FRA issues new regulations for SPACs

Egypt’s Financial Regulatory Authority (FRA) has announced new regulations governing the listing and trading of Special Purpose Acquisition Companies (SPACs) on the Egyptian Stock Exchange (EGX). These regulations, outlined in Decree No. 140 and 148 of 2024, aim to enhance the efficiency and competitiveness of the capital market by attracting more local and foreign investments.

Under the new rules, SPACs must have a minimum capital of 10 million Egyptian pounds at the time of establishment. Within three months of listing, these companies are required to increase their capital to 100 million Egyptian pounds through private subscriptions from qualified investors and financial institutions. Additionally, SPACs must apply to list their shares on the stock exchange within one month of obtaining their license.

To ensure transparency and investor confidence, SPACs must provide an information memorandum detailing the founders’ experiences, the investment plan, acquisition methods, investment risks, and redemption controls. The number of shareholders post-subscription must be at least 50, with a minimum of 5 per cent of the shares being freely tradable.

The new regulations also stipulate that SPACs must present the draft acquisition resolution to their extraordinary general assembly within six months of listing and complete the acquisition within two years. Failure to comply with these requirements could result in the cancellation of the company’s license and mandatory liquidation procedures.

These measures reflect the FRA’s commitment to fostering a dynamic and robust non-banking financial sector, thereby contributing to the national economy. By providing clear guidelines and enhancing market accessibility, the FRA aims to create a more attractive investment environment for both local and international investors.

Attribution: FRA