SPACs In India - Exploring Feasibility Through Global Comparisons

Author: LawSphereX

Category: General Law

Published: 2026-08-23T21:08:05.973554+00:00

Updated: 2026-08-30T07:11:45.448Z

SPACS IN INDIA: EXPLORING FEASIBILITY THROUGH

GLOBAL COMPARISONS

Rohan Gaddam, NALSAR University of Law, Hyderabad

ABSTRACT

This paper mainly talks about the concept and regulatory framework surrounding Special Purpose Acquisition Company (SPAC), focusing on their operational dynamics and potential integration within Indian Securities Market. It compares the Securities Exchange Commission (SEC) in the US, the Singapore Exchange (SGX) and the Securities Exchange Board of India (SEBI) to explore the limitation and growth opportunities for SPACs. Especially since the International Financial Services (IFSC) regulations have recognised the operation of SPAC and introduced provisions designed to enhance investor protection and market stability.

Introduction

A SPAC is an entity solely focused on acquiring another company and facilitating that target's Initial Public Offering (IPO). The procedure of combining a SPAC with an existing private or public entity is termed a De-SPAC transaction. Before acquiring a prospective target, the SPAC secures capital through an initial public offering in the public market. Following the conclusion of the De-SPAC transaction,1 the SPAC is dissolved, and the shares of the Target Company are listed for public trading. SPACs were initially established by GKN Securities2 and David Nussbaum in 1993. Since their inception, SPACs have significantly impacted the market, raising $83 billion globally in 2020, which constitutes a 600% increase compared to the previous year.

The Securities and Exchange Commission (SEC) and the Singapore Exchange (SGX) have instituted stringent regulations to protect the rights of investors and shareholders in SPAC activities. SPACs necessitate meticulous examination as they do not conduct business operations; their primary objective is to acquire another entity. The economies of the United States and Singapore have been substantially influenced by SPAC since its inception, owing to effective regulation. The acquisition of Nidar Infrastructure by Cartica Acquisition Group, resulting in the listing of Nidar shares on NASDAQ, exemplifies the direct influence of SPACs on sectoral growth. 3 The SPAC in the previously mentioned scenario was explicitly created to acquire a company in the Technology and Artificial Intelligence sector.

Numerous additional examples exist, including Lucid Motors and Churchill Capital Corp IV, which operate in the Renewable and Green Energy Sector, currently boasting a market capitalisation of approximately $24 billion. 4 SoFi and Social Capital Hedosophia V in the fintech sector now possess a market capitalisation surpassing $20 billion. 5 These SPACs, specifically established 1 Radha M. Ladkani, De-SPAC Transactions, a₹tha, Indian Institute of Management Calcutta (Dec. 2023), https://www. iimcal. ac. in/FinLab/email-template8/pdf/Radha-Ladkani. pdf. 2 Erick Podwill, Rise of the SPAC: What Investors Need to Know About “Blank Check Companies”, Canterbury Consulting Blog (Mar. 25, 2021), https://www. canterburyconsulting. com/blog/rise-of-the-spac-what-investorsneed-to-know-about-blank-check-companies/ 3 Leading Data Center Provider for AI – Nidar Infrastructure Limited – to Become a U. S.

-Listed Company via Business Combination with Cartica Acquisition Corp. , PR Newswire (Apr. 24, 2025), https://www. prnewswire. com/news-releases/leading-data-center-provider-for-ai--nidar-infrastructure-limited-- to-become-a-us-listed-company-via-business-combination-wih-cartica-acquisition-corp-302180709. html. 4 Kirsten Korosec, Lucid Motors Strikes SPAC Deal to Go Public with $24 Billion Valuation, TechCrunch (Feb. 22, 2021), https://techcrunch. com/2021/02/22/lucid-motors-strikes-spac-deal-to-go-public-with-24-billionvaluation/.

5 Online Lender SoFi to Go Public via SPAC Backed by Chamath Palihapitiya, CNBC (Jan. 7, 2021),

https://www. cnbc. com/2021/01/07/online-lender-sofi-to-go-public-via-spac-backed-by-chamath-palihapitiya- . html. to foster the development of a particular sector, are notably significant and optimal in the contemporary economy. Post-De-SPAC transaction, the market valuation of the target company's shares escalates dramatically as it transitions to public trading, thereby conserving considerable time. Special Purpose Acquisition Companies (SPACs) have experienced global growth; however, India has yet to acknowledge SPACs or De-SPAC transactions within its legal framework. The International Financial Services Centre (IFSC) in GIFT City has achieved notable advancements in this area. The IFSCA (Issuance and Listing of Securities) Regulations, 2021, delineated protocols for the listing of SPACs on a recognised stock exchange.

