S. 1901: Sponsor Promote and Compensation Act

This bill establishes additional disclosure requirements for a blank check company (e.g., a special purpose acquisition company) during an initial public offering or prior to a merger. A blank check company is a development stage company that issues a penny stock and (1) has no specific business plan or purpose, or (2) has indicated that its business plan is to merge with a company or companies.

Specifically, the bill requires such a company to disclose

• the amount of cash per share expected to be held by the blank check company immediately prior to the merger under various redemption scenarios;
• side payments or agreements to pay sponsors, blank check company investors, or private investors in public equity for their participation in the merger; and
• fees or other payments to the sponsor, underwriter, and any other party.

Written by the Congressional Research Service, Library of Congress.