SPACs and traditional IPOs: An offshore perspective
从离岸视角看SPAC交易与传统IPO
Offshore jurisdictions have long been a popular choice for listing vehicles and feature prominently on over 20 exchanges worldwide.
离岸法域一直是搭建上市架构的热门地，在全球超过20个交易所里，离岸法域的身影频频出现。 在美国和亚洲的主要交易所中，离岸公司主要选择在开曼群岛、英属维尔京群岛和百慕大注册，而亚洲的IPO保荐人则偏好开曼群岛。
On the leading US and Asian exchanges Cayman Islands (Cayman), British Virgin Islands (BVI) and Bermuda companies are the offshore heavyweights, with Cayman remaining the favoured jurisdiction for Asia-based sponsors looking to raise capital by way of an initial public offering (IPO).
For decades, the process for many Chinese and other Asia-based businesses to go public in the US was the traditional underwriter-led IPO on NYSE or Nasdaq. Despite increasing regulatory scrutiny on US-listed Chinese companies, Chinese businesses continue to follow this well-trodden path. Just this month, China's ride-sharing business DiDi Chuxing filed for what will likely be the largest IPO in the US this year using a Cayman company as the issuer.
Nearer to home, Cayman companies account for approximately 55% of issuers listed on the main board of the Hong Kong Stock Exchange (HKEx) - far outnumbering any other domicile - and in 2020, approximately 95% of IPOs on HKEx used a Cayman company. That trend looks set to continue in China following listing reforms made in 2019 to encourage IPOs of Chinese businesses domestically, including on Shanghai's recently launched SSE STAR Market (STAR Market), China's equivalent to Nasdaq. To date, 100% of foreign 'red chip' companies registered (or awaiting registration) on the STAR Market are Cayman companies.
Offshore SPACs
2020 saw the resurgence of special purpose acquisition companies (SPACs) as an alternative to traditional IPOs, particularly on US exchanges. A SPAC does not have an operating business – it is a 'shell' company formed for the purpose of raising capital through an IPO for use in a subsequent merger or acquisition of an unlisted target company (known as a de-SPAC transaction). Taking a private company public via a de-SPAC transaction can be achieved on a faster timeline than a traditional IPO, at a lower cost, and with a greater degree of certainty around valuation.
There were 248 SPACs launched on US exchanges in 2020, raising a war chest for acquisitions of US$83 billion. The SPAC boom continued into this year, with more SPACs launched in just the first quarter of 2021 alone (a total of 298) than in all of 2020. However, recent regulatory scrutiny has led to a steep decline in the number of SPAC IPOs, with only 32 SPACs launched in April and May.
Most SPACs formed by sponsors pursuing US targets are incorporated in Delaware. The vast majority of SPACs formed by sponsors pursuing targets outside the US are incorporated offshore (with Cayman dominating, but BVI also popular) to allow for a more efficient structure following the de-SPAC transaction and to minimise any tax or legal complexities that may arise as a result of using a US entity. Approximately one-third of all SPACs launched in 2020-21 were incorporated in Cayman. Cayman LLCs are also increasingly being formed instead of Delaware LLCs to act as the sponsor vehicle.
Despite the recent slowdown in SPAC activity, we continue to see interest from a broad range of Asia-based sponsors and investors (including Chinese fund managers and family offices) for listings of offshore SPACs on US exchanges, especially in the technology sector. We are also seeing many offshore SPACs looking east to explore opportunities in China and Southeast Asia for de-SPAC transactions, where a number of venture capital and private equity backed emerging companies with compelling growth prospects are located.
Although Nasdaq and NYSE currently have the lion's share, several Asian jurisdictions are now considering allowing SPAC listings in their home markets. At present, South Korea and Malaysia are the only two Asian countries that permit them. Given the success of the SPAC format, HKEx and the Australia and Singapore exchanges are now engaged in public consultations in order to explore changes to their listing rules that would allow SPACs to list with certain conditions.
As we begin to see more SPACs listed outside the US, an increasing number of de-SPAC transactions and greater interest from Asia-based sponsors, we expect the use of Cayman, BVI and other offshore companies will continue to increase in relation to Asia-connected SPAC deals.
Why are Cayman and BVI so popular for SPACs and traditional IPOs?
