SEC Enhances SPAC Disclosures with iXBRL Tagging

SEC Enhances SPAC Disclosures with iXBRL Tagging

By Prathamesh 29 January, 2024

The Securities and Exchange Commission (SEC) has adopted a final rule to strengthen investor protections in Special Purpose Acquisition Companies (SPACs). The rule mandates Inline XBRL tagging for information in Subpart 1600 of Regulation S-K, addressing the previously limited disclosure requirements that led to potential information asymmetry between sponsors and investors.

Inline XBRL, a format integrating XBRL tags with HTML or XHTML documents, is now crucial for SPAC disclosures, especially concerning compensation, conflicts of interest, dilution, and board determinations in de-SPAC transactions.

In response to XBRL US’s suggestion for a phased-in approach for smaller entities, the SEC has incorporated a one-year phase-in for the tagging requirements, allowing issuers of all sizes additional time to comply.

SEC Chair Gary Gensler emphasized aligning investor protections in SPACs with those in traditional IPOs. The final rules introduce enhanced disclosures, accountability for forward-looking statements, and issuer obligations to address information asymmetries, misleading information, and conflicts of interest in SPAC and de-SPAC transactions. This move aims to bolster investor confidence and transparency in the growing SPAC market.

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