- Release No. 33-11265 (effective July 1, 2024) eliminated the PSLRA forward-looking statement safe harbor that SPAC transactions previously relied on to shield financial projections from liability.
- New Rule 145a deems the de-SPAC transaction a "sale of securities," making the target company a co-registrant on the S-4 or F-4 and subjecting its officers and directors to Section 11 and Section 12 liability.
- A mandatory 20-day minimum shareholder redemption notice period now applies to all de-SPAC transactions, adding a fixed window to transaction timelines.
- Transactions must now include a fairness opinion or provide a reasoned explanation for why one was not obtained, raising the diligence burden on target boards.
- As of mid-2026, the Trump-era SEC has reviewed but not rescinded these rules; companies must plan around the July 2024 framework as the operative standard.
Why January 2024 Was a Turning Point
On January 24, 2024, the Securities and Exchange Commission adopted Release No. 33-11265, the culmination of a rulemaking process that began in March 2022. The rules became effective July 1, 2024, and they fundamentally altered how SPAC transactions are structured, disclosed, and litigated. For any company that received a term sheet from a SPAC sponsor in 2023 or early 2024 under the old framework, the operative legal and disclosure environment is now materially different.
The impetus was well-documented in the SEC's proposing release: the Commission found that SPAC mergers had become a mechanism for taking companies public under a regulatory framework that offered significantly more protection to issuers and sponsors than the traditional IPO process provided. Projections that could not survive the scrutiny of an S-1 roadshow were being presented to SPAC shareholders under the cover of the PSLRA safe harbor. Conflicts of interest between sponsors, target boards, and public shareholders were not being consistently or fully disclosed. Target companies were benefiting from the SPAC's registered status without incurring the associated liability. The 2024 rules were designed to close each of these gaps.
The practical result is that a de-SPAC transaction now imposes regulatory obligations on the target company that are much closer to those of a traditional IPO than to what existed before July 2024. For companies evaluating their listing options, this convergence changes the calculation in ways that are not yet widely understood by management teams first exploring the SPAC path.
The Elimination of the PSLRA Safe Harbor
Perhaps the single most consequential change in the 2024 rules is the elimination of the Private Securities Litigation Reform Act (PSLRA) safe harbor for forward-looking statements made in connection with SPAC transactions. This safe harbor had been one of the primary structural arguments in favor of the de-SPAC route: companies going public through a SPAC merger could present multi-year financial projections — often the only financials that made the valuation pencil out — with a degree of protection from securities fraud claims that traditional IPO registrants could not access.
The PSLRA safe harbor protects issuers from liability for forward-looking statements accompanied by meaningful cautionary language, provided those statements are not made by persons with actual knowledge that the statement is false or misleading. In an IPO context, this protection does not apply to initial public offerings. SPACs had long argued that the business combination registration statement was not an IPO, allowing them to invoke the safe harbor for the aggressive projections commonly included in SPAC proxy materials.
The 2024 rules eliminate this argument. Under the new framework, the PSLRA safe harbor is explicitly unavailable for forward-looking statements included in any document filed in connection with a de-SPAC transaction. Companies that include projections in S-4 or F-4 filings for SPAC mergers are now subject to the same liability standard for those projections as a traditional IPO issuer — meaning that materially false or misleading projections can give rise to liability under Section 11, Section 12, and Rule 10b-5 of the Exchange Act.
This change does not prohibit the use of projections in SPAC transactions. Projections remain common and, in many cases, essential to the transaction narrative. What it changes is the evidentiary standard and the diligence process that must support them. Every projection included in the registration statement must now be supportable by contemporaneous internal documentation, and the assumptions underlying those projections must be disclosed with specificity. A target company that provided its SPAC sponsor with optimistic management projections in 2022 under the old framework needs to rigorously reexamine how those projections would be treated under the 2024 standard before signing a new transaction.
Rule 145a and Co-Registrant Liability
New Rule 145a is the most structurally significant change in the 2024 package for target companies. It deems the securities issued in a de-SPAC transaction to be sold to the public in a registered offering, and it treats the target company as a co-registrant on the combined S-4 or F-4 registration statement. This has direct, material consequences for the legal exposure of the target company's officers and directors.
