May 27, 2021

Corporate Partner Iliana Ongun Comments on What to Know Before Joining a SPAC Board in Agenda


Corporate Partner Iliana Ongun was quoted in Agenda, a service from the Financial Times, on the considerations and risks attendant to joining a SPAC board in an article titled: “What to Know Before Joining a SPAC Board.”

As the popularity of SPACs has grown, litigation involving SPAC directors and SEC oversight has also increased. To avoid undue risks, Ms. Ongun noted that it’s “important for SPAC directors to ‘be on the lookout’ for potential conflicts of interest, including if a director has a preexisting relationship with a potential target. Any such potential conflicts should be raised to the board as soon as they are identified.”

She added, “The SEC is laser-focused on de-SPAC acquisitions, particularly potential conflicts of interest between the SPAC sponsor (and insiders on the SPAC board) and the public SPAC stockholders. The SEC is also signaling that in the absence of underwriters in de-SPAC transactions, it may look to auditors and lawyers to act as ‘gatekeepers’ to the capital markets. SPACs and targets should ensure that they identify, appropriately address and ultimately disclose all potential conflicts of interests to SPAC stockholders.”

In addition to being proactive in disclosing conflicts of interest, attorneys and directors should treat other aspects of these transactions with caution and forethought, the article notes. Before a SPAC takes a target public in a de-SPAC transaction, the target’s management team may wish to undertake communications training, Ms. Ongun comments, “as they will soon find themselves representing the company in front of a larger audience with higher stakes.”

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