The Capital Market Authority (CMA) has approved a regulatory framework governing the offering of Special Purpose Acquisition Companies (SPACs) on the Parallel Market (Nomu), following amendments to key market regulations. The changes will take effect upon publication.
The amendments cover the Implementing Regulation of the Companies Law for listed joint stock companies, the Rules on the Offer of Securities and Continuing Obligations, and the Glossary of Defined Terms used in CMA regulations.
The new framework is aimed at diversifying investment products, encouraging private sector listings, and supporting financing needs. It is also expected to increase offerings and liquidity in Nomu while enabling investors to access non-listed companies that were previously difficult to invest in directly.
Under the framework, SPACs must be established by a sponsor and their shares may be redeemable at the option of shareholders. Investors are granted the right to redeem shares for cash from an escrow account proportional to their holdings in specific cases, including when a SPAC completes a transaction with a target company and a shareholder votes against the deal.
The regulations stipulate that post-offering capital must not fall below $26.66 million (SAR100 million), reinforcing market efficiency and attractiveness.
The framework also sets conditions for acquisition or merger transactions between SPACs and target companies to strengthen governance and protect investor rights. These include a ban on sponsors, or funds managed by them, holding direct or indirect stakes in the target company. Additionally, the target company’s value must account for at least 80 percent of the funds held in escrow, and SPAC shareholders must retain no less than 30 percent ownership in the target company following the transaction.
SPACs are required to complete acquisitions within 24 months of listing on Nomu. A one-time extension of up to 12 months may be granted with approval from the Extraordinary General Assembly. Sponsors and their affiliates are not allowed to vote on extension decisions, and the CMA must be notified of any such approvals.
