22 Nov 2021

The FRA (Financial Regulatory Authority) has issued the rules and regulations that will govern the activities of SPACs (Special Purpose Acquisition Company). The rules were crafted in line with the best practices followed in major international markets. SPACs are established with the purpose of acquiring other companies, especially emerging companies that would have difficulty listing on the stock market. It is expected that one of the most attractive sectors for these kinds of companies will be fintech and IT.

Some of the rules are that the SPAC’s capital can be no less that EGP10mn, and that it must commit to increasing its capital through a public or private offering within 1 month of its official registration. Also, individuals must own at least 50% of the company, institutions must own at least 25%, and the founders or sponsors must own at least 5%. The founders or sponsors must also contribute at least EGP10mn at the time the company is established.

The SPAC must make its acquisition within 2 years, either through acquiring 100% of the company or a controlling stake or at least an absolute majority. The value of the acquired company must represent at least 80% of the funds that the SPAC raised in its capital increase offering, as well as any additional financing or purchase of shareholders’ shares.

(Source: Business Today Egypt (English), Egypt Today (English), Daily News Egypt (English), FRA (1) (2), al-Maal, Amwal al-Ghad, al-Ahram, al-Youm al-Saabe, al-Shurouk, al-Sharq Business, al-Arabiya)