FRA updates SPAC registration rules to attract growth-oriented businesses
Updated 2/18/2025 2:17:00 AM
Arab Finance: The Financial Regulatory Authority (FRA) has introduced new rules for registering special purpose acquisition companies (SPACs) to attract businesses seeking growth, as per a statement.
The changes include more flexible provisions and simplified regulations for SPACs, diversifying acquisition mechanisms by adding the option of merging into a SPAC, alongside share swaps and credit balance acquisitions.
The new rules allow the trading of shares subscribed to a SPAC’s capital increase at a fair value instead of the nominal value, provided a disclosure report is published after the acquisition.
Additionally, SPAC shares can be publicly traded post-acquisition as long as shareholder numbers and free-float percentage requirements are met through a prospectus or a disclosure report.
SPACs must now publish financial statements for the six months after an acquisition, showing a net profit of at least 5% and shareholders' equity not below paid-up capital, instead of the previous requirement of annual statements for two years.
The FRA also reduced the mandatory shareholding retention requirement from 100% to 51% for SPAC founders, board members, and managers of acquired companies if they subscribe to the capital increase.
Furthermore, key shareholders in small and medium-sized enterprises (SMEs) are exempt from maintaining stable ownership for a third year if they transfer their shares to the main market, encouraging capital growth and market expansion.
The decision aligns with the FRA’s strategy to enhance market stability, transaction security, and investor protection.
It also supports the development of non-banking financial markets by improving accessibility, efficiency, and transparency.
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