The answer is relatively simple: Both jurisdictions offer political and economic stability, a trusted legal system (with their roots in English law), tax neutrality, speed to market and lower costs whilst continuing to align with international gold standards. Cayman and BVI vehicles have been central to deal flows in China since the late 1980s, are well understood across the rest of Asia (and in the US) and are widely accepted by global exchanges, institutional and private investors, lenders, rating agencies, underwriters and regulators.
Some particular features of Cayman and BVI company law which make such jurisdictions well suited to SPACs and traditional IPOs include:
Flexibility
Laws are progressive and allow Cayman and BVI companies to tailor their articles of association to cater to sponsors' needs and to the listing rule requirements of the relevant exchange. For example, a company may in its articles implement certain provisions to allow for the issue of warrants and different classes of shares suitable to the SPAC model, regulate a SPAC's entry into a de-SPAC transaction, cater for defensive takeover tactics such as 'staggered boards' and 'poison pills', allow for weighted voting rights and/or provide for additional shareholder protections. Cayman and BVI companies may have unrestricted objects in their articles, which is crucial for SPACs with broad investment mandates.
Mergers, takeovers and migrations
Both Cayman and BVI have straightforward statutory merger regimes modelled on Delaware law, which are familiar to US lawyers and conducive to de-SPAC transactions.
In both jurisdictions, there is no takeover code or legislation applicable to listed companies (unless that company is regulated in the BVI or Cayman or, in the case of a Cayman company, it is listed on the Cayman Stock Exchange), nor are there any statutory prohibitions on financial assistance or restrictions in respect of defensive mechanisms which the board of directors could utilise in respect of actual or potential takeover or merger offers, subject to their usual fiduciary duties.
It is also possible to migrate Cayman and BVI companies to other jurisdictions and vice versa without triggering a disposal of assets or requiring a novation of liabilities.
These features offer flexibility and creative solutions to any pre-IPO restructuring and/or acquisition, outside of a typical share swap. They are also particularly ideal for SPACs as they offer a quicker, lower cost and simplified process when it comes to the acquisition of target companies.
Geopolitical developments between the US and China, heightened regulatory scrutiny of US-listed Chinese businesses by US regulators and potentially higher trading multiples upon a re-listing in China (or Hong Kong SAR) are key drivers for the recent spate of "take-private" transactions of Cayman and BVI companies by way of schemes, tender offers and statutory mergers.
Regulatory considerations
There is no need to register or file a prospectus for companies making public offers outside Cayman or the BVI. The issuer may therefore focus on the listing rule requirements of the relevant exchange, without the need to consider any additional "layer" of Cayman or BVI law requirements. Equally, there is no need to obtain the approval of any regulatory authority in either Cayman or BVI in respect of the issue or transfer of shares (or depositary receipts).
Dividends and distributions
Cayman and BVI have flexible capital maintenance rules allowing distributions to be made, and shares to be redeemed and repurchased from, a wide range of sources provided there are no restrictions in the company's memorandum or articles of association (and subject to the company meeting applicable solvency criteria).
Directors
No directors or officers are required to be resident in Cayman or BVI.
FPI status
If structured properly, a Cayman or BVI company listed on a US exchange may be eligible to qualify as a "foreign private issuer" allowing it to take advantage of reduced disclosure and reporting requirements, certain exemptions from US proxy rules and the ability to apply certain "home country" standards in respect of key corporate governance practices.
Looking ahead
Although interest in SPACs now rivals the traditional IPO in popularity, we continue to see a steady flow of traditional IPO work for Chinese (and Southeast Asian tech) businesses using offshore structures to make their public debut, particularly on the STAR Market, Nasdaq and NYSE.
There is some speculation about whether SPAC IPOs will make a comeback in the US. Indeed, the SPAC frenzy witnessed throughout 2020 and Q1 2021 has recently tapered off as a result of the SEC's increased scrutiny of, and guidance issued to, SPACs in April this year. However, Asian sponsors and potential target companies in the region remain bullish on SPACs.
