الهيئة العامة للرقابة المالية

• The development introduced more flexible and simplified rules for SPACs
• SPACs can now buy companies through mergers, in addition to swapping shares or using cash. This gives them more options and helps them reach their goals.
• SPAC shares issued in a capital increase may trade at the subscription price (representing fair value) after the acquisition and publication of a disclosure report
• Post-acquisition public trading of SPAC shares requires meeting shareholder count and free float thresholds, documented by prospectus or trading report
• To trade publicly post-acquisition, companies must publish 6-month financial statements showing 5% net profit and shareholders’ equity at least equal to paid-up capital (replacing the previous two-year annual requirement).
• Share retention for SPAC founders, board members, and acquired company insiders subscribing to capital increases is now 51%, reduced from 100%.
• SME main shareholders are exempt from the third-year stable ownership requirement when transferring shares to the main market, encouraging capital increases and market transition

In furtherance of its strategic objectives to promote market stability, ensure transaction integrity and safeguard investor rights, FRA has issued Decree No. 46 of 2025 to amend Board of Directors Decree No. 11 of 2014 regarding listing and delisting rules, thereby seeking to attract growth-oriented enterprises and bolster the contribution of the non-bank financial sector to the national economy.

FRA has introduced flexible provisions and simplified regulations governing Special Purpose Acquisition Companies (SPACs). These measures are designed to enhance the business environment and facilitate ease of access, efficiency and transparency upon providing non-bank financial services.

To enhance acquisition strategies, Special Purpose Acquisition Companies (SPACs) are now permitted to utilize mergers in addition to share swaps and credit balance acquisitions. This diversification of acquisition mechanisms aims to facilitate the achievement of SPACs’ investment objectives.  This information, along with other key details, is disclosed in the information memorandum submitted with the listing application. The memorandum includes general information about the company, the experience of its founders and board of directors, the target sectors and investment controls, the investment plan for acquiring target companies, investment risks, redemption controls, and framework for managing the company’s capital (including funds from subscription), related parties and means of avoiding conflicts of interest.

Per Article 138 of the Executive Regulations of Law no.159 of 1981, SPAC shares issued in a capital increase may trade at the subscription price (fair value, determined by an independent advisor) after the acquisition and disclosure report, replacing nominal value trading.

According to the decree, public trading of SPAC shares post-acquisition is conditional upon compliance with minimum shareholder count and free float share percentage requirements (demonstrated by prospectus or trading disclosure report). Direct trading is allowed.

As a condition precedent to public trading post-acquisition, SPACs are required to publish reviewed interim (6-month) financial statements, prepared in accordance with Egyptian accounting standards and accompanied by a comprehensive review report from a registered auditor. These statements must demonstrate a net profit of at least 5% and shareholders’ equity no less than paid-up capital, instead of the prior two-year audited annual requirement.

This came to simplify the requirements for trading the shares of SPACs to the public instead of restricting trading to qualified investors after acquisitions and allowing the company to achieve the minimum requirement for the number of shareholders and the percentage of free float shares through the publication of a prospectus or information memorandum if the company will meet those conditions through the offering, with the possibility of trading those shares to the public also through direct trading by publishing a disclosure report for trading purposes if it has achieved the minimum number of shareholders and the percentage of free float shares.

The timeframe for public trading of SPAC shares has been amended to permit trading following the publication of compliant financial statements for a period of no less than six months post-acquisition, instead of the previous requirement of two years of audited annual financial statements. This amendment facilitates market entry and price determination based on supply and demand dynamics.

Furthermore, this amendment, in conjunction with the aforementioned relaxation of the 51% share retention requirement for insiders, permits other subscribers to freely dispose of their shares acquired in the capital increase, thereby affording an exit strategy for shareholders of acquired companies and promoting greater receptivity to acquisition transactions pursued by SPACs.

The decree provides an advantage to SME founders and principal shareholders (or their successors) with respect to stable ownership requirements. Exemption from the three-year holding period is granted contingent upon the transfer of company shares to the main market, thereby incentivizing prompt transition from the SME market.