This article first appeared in The Edge Financial Daily, on March 21, 2016.

KUALA LUMPUR: As it failed to meet its March 9 deadline to acquire its qualifying asset (QA), three years after its listing, CLIQ Energy Bhd remains a shell company with no real business or notable assets. It has no debts too, as special-purpose acquisition companies (SPACs) are not allowed to take on loans.

As such, it is not unreasonable that shareholders expect their money — 90% of the proceeds raised from the SPAC’s initial public offering (IPO), which totalled RM355.72 million as at Feb 12, 2016 — to be returned to them with all haste, as the company liquidates.

According to CLIQ’s financial statements, the lifespan of the trust account is three years from the SPAC’s IPO date. CLIQ was listed on April 10, 2013.

So theoretically, the money should be returned to shareholders by or before April 10. But here is where it gets a little grey: There is no specific guideline in relation to SPACs that expressly states when exactly the money would be returned. There is also no precedence to follow as CLIQ is the first SPAC that is being wound up after failing to acquire its QA.

CLIQ’s own prospectus only stated that the liquidation process should be commenced in 60 days after the expiry of the QA deadline, following which the amount held in the trust account shall be distributed to holders of its shares on a pro rata basis, “as soon as practicable”.

The refund (net of any tax payable and direct expense related to the liquidation distribution), however, is not applicable to shares held by the management team, persons connected to them or the initial investors, except those shares purchased after the IPO.

A minority shareholder is disappointed over CLIQ Energy’s management’s handling of the issue, as it has yet to specify or clarify when the money would be returned.

“The trust account is never part of the company’s equity or assets by legal definition. It is held in trust by the trustee for the beneficiaries of the account, who are the public IPO investors,” the minority shareholder, who wished to remain anonymous, wrote to The Edge Financial Daily.

“Regardless of whether the company is liquidated by then, the trust account matures and must be distributed back to the beneficiaries by the trustees,” he added.

“If the company can immediately serve the required 21 days notice for the extraordinary general meeting to formalise the liquidation, then it can even be earlier by a few days before that,” he added.

He said the trust account is not subject to any claim by the company’s creditors — even if there is any — as it is not part of the company’s assets.

“The only possible claims on the funds are for tax and trustees’ expenses, which any competent trustee can easily compute and set aside the necessary reserves from the distribution. Therefore, the trustee is fully empowered to act independent of the company and the liquidation process to make the distribution anytime after maturity of the trust account,” he added.

Meanwhile, on March 10, CLIQ quashed speculation that it had submitted a fresh appeal to the Securities Commission Malaysia (SC) for more time to complete its QA after its first appeal was rejected. It had proposed to buy a 51% stake in a special-purpose vehicle that would host Phystech Firm LLP’s two onshore Kazakhstan oilfields for US$110 million (RM455 million) last year, but the application for the buy was returned by the SC in January due to incomplete information submission.

“To date, CLIQ expects that there will be no appeal made to the SC ... At present, the company is shortlisting the candidates to be appointed as the liquidator, among others, taking into account costs, timeline and practical approach for distribution and liquidation process,” CLIQ’s filing read.

As to whether the trust account money can be distributed once the liquidation is initiated, financial advisory firm CRS Corporate Services Sdn Bhd director Dawn Chu told The Edge Financial Daily that the appointed liquidator will have to first verify the shareholdings and shareholders’ details in relation to the trust account.

He or she also has to identify all costs and expenses that have been incurred and/or to be incurred, including for the liquidation exercise, as well as the tax payable — which has to be deducted from the payout.

“Lastly, the liquidator has to identify any income earned from permitted investments accruing in the trust account, which shall form part of the liquidation distribution.”

To expedite the refund, an industry observer opined that CLIQ could set aside an estimated sum for the deductions, and return the remainder to shareholders first.

Still, it’s anybody’s guess as to when shareholders will see the money returned. One thing’s for sure though: CLIQ will serve as an important case study as to whether the SC will need to review SPACs’ guidelines, to ensure that this investment platform that it introduced to the local market in 2009 remains viable.

In the interim, Credit Suisse Group AG, interestingly, has re-emerged as a substantial shareholder of CLIQ after the company announced its liquidation.

Credit Suisse first emerged as CLIQ’s substantial shareholder on Oct 9, 2014, with a stakeholding of 5.024%, but quit as substantial shareholder twice in the past two years, before resurfacing with a 5.43% stake on Feb 25. As at March 14, its stake stood at 7.061%.

Shares in CLIQ Energy slipped half a sen last Friday to 69 sen, valuing them at RM435.35 million.