It remains to be seen which Asian exchange will become the region's go-to for SPACs and whether Asia will be the next to see the SPAC boom. What is certain is that Cayman and BVI will continue to remain central to global capital and M&A markets as more Asia based SPACs are launched and large numbers of existing cashed-up SPACs race to identify merger targets. If 2020 was the year of the SPAC, 2021 may well prove to be the year of the de-SPAC.
Offshore leader
Carey Olsen's global corporate team is one of the largest and most widely recognised in the offshore world, advising on all aspects of corporate law including SPACs and traditional IPOs, mergers and acquisitions (including de-SPAC transactions), joint ventures, corporate restructurings and listings of both debt and equity securities on internationally recognised stock exchanges.
Our full service Singapore and Hong Kong offices supply Asia-based clients with Mandarin and Bahasa language capability and on-the-ground legal advice on the laws of Bermuda, the BVI, the Cayman Islands and Jersey.
The corporate team at Carey Olsen Singapore have advised a number of Chinese/Asian clients and underwriters in connection with IPOs of offshore companies on the STAR Market and on US and Asia-Pacific stock exchanges.
An original version of this article was published by China Business Law Journal, June 2021.
© Carey Olsen 2021.
几十年来，许多中国和其他亚洲企业通过承销商主导的传统IPO赴美（纽交所或纳斯达克）上市。尽管在美上市面临的监管审查越来越严格，但中国企业仍前赴后继。就在本月，中国共享出行公司滴滴出行提交申请，滴滴正是利用开曼群岛注册的公司作为发行人，此次IPO可能成为美国今年最大IPO。
由于开曼群岛地理距离更近，在港交所主板上市的发行人中，开曼公司占近55%，远超其他地区注册的公司，2020年，在港交所的IPO中，近95%利用了在开曼群岛注册的公司。开曼群岛的热度在2019年推出的上海交易所科创板中得以延续，第一家IPO上市的外国红筹公司就是在开曼群岛注册的发行人。迄今为止，在科创板注册上市或等待上市的所有红筹公司均在开曼群岛注册。
离岸SPAC
2020年，尤其是在美国交易所，特殊目的收购公司（即SPAC）再次流行起来，成为除传统IPO以外的一个热门上市途径。SPAC只是一个壳公司，没有业务运营，其目的就是通过IPO募资，募得的资金用来并购一家目标公司，整个过程被称为de-SPAC交易。与传统的IPO相比，通过de-SPAC交易上市用时更短，成本更低，且估值的确定性更高。
在2020年，有248家SPAC登陆美国交易所，募得830亿美元巨资用于未来的收购。SPAC热潮持续到今年，仅在2021年第一季度上市的SPAC数量（共298家）就超过了2020年全年。不过，最近的监管审查已导致SPAC IPO的数量急剧下降，在4月和5月仅有32家SPAC。
