FRA listing rules for SPACs: The Financial Regulatory Authority (FRA) has updated its rules governing the listing and delisting of special purpose acquisition companies (SPACs) on the Egyptian bourse, according to an FRA statement.

The listing: SPACs must apply to list on the EGX within one month of obtaining their license from the FRA, or it will be considered invalid. They need a minimum issued and paid-up capital of EGP 10 mn which must be increased to EGP 100 mn within three months of listing on the EGX.

The rest of the nitty-gritty:

  • SPACs have two years from their listing date to complete an acquisition, which can be a full buyout, a controlling stake, or an absolute majority in the target company's capital or voting rights.
  • The acquisition target must be presented to shareholders within six months of listing, with objecting shareholders given a 30-day exit window.
  • Founders must retain 100% of their shares until profitability conditions are met and two fiscal years have passed since listing.
  • SPACs need at least 50 shareholders post-subscription, with a minimum free float of 5%.

No SPAC? If the SPAC fails to close an acquisition within the two-year window, it will either reduce its capital by the value of shares listed or re-offer the same shares to qualified investors.

Egypt’s first SPAC could be months away: Investors have expressed interest in setting up SPACs and are currently in discussions with the FRA, Al Borsa reports, citing unnamed government officials. The sources said that we can expect the first SPAC to make its debut in September.

REMEMBER- SPACs are fairly new to the Egyptian market. The FRA greenlit a proposal to allow the establishment of blank-check firms back in 2021. Under the proposal SPACs were subject to the same regulations as venture capital firms under the Capital Markets Act, with listing and delisting rules still to be decided by the FRA.

What’s a SPAC again? A special purpose acquisition company is a type of shell company used by investors to acquire firms. SPACs raise money from the public in an IPO and then use the proceeds to merge with or acquire an appropriate company. Check out our explainer for more on how SPACs work.

CRACKING DOWN ON INSIDER TRADING-

FRA cracks down on insider trading: The FRA also issued new rules to limit insider trading that prohibit company insiders — including board members, executives, and major shareholders owning 20% or more of a company’s capital — from trading during the five working days before and one day after the disclosure of any significant information.

Listed companies must now establish clear internal procedures to define blackout periods and notify insiders of these periods through secure, documented means such as verified emails. Companies are also required to inform the EGX of their compliance procedures and provide copies of insider notifications.

Investors get a layer of protection: The FRA is also mandating that all listed companies join the Investor Protection Fund, which aims to cover financial losses due to non-commercial risks for its members.

What’s next? Companies have a three-month grace period to comply with both the new insider trading regulations and fund membership requirements.

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