should consult the Exchange as soon as possible.
         
        Note  5:    No written shareholders’ approval will be accepted in lieu of holding the general meeting referred to in rule 18B.32(a).
         

      • 18B.33

        Prior to the vote on the continuation of the SPAC following a material change referred to in rule 18B.32, shareholders of the SPAC (other than holders of Promoter Shares) must be given the opportunity to elect to redeem their shares in accordance with rule 18B.57.

      • 18B.34

        If a SPAC fails to obtain the requisite approvals as required under rule 18B.32, rules 18B.73 to 18B.75 in relation to return of funds and de-listing of a SPAC will apply.