ESMA updates AIFMD Q&As on whether managers of SPACs are in scope

On 16 December 2022, ESMA updated its Q&A on the application of the AIFMD to include a new Q&A within Section XI (Scope) regarding the position of managers of special purpose acquisition companies (“SPACs”) under the AIFMD.

The new Q.3 asks whether managers of SPACs are subject to the AIFMD.

By way of answer, ESMA notes:

• SPACs are not yet legally defined in EU law
• ESMA’s Public Statement of July 2021 describes SPACs as “shell companies that are admitted to trading on a trading venue with the intention to acquire a business”
• It further lists the three stages of the typical life-cycle of a SPAC
  • the Initial Public Offering
  • the SPAC searches for a target company to acquire and
  • the business combination with the target company, typically through a merger.
• ESMA, though, accepts that “there are significant variations between the general structuring of relevant vehicles and concrete modalities of their transactions”
• As a result, it should be assessed on a case-by-case basis whether a given SPAC
  • meets the definition of an “AIF” under Article 4(1)(a) of the AIFMD and
  • qualifies as a “holding company” under Article 4(1)(o) of the AIFMD.
• Such assessment needs to take the specific features and characteristics of the individual structure of the SPAC into account and should be based on substance, not form
• Close attention should be paid to ESMA’s Guidelines on key concepts of the AIFMD (the ESMA Guidelines).
• During a SPAC’s life-cycle, circumstances might arise which are relevant when assessing whether the SPAC meets the elements described in the ESMA Guidelines.
• The occurrence of some or all such circumstances may indicate that the SPAC is not an AIF including when:
  • a SPAC does not raise capital through the IPO with a view to investing it in accordance with a defined investment policy
  • all, or substantially all, the proceeds of the IPO are used for the business combination
  • following the business combination, the SPAC has a general commercial or industrial purpose as defined in the ESMA Guidelines.