6 Subsequent to this incident, the Ministry of Corporate Affairs recognised the framework and functioning of SPACs in compliance with IFSCA regulations in its March 2022 Report of the Company Law Committee. 7 The Ministry proposed amendments to the registration of SPACs established in India on international exchanges. SEBI and Company Laws in India have not yet identified these categories of shell companies, even though SPACs have been legally recognised in India. This paper seeks to identify the gaps and constraints that hinder the integration of SPACs beyond the IFSC. Secondly, the paper emphasises the acknowledgement of exit mechanisms aligned with global practices, which the last party would examine regarding disclosure requirements in the context of a SPAC and pertinent SEBI Regulations that may be modified accordingly.

Legal Conundrum Integration of SPACs within the India’s existing securities framework presents a unique set of legal drawbacks. Despite the fact that SPACs have achieved global legitimacy and regulatory clarity in security markets such as SEC and SGX and also the IFSC, Indian Laws are not consistent enough to accommodate these type of entities. This section deals with four primary areas of concern and compares them to the established standards to understand their recognition and mitigate the risks associated with their integrations. International Financial Services Centre (Listing) Regulations (IFSCA (Listing)) https://ifsca. gov. in/Document/Legal/ifsca-listing-regulations-202430082024045210. pdf 7 Ministry of Corporate Affairs, Govt. of India, Report of the Company Law Committee (Mar. 21, 2022), https://www. mca. gov. in/bin/dms/getdocument?

mds=bwsK%252FBEAFTVdpdKuv5IR5w%253D%253D&type =open.

Shell Companies in India Companies incorporated in India, whether Public or Private Limited by shares, must initiate business operations within one year of incorporation. Section 248(1) of the Companies Act empowers the Registrar of Companies (ROC) to annul a company's registration if there is reasonable cause to suspect that the company has not initiated business operations. 8 This provision contradicts the concept of a SPAC, which is solely focused on acquiring a potential target company rather than generating revenue. The global recognition of SPACS, revolves around their ability to remain dormant and operationally non-existent until they identify and acquire a target company. For instance, under Nasdaq Listing Rule IM-5101-29 and NYSE Listed Company Manual Section 102. 0610, SPACs are granted a window of 36 months post-IPO to complete a business combination.

Similarly, SGX Mainboard Listing Rules, Rule 210(11)(n) offers a 24-month period with a 12-month extension subject to shareholder approval. 11 These regulations provide SPACs with the flexibility to operate as shell companies during their initial phase, while ensuring regulatory oversight for their eventual transition into an operational business. This had been reiterated by the Listing Regulations, Reg 3(ee) defines SPAC and outlines their applicability to entities intending to list on recognized Stock Exchange in IFSC. 12 Further Reg 54(8) further mandates that the business combination must be completed within 36 months of listing, with a possible extension of 12 months upon shareholder approval13 and Reg 44(1) (c) ensures that the sponsors, promoters and investor possess adequate expertise to manage intricate acquisition processes.

14 However, outside the IFSC, SPACs are not recognized under the Companies Act, 2013 or SEBI’s broader regulatory framework. Section 248 should be amended to carve out an exemption for SPACs and SEBI (Issue of Capital and Disclosure Requirement) (ICDR)

8 Companies Act, No. 18 of 2013, § 248(1) (India).

9 NASDAQ Stock Market LLC, Listing Rule IM-5101-2, Listing of Companies Whose Business Plan is to

Complete One or More Acquisitions, https://listingcenter.nasdaq.com/rulebook/nasdaq/rules/im-5101-2.

10 New York Stock Exchange, Listed Company Manual § 102.06, Acquisition Companies.

11 Singapore Exchange, Mainboard Listing Rules, r. 210(11) (g)–(n).

12 International Financial Services Centres Authority (Listing) Regulations, 2024, reg 3(ee) (India), 13ibid, reg 54(8). 14ibid, reg 44(1)(c).

