ISLAMABAD: The special purpose acquisition company (SPAC) is required to have a paid-up capital of at least Rs 10 million to register with the Securities and Exchange Commission of Pakistan (SECP).

According to details released by the SECP here on Thursday, the “SPAC” stands for special purpose acquisition company a company formed by specifically qualified professionals to raise funds from the general public for execution of acquisition/merger transaction within a permitted time frame.

In simple words, a SPAC is a company without any revenue or operating history and uses the investor’s funds to acquire or merge with an operating company.

The term SPAC has been defined under regulation 2(1) of Public Offering Regulations, 2017 as “a company formed and registered under the Companies Act, 2017, having sole principal line of business to raise money through public offering for entering into merger or acquisition transactions.”

To form a SPAC, one needs to incorporate a Public Limited Company with the SECP under the Companies Act, 2017 having paid-up capital of at least Rs10 million.

Public limited company can be incorporated through both electronic and physical mode.

The principal line of business of the company is to raise funds from public offering and utilise those funds for merger and acquisition of company/ companies within the permitted time frame, as per the Public Offering Regulations, 2017. Except for the businesses mentioned in sub-clause (iii) hereunder, the company may engage in all the lawful businesses (related to merger/acquisition) and shall be authorised to take all necessary steps and actions in connection therewith and ancillary thereto, the SECP added.

Copyright Business Recorder, 2021