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Special Purpose Acquisition Company (SPAC) Charter Amendments

November 17, 2008
Michael M. Ledyard and Ross Antonnacci
Delaware Corporate and Alternative Entity Newsletter, Vol. 23

The credit crunch and recent market turmoil have had a significant impact on almost every market worldwide. SPACs have not been immune. Many investors may wish to remain on the sidelines until the smoke clears, however, the clock continues to tick on their SPACs.

In a typical SPAC charter, if the SPAC has not completed an approved acquisition within the allotted time period (typically 18 – 24 months after its IPO), the SPAC must dissolve and liquidate. Many SPACs and their investors have been looking for an alternative. One alternative has been to amend the SPAC’s charter to extend the date before which it must complete an acquisition.

Such amendments, which may be prohibited by the SPAC's charter, often may be validly affected under Delaware law, however they typically present significant legal issues which must be resolved. Related questions that often arise include matters involving stockholder and director voting rights, vote buying and Delaware public policy. We have extensive experience in this area and can assist you and your clients with Delaware legal advice and opinions.