SPAC

SPAC is an abbreviation of a special purpose acquisition company (기업인수목적회사). A SPAC refers to the SPC specialized in collective investment scheme that allows investors to invest in its stocks, and exists only for the purpose of merging with or acquiring a certain company of high potentiality with the proceeds of its initial public offering (IPO).

Key words
SPC, IPO, M&A, listing

Legal ground
A Special Purpose Acquisition Company (SPAC) is created to facilitate the M&A process of listed companies. SPACs are established pursuant to the Enforcement Decree of the Capital Markets Act so as to protect investors.

SPACs are exempted from the regulation regarding collective investment scheme. When a SPAC fails to merge other company of good prospects, the promoter(s) may collect five percent of the principal, or invested money. In other words, such negative compensation results from their failure to identify and merge the target company with probable capital gains.