By Omer Bilal ISLAMABAD, Nov 05 (INP-WealthPK): Pakistan has opened up an avenue for Special Purpose Acquisition Companies (SPACs) with the aim of promoting and opening up the capital market. Securities and Exchange Commission of Pakistan (SECP) has made necessary changes to Public Offering Regulations, 2017 to introduce a regulatory framework for SPACs. SPAC is like a shallow company which may be a professional consortium whose primary objective is to raise capital through initial public offering (IPO) for merger or acquisition. The concept of SPAC is commonly practiced in many developed countries. According to a statement of SECP, under the proposed regulatory framework, SPAC shall be a public limited company with a paid capital of not less than Rs10 million. To protect shareholders, it is mandatory that 90 percent of the capital must be raised through IPO which cannot be used for any commercial activities as per the given time period. This initiative is beneficial for Pakistan merging companies. This process takes a couple of months and has the potential to uplift organisations like Steel Mills in Pakistan by financial inclusion. Although the procedure may be less profitable for individual companies, in departure from traditional practices, SPAC directly goes public first. In order to achieve the desired ecosystem for stability of capital markets and to increase investor outreach, Pakistan is focusing on reforms in capital markets. SPAC features legal, organisational, regulatory, monitoring and product development initiatives for boosting capital markets in the country. With the objective of bringing effectiveness and making ease in capital formation, consequential amendments were inevitable. For enhancing outreach to stakeholders, State Bank of Pakistan (SBP) has revised Primary Dealer Framework, whereby the capital market investors can now directly make investment. IPOs have become an effective way for firms to increase capital, whereas SPACs are effective institutional investors for offering shares to the public, as after the completion of merger, share of common stock repeatedly converts to new business. The amended guidelines are aimed to facilitate stakeholders to diversify their sources of financing, and provide an additional financial instrument to a general class of investors, and boost the economy through capital market outreach. While traditional IPO is affected by market instability and broader investor sentiment, SPAC mergers offer more stability because of upfront pricing and valuation.