25 Many of the SEC’s proposals for enhanced disclosures and harmonizing financial statement requirements are consistent with current market practice for disclosures in SPAC IPOs and de-SPAC transactions, and do not appear to be overly burdensome. The disclosure requirements with respect to the fairness of the transaction, while not specifically requiring a fairness opinion, are clearly intended to push market participants towards obtaining a fairness opinion more typical for public M&A transactions, including disclosure of the corresponding reports/opinions provided by outside advisors. Enhanced Liability The SEC also has issued a number of proposals that serve to enhance liability in SPAC transactions, and these are likely to have much more significant impact if adopted. First, the SEC proposal would require that all de-SPAC transactions, regardless of structure, be deemed to be a sale of securities to the SPAC’s shareholders. Israeli deals have typically involved an offer of target company shares to SPAC shareholders so this would not impact them, but for other issuers, where the SPAC issues shares to private company shareholders, this will have the practical effect of increasing the liability profile of the transaction so that all shareholders of the combined company can bring securities laws claims. Second, the SEC would require that the private company be a registrant and liable for the registration statement. Similar to the prior one, this will not impact Israeli deals where this is always the case, but will expose these companies and their directors and officers to additional liability in situations where the SPAC is the buyer. Third, the proposal includes additional rules that would remove the Private Securities Litigation Reform Act of 1995 (PSLRA) safe harbor that some practitioners believe provides a measure of protection against liability for the use of projections in de-SPAC transactions. The PSLRA provides a safe harbor for forward-looking statements under the Securities Act and the Securities Exchange Act, pursuant to which a company is protected from liability in any private right of action for forward-looking statements when, among other things, the forward-looking statement is identified as such and is accompanied by meaningful cautionary statements. The safe harbor is not available in initial public offerings and is also not available
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