Regulation should recognize and define SPACs as companies with commercial operations and exclusively formed for raising capital through IPO for acquisition or merger. Exit Mechanisms and Redemption Rights Redemption Rights are seen as an important facet surrounding SPACs, these ensure that the investors rights are protected by giving them an option to exit and redeem the securities at a predetermined price. This right was observed as being essential, especially when the SPAC fails to acquire another entity within stipulated time and also if the investor or minority shareholder is not in unison with the potential acquisition.

The US SEC and SGX provide clear regulations ensuring shareholder protections, SEC under Regulation 1600 of Subpart 1600 of Regulation S-K15, mandates that SPACs offer redemption rights to public shareholders before the business combination occurs, enabling them to exit the investment if they disagree with the proposed merger. Similarly, SGX Rules 210(11) (g) & (h) grants shareholders the right to redeem their shares prior to a merger, ensuring that investors can exit if they do not approve of the target company chosen by the SPAC. 16 In India, the IFSCA regulations, under Regulation 54(6), establish redemption rights for dissenting shareholders, allowing them to convert their shares into pro-rata escrow value in the event of a failed business combination or disapproval of the acquisition.

17 While these provisions align with global standards, they are currently limited to the IFSC jurisdiction. India’s broad framework does not accommodate Redemption Rights for SPACs outside the IFSC. The Securities Contracts (Regulation) Act, 1956 (SCRA), particularly Section 2(d), addresses options in securities, including both call and put options, as a contract or clause granting the right to purchase or sell securities at a future date at a predetermined price. The Bombay High Court’s ruling in Percept Finserve Pvt Ltd v. Edelweiss Financial Services Ltd clarified the legality of put options under Section 18A, indicating that such options, which allow shareholders to exit the transaction, are not prohibited under the SCRA.

18 This legal precedent supports the argument that redemption rights, akin to put options, can be legally recognized in SPAC transactions, as long as they are structured correctly within the legal framework. To align with international practices and provide clarity, ICDR Regulations 25 and 15 U. S. Securities and Exchange Commission, Regulation S-K, Subpart 1600 – Special Purpose Acquisition Companies (SPACs).

16 Singapore Exchange, Mainboard Listing Rules, r 210(11) (g)&(h) (Singapore).

17 International Financial Services Centres Authority (Listing) Regulations, 2024, reg. 54(6) (India).

18 Percept Finserve Pvt Ltd. v Edelweiss Financial Services Ltd 2023 SCC OnLine Bom 319 (India).

26 should be amended to explicitly include provisions for redemption rights in SPACs.19

Additionally, SCRA should be amended or SEBI should issue a circular to explicitly clarify the legality of redemption rights in the context of SPACs, thereby making these mechanisms consistent with global standards. Sponsor Disclosure and Accountability In the context of sponsor disclosures and accountability, both the US SEC and SGX provide detailed requirements to ensure transparency and protect investor interests. The SEC, under Regulation S-K, Subpart 1600, mandates that SPACs disclose sponsor compensation, equity stakes, and potential conflicts of interest prior to the IPO. This ensures that investors are wellinformed about the motivations and incentives of the sponsors, thus preventing any misalignment of interests.

Similarly, SGX Rule 210(11) (j) to 210(11) (i) require SPACs to disclose sponsor compensation, lock-in periods, and dilution risks, ensuring that sponsors remain committed to the long-term success of the SPAC and preventing excessive dilution of share. The IFSCA regulations do not currently impose the same level of disclosure regarding sponsor compensation and potential conflicts of interest. While Regulation 54(13) provides provisions for the issuance of warrants, it does not explicitly require detailed pre-IPO sponsor disclosures, which are crucial for ensuring transparency and protecting investors. 20 This lack of sponsor transparency could lead to misalignment between sponsors and investors, particularly if sponsors hold disproportionate equity or have the ability to influence acquisition decisions.

The absence of such specific sponsor disclosure requirements in India’s regulatory framework does not present an insurmountable challenge. SEBI’s ICDR Regulations (Regulations 25 and

26) could be amended to include sponsor disclosures, similar to the SEC’s Regulation S-K,

without conflicting with India’s existing legal provisions. The current ICDR framework does not explicitly prohibit the inclusion of such disclosures; therefore, it would be feasible to introduce provisions requiring SPACs to disclose sponsor compensation, equity participation, and any potential conflicts of interest. 21 Moreover, the ICDR regulations have a wellestablished track record of making amendments to improve investor protection by imposing 19 Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, regs. 25 & 26 (India). 20 International Financial Services Centres Authority (Listing) Regulations, 2024, reg 54(13) (India). 21 Devarsh Shah, SPAC Listings in India: Regulatory Hurdles and the Way Forward, IndiaCorpLaw (Mar. 23, 2021), https://indiacorplaw. in/2021/03/spac-listings-in-india-regulatory-hurdles-and-the-way-forward. html.