Before Rule 145a, the conventional view was that the SPAC — as the registered entity — bore primary liability for the accuracy of the registration statement. The target company provided information that was incorporated into the document, but the target's officers and directors were not signatories to the registration statement in the same way as a traditional IPO. This created an asymmetry: the target's management team could benefit from public market access through the SPAC structure without fully incurring the signing liability that comes with an S-1.
Under Rule 145a, that asymmetry is gone. Target company officers and directors are now required to sign the S-4 or F-4 as co-registrants. By signing, they take on the same Section 11 liability exposure as directors and officers in a traditional IPO: they can be held personally liable for materially false or misleading statements in the registration statement unless they can demonstrate that they conducted a reasonable investigation and had reasonable grounds to believe, and did believe, that the statements were accurate (the "due diligence" defense).
The practical implication for target company boards is significant. Directors who sign the de-SPAC registration statement are now in the same position as directors who sign an IPO prospectus. They must undertake — and be able to document — a reasonable diligence process with respect to the accuracy of the information in the document. This typically requires retaining independent counsel, conducting board-level document review, and receiving expert opinions on material sections. Companies that treated a SPAC merger as a lighter-touch regulatory process than an IPO need to recalibrate that assumption entirely.
Enhanced Disclosure Requirements — Conflicts, Dilution, and Compensation
Beyond the liability framework changes, the 2024 rules impose a structured set of enhanced disclosure requirements that address the information asymmetries that characterized the 2020–2021 SPAC boom. These disclosures are required in both the SPAC IPO prospectus and the de-SPAC transaction registration statement, and they cover three primary areas: sponsor conflicts, dilution, and compensation.
On conflicts, the rules require quantified, specific disclosure of any economic arrangements between the SPAC sponsor and the target company or its affiliates, any relationships between the sponsor and underwriters or advisors in the transaction, and any conflicts arising from the sponsor's interest in completing a deal (as opposed to liquidating) before the deadline. The prior disclosure practice of general boilerplate conflict descriptions is no longer sufficient. Each conflict must be identified specifically, quantified where possible, and described in terms of how it could affect the sponsor's incentives in the transaction.
On dilution, the rules require a clear, tabular presentation of the various sources of dilution in the transaction and their per-share impact on existing public shareholders. This includes founder shares (typically representing 20% of post-IPO shares at minimal cost to the sponsor), rights or warrant conversion shares, PIPE issuances, and any contingent consideration arrangements. The dilution table must show the impact under multiple redemption scenarios, from minimal to maximum redemption, so shareholders can evaluate the transaction's economics under realistic conditions.
On compensation, the rules require specific disclosure of all forms of compensation paid or payable to the sponsor, including deferred underwriting discounts, advisory fees, transaction bonuses, and any non-cash compensation such as the founder shares themselves. The aggregate economic value of these payments must be disclosed in a format that allows shareholders to assess whether the sponsor's compensation is proportionate to the value delivered in the transaction.
The 20-Day Notice Period and Fairness Opinion Requirements
Two procedural requirements in the 2024 rules directly affect transaction timelines and the diligence process. The first is a mandatory minimum 20 calendar-day period between the dissemination of the redemption notice to shareholders and the shareholder vote on the transaction. This requirement codifies a practice that many sponsors already followed, but it eliminates flexibility for accelerated timelines and adds a fixed minimum window that must be built into every transaction schedule.
For transactions where every day matters — either because the trust account deadline is approaching or because market conditions are time-sensitive — the 20-day minimum can be a binding constraint. Combined with the SEC comment review period (which averages two to three rounds on most de-SPAC registration statements), the total time from filing the S-4 to closing the transaction typically runs a minimum of four to five months from the date of initial filing. Companies and sponsors who have planned for a faster execution timeline need to revise those assumptions.
The fairness opinion requirement — or, more precisely, the disclosure requirement triggered by the absence of one — is equally significant. The 2024 rules do not mandate that a fairness opinion be obtained in every de-SPAC transaction. They require that if no fairness opinion was obtained, the registration statement must explain why one was not obtained and describe the process by which the board determined the transaction to be fair to shareholders.
