(Reuters) – U.S. blank-check companies and their acquisition targets will take on more legal liability for disclosures about projected earnings and other material information under new rules adopted by the U.S Securities and Exchange Commission on Wednesday.

The changes target deals involving “special-purpose acquisition companies” (SPACs), shell companies that raise funds through a listing with the intention of acquiring a private company and taking it public. Critics say the vehicles allow targets to sidestep the stiffer regulatory scrutiny of a traditional initial public offering (IPO), putting investors at risk.

A divided five-member Commission voted 3-2 to adopt the proposal, with Republican members saying it was likely to inhibit the use of a potentially valuable investing tool.

The SEC began scrutinizing SPACs after a gold rush of such deals in 2020 and 2021 sparked worries that target company financial projections were frequently wildly optimistic or misleading. It first proposed the rule in March 2022.

Gary Gensler, chairman of the U.S. Securities and Exchange Commission, said at the start of Wednesday’s meeting that the rules aimed to bring SPACs more closely in line with IPO rules.

“Whether you are doing a traditional IPO or a SPAC target IPO, SPAC investors are no less deserving of our time-tested investor protections,” he said.

The rule would strip SPACs of some liability safe harbors for forward-looking statements. It would also in some cases require that target companies register with the SEC and therefore also take responsibility for investor disclosures about the deal, SEC officials said in advance of the vote.

It would also require that companies provide stricter disclosures about compensation for SPAC sponsors, conflicts of interest and the potential for the dilution of share value.

The new regulations will take effect 125 days after they are published in the federal register. SPACs already listed are subject to the prior regulations if they conclude the acquisition in that 125 day transition period.

The rules come as investors have cooled on SPAC deals.

As a of last year, SPAC IPO value had fallen 98% to just $4 billion from a peak in 2021 while the performance of SPAC-launched stocks has tumbled more than 90%, according to figures from SPAC Research and the financial data firm Solactive.

SEC officials said that in light of public comments they had received on the proposal they had made changes to the final rules. The agency scrapped a requirement that would have automatically deemed some SPAC IPO participants to be underwriters in the subsequent acquisition.

Instead, the agency will issue guidance on rules to explain that some participants may qualify as underwriters with legal responsibilities for investor disclosures made as part of the de-SPAC deal.