将美国公司作为收购目标的大部分SPAC都注册在特拉华州，而收购目标在美国以外的大部分SPAC则注册在离岸法域（主要是开曼群岛，其次是英属维尔京群岛），这是为了de-SPAC交易后的架构更高效，税务和法律事务也比在美国注册简单。2020年至2021年上市的所有SPAC中，有三分之一在开曼群岛注册成立。相比特拉华州，开曼群岛注册的有限责任公司（即LLC）越来越受欢迎，成为主要的募资载体。
尽管近期SPAC热度放缓，但我们仍注意到有大量亚洲投资人（包括中国的基金管理公司和家族办公室）希望成立离岸SPAC架构赴美上市，尤其是在科技领域。我们也看到很多离岸SPAC架构“东行”，来中国和东南亚寻找de-SPAC交易机会，毕竟，这里有相当数量的新兴企业，他们背靠风投基金和私募股权基金，增长前景可观。
尽管纳斯达克和纽交所是主要的上市地，几大亚洲法域也已在考虑接纳SPAC上市。目前，在亚洲，只有韩国和马亚西亚允许SPAC上市。鉴于SPAC的成功，港交所、澳大利亚和新加坡交易所正公开征询意见，拟将修改上市规则，允行SPAC在一定条件下上市。
随着越来越多SPAC在美国以外的地区上市，大量的de-SPAC交易以及来自亚洲保荐人的热情有增无减，我们预期，在以亚洲公司为收购目标的SPAC交易中，开曼群岛、英属维尔京群岛和其他离岸公司会越来越多。
为什么开曼群岛和英属维尔京群岛在SPAC和传统IPO中如此受欢迎？
答案相对简单：这两个地区政治和经济稳定，有一个可靠的法律体系（参照英国法设立），税收中性，能快速接入市场，成本较低，且一直与国际黄金标准接轨。自上世纪80年代末，在开曼群岛和英属维尔京群岛注册的离岸载体是中国上市潮中不可或缺的元素，亚洲其他国家和地区（以及美国）对这两个离岸法域也已相当了解。这两个地区的离岸构架广受全球交易所、机构和个人投资者、借款人、评级机构、承销商和监管部门认可。
这两个地区注册的离岸公司还有以下这些独特的特点使之更为适合SPAC以及传统IPO：
灵活——当地法律渐进，允许开曼和英属维尔京群岛公司“定制”公司章程，迎合保荐人的需求以及相关交易所的上市规则要求。例如，公司章程中可设置特定条文，允许发行适合SPAC模式的认股权证和不同类别的股份，规定SPAC如何进入de-SPAC交易，为防御性收购奠定法条基础，如分期分级董事会（staggered boards）和毒丸计划（poison pills），允许同股不同权，以及规定其他股东保护制度。开曼和英属维尔京群岛公司的章程中可以固定不限制收购目标，这一点对SPAC非常重要，毕竟SPAC的投资范围很广。
合并、收购和迁册——开曼和维尔京群岛参照特拉华州法律设立了直观的、有利于de-SPAC交易的法定合并规定，是美国律师所熟悉的。
这两个法域都没有适用于上市公司的收购准则或立法（除非这家公司在开曼、英属维尔京群岛受监管，或者如果是开曼公司，公司在开曼交易所上市），没有法规禁止财政补助，也不限制董事会在面对真实的或可能的收购或合并邀约时可利用的防御机制（以董事会信义义务为前提）。
开曼和英属维尔京群岛公司可迁册到其他地区，反之亦然，不触发资产处理，也不要求责任的更新。
这些规定非常灵活，也给IPO前重组和收购提供了除典型的换股以外的新方案。这些规定使收购变得更快、更简单，成本更低，因此尤其适合SPAC。
中美之间关系紧张，美国监管部门对在美上市的中国公司实行更严格的监管审查，在中国内地（或香港）进行二次上市会带来更高估值倍数，这些因素促使了最近开曼和英属维尔京群岛公司的私有化热潮，这些公司通常通过协议安排、要约收购和法定合并进行私有化。
监管考虑——公司在开曼或英属维尔京群岛以外的地区上市时不需要注册或提交招股说明书。因此，发行人可专注于相关交易所的上市规则要求，不需要考虑开曼群岛或英属维尔京群岛的法律要求。同样，发行股票或转让股票（或存托凭证）时不需要获得开曼群岛或英属维尔京群岛的监管批准。
股息和分配——开曼和英属维尔京群岛有灵活的资本维持规则，允许进行分配，也允许股份赎回和回购，只要公司章程中没有任何限制（并以公司符合适用的偿付能力标准为前提）。
董事——不要求董事或高管居住在开曼群岛或英属维尔京群岛。
外国私人发行人身份——如果搭建的结构恰当，在美国交易所上市的开曼或英属维尔京群岛的公司还可享受“外国私人发行人”的身份，这样，公司须遵守的披露和财务报表的要求减少，被豁免美国的委托代理规则，在一些关键的公司治理要求方面，还可申请“母国”标准。
离岸带头人
凯瑞奥信律师事务所的全球公司业务团队是离岸律所中规模最大、知名度最高的团队之一，为涉及公司法的各个方面提供法律服务，包括SPAC和传统的IPO、并购（包括de-SPAC交易）、合资公司、重组以及债务和证券国际公认的证券交易所的上市等。
我们在新加坡和香港的“全方面服务 ”办公室为亚洲客户提供普通话和马来语服务，并在实地为客户提供关于百慕大、英属维尔京群岛、开曼群岛和泽西岛法律相关的服务。
凯瑞奥信律师事务所新加坡办事处的公司业务团队已经为许多中国/亚洲客户和承销商提供有关离岸公司在科创板以及美国和亚太地区证券交易所IPO及上市有关的建议。