stringent disclosure requirements. These include clear mandates for transparency regarding the financial health of companies seeking to list, the structure of IPO offerings, and the roles of significant stakeholders. By performing rigorous scrutiny on these disclosures, the ICDR ensures that investor interests are adequately safeguarded. Therefore, incorporating sponsor disclosure requirements for SPACs would be a natural extension of these protections. These additional disclosures would align India’s regulatory framework with international best practices, ensuring that investor interests are safeguarded, and SPACs operate transparently and responsibly. De-SPAC Transaction The US SEC, under Rule 145a,22 treats De-SPAC transactions as sales of securities, requiring full financial disclosure, registration, and shareholder approval.

This ensures that investors are fully informed about the merger and that the process remains transparent. Similarly, SGX Rule 210(11)(n)23 mandates due diligence and approval from both independent directors and public shareholders, ensuring that all stakeholders are involved in the business combination and that the target company is thoroughly vetted before the merger. In India, the IFSCA regulations provide a structured process for De-SPAC transactions under Regulation 81, which mandates post-approval disclosures for SPACs listed within the IFSC. A De-SPAC transaction is akin to a Reverse Merger under Section 232(3)(h) of Companies Act, 2013, where a private company merges with a public company to gain a publicly traded status without going through the traditional IPO process.

24 In this scenario, the SPAC serves a similar purpose to a reverse merger but with a more strategic and sector-focused approach. This sectoral focus allows SPACs to bring not just capital, but also industry-specific expertise and strategic value to the acquisition, which differentiates them from reverse mergers that are generally more opportunistic in nature. As it stands, there is no clear provision for financial disclosures, shareholder voting, or governance adjustments post-merger in the Indian legal framework, which could result in a lack of regulatory oversight and transparency in such transactions. To resolve this, SEBI’s 22 U. S. Securities and Exchange Commission, Rule 145a – Business Combinations Involving Shell Companies

(U.S.)

23 Mainboard Listing Rules, r 210(11)(n) (n 6) (Singapore)

24 Companies Act, No. 18 of 2013, § 232(3)(h) (India).

ICDR Regulation 2 should be amended to formally define a De-SPAC transaction and introduce specific regulatory requirements for financial disclosures, shareholder voting, and governance changes post-merger. 25 Additionally, Regulation 10 of the SEBI (Listing Obligations and Disclosure Requirements) (LODR) should be updated to clarify that reporting obligations are triggered only after the completion of the business combination, reflecting the best practices of global financial markets. 26 Furthermore, Schedule V of the LODR Regulations should be amended to include SPAC-specific reporting requirements, ensuring transparency, investor protection, and proper governance during the transition from a shell company to an operating entity.

27 The IFSC’s adoption of global standards in its regulations provides a strong precedent for SEBI to follow, ensuring that India’s regulatory framework for SPACs aligns with international norms, fostering confidence among investors and market participants. By drawing on the regulatory framework for reverse mergers, which already exists in India, and adapting it for De-SPAC transactions, India can create a clear, comprehensive legal structure that supports the growth of SPACs while protecting investors and ensuring market stability. Regulatory Integration SPACs can boosts India's key sectors such as renewable energy, technology, and fintech is substantial. By facilitating swift capital access, could expedite India's pursuit of ambitious national objectives, including achieving 500 GW of renewable energy capacity by 2030 and establishing itself as a global leader in digital finance.

28 Although the proposed SPAC regulatory changes in India follow international best practices, their success depends on SEBI and other authorities' strict enforcement. In the absence of robust enforcement mechanisms, the integrity of the market and the confidence of investors essential for the success of SPACs would be jeopardised. Oversight and Supervision SEBI should establish a specialised oversight unit to monitor all SPAC operations to ensure effective regulation. This unit could supervise SPAC IPOs, business combinations, redemption 25 Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, reg.

2 (India).

26 Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2018, reg. 10 (India).

27 ibid, sch V.

