Churchill Capital Corp. III is a special purpose acquisition business that was founded as a Delaware corporation in October 2019. (SPAC). SPAC’s initial public offering (IPO) was completed in February 2020 for $1.1 billion. The sponsor of the SPAC chose MultiPlan, Inc. as a target. In October of 2020, the company combination was completed. The investors who did not exercise their redemption options become shareholders in the merged company. The value of the merged firm decreased as the value of the shares decreased, resulting in losses for the investors. Investors claim that the fiduciaries failed to communicate critical insider information prior to the company combination. The important fact is that one of MultiPlan’s largest customers was developing an in-house platform.

SPAC insiders approved the transaction despite withholding material facts from stockholders, according to the Delaware Chancery Court. Experts believe that applying Delaware Fiduciary Law to the Churchill SPAC might have far-reaching repercussions for SPACs that have drawn billions of dollars in investment in recent times.

It has to be seen what is the role of directors in protecting minority shareholders. The promoter directors, who are in charge of the company’s business, designate independent directors. They get the board to enact a resolution appointing them as independent directors. Independent Directors join the board of directors as non-executive independent directors. When addressing the responsibilities and liabilities of independent directors, the mode and manner of appointment is an important factor to examine. This is significant to be examined as Independent Directors are not promoter’s proxy.

It is critical that we have directors on the board who are fiercely independent in their approach to defending minority shareholders. The ability to ask the proper questions should be unrestricted, which has become the most significant limitation of independent directors. The independent directors in India are entrusted with a great deal of duty and power under Indian company law. In corporate India, we’ve seen multiple instances when independent directors have demanded major changes, including the replacement of the company’s promoter chairman.

The world is changing at a breakneck pace. Decentralized autonomous groups are paving the way for traditional organisations. NFTs, Digital Assets, Meta Verses, and other technologies will drastically change the rate of invention. So, what kind of governance structure should we have? It is being considered providing everyone with a voting chip who has a financial interest in a dough for voting on any resolution that has a fork or requires options.

The independent directors, or directors of this dough, are authorised to ensure that they will mutually agree on the course that needs to be taken via the mechanism of NFTs, allowing them to work on them. As a result, with the emergence of totally Decentralized Autonomous Organizations, governance standards will be migrating digitally in the near future.

Billions of Dollars have been raised through SPAC. SPAC IPOs are based on trust by the investors, believing that the sponsor will create value for the stakeholders. SPAC structures needs sound governance and independence so that value can be created for all the stakeholders.

Bureau Galactik Views