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Special Purpose Acquisition Company (SPAC) Charter Amendments

Winter 2009
Michael M. Ledyard and Ross Antonacci

As we discussed in our Fall 2008 newsletter, the credit crunch and recent market turmoil have had a significant impact on SPACs. New SPAC offerings have come to a halt, however a large number of existing SPACs have not yet consummated a business combination and continue to look for a suitable target. Some in the industry believe that many attractive acquisition targets will become available over the next year, however, executing a business combination takes time, and the most attractive target candidate may operate in a different business sector than was originally contemplated by the SPAC’s charter.

Amending a SPAC’s charter to extend the time allotted in order to complete a business combination, or to remove or modify limitations on the type of business to be acquired, may give you or your client the tools necessary to complete a successful business combination. Such amendments, which in many cases may be prohibited by the express terms of the SPAC's charter, often may nonetheless be validly effected under Delaware law.

Related questions that often arise when counseling SPACs include issues concerning stockholder and director voting rights, vote buying, charter construction and Delaware public policy. We have extensive experience in these areas (and in responding to related Securities and Exchange Commission comments) and can assist you and your clients with Delaware legal advice and opinions.

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