28 Economic Times, 'India to Lead Global Open Finance Adoption, Contribute 47% of Users by 2030', 24 April rights, and sponsor disclosures, ensuring compliance with established regulations.29 Regulation

25 and 26 of the ICDR Regulations should require SPACs to submit quarterly progress reports

on business combinations and IPO proceeds. This would ensure that SPACs are not shell companies waiting for an acquisition and are transparent. SEBI should also work with the RBI on financial institution SPACs and the MCA on Companies Act, 2013 compliance. SEBI can ensure that SPACs in complex regulatory sectors like Fin-tech are thoroughly examined by working with these entities. Sanctions for Non-Adherence To guarantee adherence to the newly proposed SPAC regulations, SEBI must establish a penalty framework that enforces stringent repercussions for SPACs that do not comply with disclosure and governance standards. 30 This framework must include penalties, market suspension, or delisting for SPACs that violate redemption rights or sponsor disclosures. Section 47 of the SEBI Act, 1992, could be utilised to impose these penalties, thereby mitigating abuses within the SPAC framework.

31 SEBI should also create a platform for investor complaints to report non-compliance or fraud. This platform would let investors report misleading disclosures or redemption rights violations. International frameworks emphasise investor protection in SPAC transactions. Transparency and Clarity Investor protection in SPAC transactions requires transparency. India should require extensive disclosures from SPAC sponsors before the IPO and during the business combination process to align with international standards, particularly those set by the US SEC under Regulation S- K, Subpart 1600. This should encompass details regarding sponsor remuneration, equity holdings, and possible conflicts of interest. Disclosures should be required not only prior to the IPO but also at regular intervals, as stipulated in Rule 210(11)(j)-(l) of SGX regulations. 32 Since 29 Sumathy T.

, SEBI Plans to Build a Dedicated Framework for SPAC in India, IR Global (July 9, 2024), https://irglobal. com/article/sebi-plans-to-build-a-dedicated-framework-for-spac-in-india/. 30 Malika Gupta, Regulatory Framework for SPACs in India: Critique & Comparative Analysis, Centre for Business and Financial Laws, March 6, 2024 https://www. cbflnludelhi. in/post/regulatory-framework-for-spacsin-india-critique-comparative-analysis

31 Securities and Exchange Board of India Act, No. 15 of 1992, § 47 (India).

32 Singapore Exchange, Mainboard Listing Rules, r 210(11)(j)-(1) (n 6)

redemption rights protect investors, India should include them in SEBI's ICDR Regulations. Regulation 25 should explicitly require SPACs to give redemption rights to shareholders who oppose the merger or fail to find an acquisition target in time. In SoFi's merger with Social Capital Hedosophia V, investors could withdraw if they didn't like the deal. Investors trust SPACs because these rights protect them from bad acquisitions. Sectoral Expansion SPACs may impact India's renewable energy and technology sectors. SPAC mergers could help solar, wind, and battery storage companies expand and meet India's 500 GW renewable energy target by 2030. 33 A hypothetical SPAC focused on an innovative Indian solar enterprise could raise capital for solar capacity expansion and India's clean energy goals. The SPAC framework may benefit Indian fintech firms.

A SPAC merger with a growing Indian digital payment firm could help Razorpay grow and serve underserved areas. SPACs would fund innovation in key sectors for India's digital transformation. SPACs may help finance startups and expand digital banking and payment platforms to achieve India's financial inclusion goal. Conclusion This paper examined the regulatory issues and opportunities of integrating SPACs into India's securities framework. The paper addresses gaps in India's regulations and proposes reforms by comparing global regulatory standards from SEC (US), SGX (Singapore), and IFSC. While SPACs are new to India, their legal framework has great potential for sectoral growth and strategic acquisitions. The Companies Act, SEBI ICDR Regulations, and LODR do not fully support SPAC operations in India.

Adapting exit mechanisms and redemption rights to the SPAC structure is possible because the country already has many legal safeguards. India can attract strategic investments in renewable energy, technology, and financial services by refining SEBI regulations and Companies Act provisions for SPACs. Redefining SPACs under the Companies Act, ensuring explicit redemption rights, and improving sponsor disclosures would help India catch up to global best practices. These changes will boost

33 Ministry of Power, Government of India, 500 GW Nonfossil Fuel Target, September 18, 2025

https://powermin.gov.in/en/content/500gw-nonfossil-fuel-target investor protection and sector-specific growth, supporting India's economic priorities. By creating a favourable regulatory environment, India can become a global SPAC innovation and investment hub.

Bibliography

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