Comparing SPAC Rules in Singapore vs the US: What Founders Should Know
In recent years, Special Purpose Acquisition Companies (SPACs) have emerged as a popular alternative to traditional initial public offerings (IPOs), particularly for startups and high-growth companies aiming to go public with speed and flexibility.
While SPACs have seen substantial activity in the United States, Singapore has also established its own SPAC framework to position itself as a competitive listing destination in Asia.
For founders considering this route to capital markets, understanding the regulatory, structural, and operational differences between SPAC rules in Singapore and the US is critical.
This article breaks down these key differences, helping business owners make more informed decisions with the guidance of experienced accounting firms in Singapore.
While SPACs have seen substantial activity in the United States, Singapore has also established its own SPAC framework to position itself as a competitive listing destination in Asia.
For founders considering this route to capital markets, understanding the regulatory, structural, and operational differences between SPAC rules in Singapore and the US is critical.
This article breaks down these key differences, helping business owners make more informed decisions with the guidance of experienced accounting firms in Singapore.
What Is a SPAC?
A SPAC is a shell company that raises capital through an IPO with the intention of acquiring or merging with an operating company within a specified timeframe—usually 18 to 36 months.
Once the acquisition (also called a “de-SPAC transaction”) is completed, the target company becomes publicly listed through the SPAC.
SPACs offer a streamlined route to public markets and are particularly attractive to growth-stage businesses that want to avoid the extensive disclosures and volatility associated with traditional IPOs.
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Once the acquisition (also called a “de-SPAC transaction”) is completed, the target company becomes publicly listed through the SPAC.
SPACs offer a streamlined route to public markets and are particularly attractive to growth-stage businesses that want to avoid the extensive disclosures and volatility associated with traditional IPOs.
Read more:
SPAC Framework in Singapore
Singapore became the first Asian market to introduce a formal SPAC framework in September 2021, with listings available on the Singapore Exchange (SGX). The framework is designed to offer founders and investors an alternative to traditional listings while ensuring robust investor protection.
Key Features of Singapore’s SPAC Rules
- Minimum Market Capitalisation: SGD 150 million
- Sponsor Requirements: Sponsors must have a proven track record in managing or investing in successful businesses
- Warrants: Allowed but with limits to prevent excessive dilution
- Timeframe to De-SPAC: 24 months (with a possible 12-month extension)
- Independent Shareholder Approval: Required for the de-SPAC transaction
- Redemption Rights: Allowed; investors can redeem before de-SPAC vote
- Minimum Sponsor Subscription: At least 2.5% to 3.5% of IPO proceeds, based on total deal size
Learn more: SPAC Lifecycle Stages
SPAC Framework in the United States
The US has been the global hub of SPAC activity, with listings on NASDAQ and the New York Stock Exchange (NYSE) peaking between 2020 and 2021. SPACs in the US have more flexibility but face increasing regulatory scrutiny from the Securities and Exchange Commission (SEC).
Key Features of US SPAC Rules
- Minimum Market Capitalisation: No fixed threshold
- Sponsor Requirements: Less stringent; often backed by private equity or celebrity investors
- Warrants: Commonly used, contributing to potential investor dilution
- Timeframe to De-SPAC: 24 months (extensions permitted with shareholder approval)
- Independent Shareholder Approval: Typically required for mergers
- Redemption Rights: Widely available for all public shareholders
- Sponsor Promote: Sponsors often receive 20% of post-IPO equity at nominal price (commonly called the “promote”)
Learn more: Is SPAC a Reverse Merger?
Singapore vs US SPACs: Key Differences
| Category | Singapore (SGX) | United States (NASDAQ/NYSE) |
|---|---|---|
| Minimum Market Cap | SGD 150 million | No official minimum |
| Sponsor Requirements | Strong track record required | Less stringent |
| De-SPAC Deadline | 24 months (plus 12-month extension) | 24 months (flexible with shareholder vote) |
| Redemption Rights | Allowed | Allowed |
| Sponsor Promote | Limited and regulated | Typically 20% of equity |
| Warrant Structure | Limited to control dilution | Common and often generous |
| Investor Protection | High (SGX-mandated safeguards) | Varies by SPAC and sponsor |
Why Choose Singapore for a SPAC Listing?
Singapore’s SPAC framework was designed to address criticisms of the US model—especially around investor dilution and sponsor misalignment. SGX provides a more tightly regulated environment, with safeguards that favour transparency and accountability.
Advantages of Singapore SPACs
- Regulatory credibility and investor confidence
- Strong corporate governance culture
- Attractive for Southeast Asia-based target companies
- Proximity to growth markets in ASEAN and Greater China
- Alignment with ESG and sustainability standards
What Founders Should Consider Before Choosing a Jurisdiction
1. Nature of the Target Company
Is your acquisition target based in Southeast Asia? If yes, Singapore may offer a more logical listing path, both geographically and operationally.
2. Sponsor Profile
Singapore requires sponsors to demonstrate relevant business experience. In contrast, US SPACs may accommodate less traditional backers, which can influence investor perception.
3. Regulatory Complexity
While US SPACs are facing increasing scrutiny from the SEC, Singapore’s rules offer a cleaner and more structured compliance path.
4. Tax Considerations
Jurisdictional tax differences, including withholding taxes, transfer pricing, and capital gains treatment, should be factored into your decision. Partnering with experienced accounting firms in Singapore can help mitigate tax exposure and structure deals more efficiently.
How an Accounting Firm in Singapore Can Support Your SPAC Strategy
Navigating a SPAC transaction—whether in Singapore or the US—requires more than legal counsel. An experienced accounting and advisory firm plays a crucial role in:
- Conducting financial due diligence
- Performing SPAC readiness assessments
- Structuring tax-efficient acquisition models
- Providing valuation services for the target company
- Supporting regulatory compliance with SGX or SEC
- Advising on post-de-SPAC reporting and governance standards
At TY Teoh International, we help founders and growing companies understand the full scope of SPAC-related decisions — from formation to merger execution.
Related article: SPAC Stock After Merger — What Happens Next?
Related article: SPAC Stock After Merger — What Happens Next?
Final Thoughts: A Strategic Path, Not a Shortcut
SPACs are not a “quick fix” to public markets. Whether you’re eyeing a listing in Singapore or the US, success depends on thorough planning, compliance, and strong business fundamentals. Choosing the right jurisdiction can have long-term implications on valuation, investor trust, and post-merger operations.
If you’re a founder or investor exploring SPAC opportunities, Singapore offers a high-quality, regulated, and internationally recognised environment to raise capital and build a sustainable public presence.
Need help assessing your SPAC readiness or comparing your options?
Contact TY Teoh International for a personalised consultation today.
If you’re a founder or investor exploring SPAC opportunities, Singapore offers a high-quality, regulated, and internationally recognised environment to raise capital and build a sustainable public presence.
Need help assessing your SPAC readiness or comparing your options?
Contact TY Teoh International for a personalised consultation today.
