With the Future Financing Act (ZuFinG), the German legislator has created specific corporate law regulations for so-called shell companies (Börsenmäntel). The goal is to open up the German capital market to this specific form of corporate financing and make it more internationally competitive.
Shell companies are publicly traded entities without their own operating business. Through a shell company transaction, an operating business indirectly enters the stock exchange. This form of financing has gained significant international importance in recent years.
SPACs (Special Purpose Acquisition Companies) are considered a special form of shell company, where not a classic operating company seeks a shell, but rather the shell (SPAC) first raises capital to subsequently identify a suitable operating company for acquisition.
Previously existing legal hurdles in "German" SPAC transactions were often solved by using foreign legal forms. An example of this was the use of the Luxembourg SE, whose shares could then be traded on the stock exchange.
This has changed with the adjustment of German stock corporation law. The new regulations are specifically tailored to the unique requirements of SPAC transactions.
For instance, the deposit of IPO proceeds into an escrow account is now explicitly permitted – a core element of any SPAC structure. Furthermore, the law provides for a redemption right for investors in the event of a SPAC transaction – a mechanism that was previously hardly practical under German law. The use of so-called "naked warrants" – i.e., separately tradable subscription rights – is also now explicitly enabled. Another milestone is the legal anchoring of the general meeting's authority to decide on the target transaction.
The now legally anchored possibility of executing SPAC transactions with a German vehicle strengthens both the shell company sector and corporate financing options significantly, making Germany more internationally competitive as a location.
The new regulation shows: The legislator has recognized that innovative forms of financing require a flexible legal framework and has taken an important step with this reform in the interest of further developing a future-proof capital market.
About INSTANT IPO SE:
INSTANT IPO is Europe's first independent specialist focusing on fast stock market launches and the German market leader for shell companies.
As an official capital market partner of the Düsseldorf Stock Exchange, INSTANT IPO implements individual, time- and cost-efficient stock market launches for companies of all industries. In addition to implementing traditional IPOs or pure listings, INSTANT IPO's special expertise lies in the segment of shell company/SPAC transactions (Reverse IPO, Reverse Merger or Reverse Takeover, Cold IPO), as shell companies offer significant advantages to companies striving for the stock exchange.