High net-worth Indians betting on the so-called blank cheque firms, a Wall Street term for special purpose acquisition companies (SPACs), are reportedly getting tax notices.
According to a report in the Economic Times, the notices follow information shared by Bermuda, which like Cayman Islands, is a preferred jurisdiction for integrating SPACs. The income tax (I-T) department has served notices on at least four people in the past 10 days, the report quoted sources as saying.
Moneycontrol couldn't independently verify the report.
A SPAC is a shell company listed on a stock exchange for acquiring (or merging with) a private firm, thus making the private company public without going through the initial public offering (IPO) process.
SPACs are formed solely to raise capital by inviting investors in a pre-listing offering to acquire a stake in an existing, primarily unlisted, operating company. Later, the company can merge with the publicly traded SPAC and become a listed entity.
In the US, SPACs are registered with the market regulator Securities and Exchange Commission and are considered publicly traded companies.
The majority of companies pursuing SPACs do it on the New York Stock Exchange, though other exchanges such as the Euronext Amsterdam, Singapore Exchange and Hong Kong Stock Exchange have also seen a small volume of SPAC deals.
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