Legal Study On General Investor Protection System In SPAC

The Special Purpose Acquisition Company(SPAC),a highly sought-after IPO and M&A model,has seen a surge in growth since 2020.Major capital markets around the world have also introduced this model and set up relevant rules.In the face of such popularity in the capital market,SPAC must have its unique advantages,and there are naturally discussions in China on whether SPAC should be introduced.This paper takes the investor protection system,one of the most crucial systems in the securities market,as the entry point,and summarizes the special challenges to investor protection in SPAC on the basis of analysis and understanding of SPAC,further discusses the possibility of introducing SPAC in the context of registration reform in China’s securities market,and what adjustments to the investor protection system should be made to better complete the legal transplantation of SPAC,so as to increase the adaptability of this listing model to China’s capital market.This paper is divided into the following four chapters.The first chapter introduces the challenges of investor protection in SPACs.The author firstly defines "ordinary investors",introduces the necessity of protecting ordinary investors in the securities market,and explains why more attention should be paid to ordinary investors;secondly,he introduces the existing challenges to the interests of ordinary public investors in the SPAC listing model,including the challenges between the promoters of the SPAC,i.e.,the management team of the later stage of the company,and the ordinary public investors.Secondly,the challenges to the interests of general public investors in the SPAC listing model are introduced,including the conflict of interests between the promoter and the management team of the company and the general public investors in the SPAC,and the ambiguity of information disclosure in the SPAC to mislead investors.Finally,the author analyzes that if China decides to introduce SPAC,the existing legal system for investor protection in China is indeed lacking and not sufficient to meet the demand for investor protection in SPAC,given the challenges faced by domestic investors’ interests.Chapter 2 introduces the investor protection mechanism in SPAC,mainly taking the U.S.securities market as an example.Firstly,the author introduces in detail the operation mode and advantages of SPAC,followed by the existing system for protecting investors’ interests in each stage of SPAC,mainly divided into the protection of investors’ rights and interests before the De-SPAC stage,the protection of investors’ rights and interests during the M&A transaction stage,the strict requirements for information disclosure and The existing system for protecting investors’ interests in the De-SPAC stage,the protection of investors’ rights and interests in the M&A transaction stage,the strict requirements for information disclosure,and the flexible exit mechanism available to investors in the late SPAC stage when the M&A transaction is successful or not.Finally,we analyze the current situation of the introduction of SPAC listing mechanism in different capital markets around the world and conclude that the investor protection system in SPAC is becoming more and more stringent.Chapter 3 compares the existing investor protection system in China with the investor protection system in SPAC.Through a detailed comparison and analysis of the market entry stage system of listed companies,the market entry stage system of investors,the information disclosure system and the remedies for investors’ rights,it is concluded that there are still many shortcomings in the overall structure and specific system design of investor protection in China’s securities market,and the SPAC listing model has more stringent requirements for the system of investor rights protection.Chapter 4 focuses on the inspiration of the SPAC listing model for investor protection in the domestic securities market.In order to carry out legal transplantation,the first step is to make adjustments in the domestic legal system.In the policy,we should take the initiative to accept the introduction of SPAC,and at the same time,we should adjust the concept of securities market regulation,combine functional regulation with bottom-line regulation,and change the concept of "paternalism" in investor protection,so that market regulators are no longer the "guardians" of investors."Secondly,the SPAC listing model needs to be adjusted to make it more adaptable to China’s local environment,and to design a regulatory requirement for information disclosure that suits China’s national conditions,as well as a regulatory mechanism for diversified subjects that is different from that of the U.S.capital market,in order to achieve the goal of better protecting the interests of ordinary investors;finally,this paper discusses the improvement of the post-event relief system for investor protection,in which the investment service center The paper finally discusses the improvement of the post-event relief system for investor protection,and proposes feasible modifications in the areas of investment service center,support for securities litigation,early payment system,and share buyback system.