Singapore is also looking to join the blank boom but will consider stricter rules than the U.S., such as a higher minimum market capitalization and trading restrictions. 

Singapore Exchange has proposed a regulatory framework for special purpose acquisition companies (SPAC) seeking to go public with stricter rules than its counterpart in the U.S.

«SPAC listings have attracted interest in major markets due to their speed to market and ability to offer price certainty in valuing target companies,» said Tan Boon Gin, chief executive of the bourse’s regulatory arm of Singapore Exchange Regulation (SGX RegCo), in a statement. 

«In reviewing the viability of SPACs, we note that recent SPACs developments have brought to the fore certain risks, in particular excessive dilution and the rush to de-SPAC.»

High Minimum

SGX RegCo is suggesting a minimum market capitalization of S$300 million ($225 million) – a figure some estimate would require the firm to have a total valuation of $1 billion – and a minimum share price of S$10 each. 

There is currently no minimum requirement in the U.S market.

Trading Restrictions

In order to prevent rushed exits, at least 90 percent of IPO proceeds will be placed in escrow pending the acquisition of a target company (within a three-year period) and only investors voting against a business combination can redeem shares.

The proposed framework will also require warrants to be undetachable from shares to prevent dilution.

Only independent shareholders will be able to vote for a merger who sponsors will be required to hold some minimum equity at the point of listing.

First SPAC By Mid-Year

In a separate news conference, SGX RegCo’s Tan said that it plans to introduce a framework by mid-year, followed by the first SPAC listing in the city-state.

«Our observations showed that the SPACs that were most successful were the ones which managed two main risks well,» he said. «[F]irst, free-riding by investors and excessive dilution of long-term investors, and second: the rush to do a business combination also known as a de-SPAC.»

Singapore’s regulatory timeline for its first SPAC listing outpaces that of Hong Kong which is reportedly seeking feedback for its own proposed framework by June.