In practice, this disclosure burden makes it very difficult for a target company board to justify not obtaining a fairness opinion. The standard for "why we didn't get one" must be sufficiently specific and defensible to withstand both SEC comment review and potential shareholder litigation. For most transactions, the path of least resistance — and greatest legal protection for directors — is to commission a fairness opinion from a qualified independent financial advisor. The cost of that opinion, which typically runs between $500,000 and $2 million depending on transaction size, should be budgeted as a standard transaction cost in any de-SPAC planning exercise.
What Has Not Changed — and the 2026 Regulatory Status
The 2024 rules, while transformative, did not change every aspect of the SPAC framework. The fundamental mechanics of the SPAC structure — trust account segregation, the right to redeem at approximately NAV, the shareholder vote requirement before a business combination — remain intact. The rules also did not impose a ban on forward-looking statements, a restriction on PIPE financing, or a requirement that SPAC transactions meet any specific financial metrics. The framework is more rigorous, not prohibitive.
As of mid-2026, the current SEC under the Trump administration has reviewed the 2024 rules but has not rescinded or proposed material modifications to the core provisions. The co-registrant liability framework, the elimination of the PSLRA safe harbor, and the enhanced disclosure requirements are all operative. Companies and their advisors should plan around the July 2024 framework as the current legal baseline, with the caveat that further SEC guidance or interpretive releases may be issued.
The de-SPAC market has adapted. The 144 SPAC IPOs completed in 2025 — raising approximately $26.86 to $30.4 billion and representing a 2.5-fold increase over 2024's 57 SPACs — were all structured under the awareness that the 2024 rules would govern any business combination. Experienced sponsors have built the enhanced disclosure and co-registrant liability requirements into their standard transaction documents and budget assumptions. The SPAC market's recovery is not a signal that the rules have relaxed; it is evidence that the structure, properly executed, remains viable under the new framework.
Implications for Companies Evaluating the SPAC Path
For a company's management team and board evaluating whether a SPAC merger is preferable to a traditional IPO, the 2024 rules change the analysis in several specific ways.
- Projection scrutiny is now equivalent across paths. The ability to present aggressive, long-dated revenue projections in a SPAC proxy without the liability exposure of an IPO registration statement is no longer available. If your company's public market valuation case depends on projections that could not survive S-1 disclosure standards, the SPAC path does not provide a regulatory escape route.
- Board liability is substantively equivalent. Directors who sign the S-4 as co-registrants are in materially the same legal position as directors who sign an IPO prospectus. The reduced regulatory burden that management teams sometimes associate with the SPAC route no longer exists at the board level.
- Transaction costs are converging with IPO costs. The addition of fairness opinion requirements, enhanced disclosure preparation, co-registrant counsel for the target, and due diligence documentation requirements has narrowed the cost gap between a de-SPAC and a traditional IPO. The cost comparison should be modeled specifically for each transaction, not assumed.
- Timeline planning must account for the 20-day notice period and SEC review cycles. A realistic de-SPAC execution timeline from LOI to close runs six to ten months under the current framework for most transactions. Companies that need to close faster than that should explore whether the trust account deadline constraints on their target SPAC are compatible with those timelines.
- Sponsor quality matters more than ever. The additional compliance burden under the 2024 rules has increased the operational barrier to executing a clean de-SPAC transaction. Sponsors who have not updated their standard documents, disclosure practices, and diligence processes to reflect the new rules create execution risk for the target company. Evaluating sponsor quality and regulatory sophistication is now a due diligence item in its own right.
The net effect of the 2024 rules is to make the SPAC path significantly more rigorous without making it unworkable. For the right company — with supportable projections, a strong governance infrastructure, and a sophisticated sponsor — the de-SPAC route remains a viable and sometimes optimal path to public market access. The companies that fail to account for the new regulatory framework in their planning are the ones most likely to encounter avoidable delays, cost overruns, and legal exposure during the transaction.