The Abu Dhabi Securities Exchange (ADX) has welcomed the Securities and Commodities Authority (SCA)’s approval of the region’s first Special Purpose Acquisition Company (SPAC) regulatory framework, paving the way for the listing of the first SPAC on the ADX this year.

The first of its kind in the GCC, the SPAC regulatory framework was developed by ADX and Abu Dhabi’s Department of Economic Development (DED), in conjunction with the SCA and legal and investment specialists. Benchmarked and assessed against best-in-class US and international SPAC regulations, the robust framework will provide international investors with access to unique growth opportunities.

The regulation also makes provisions for sponsors outside of the UAE, giving them the ability to apply for approval to list their SPACs on the ADX.

Created with attractive incentives and an innovative share structure, the UAE SPAC regulations provide sponsors with a seamless and efficient process to take companies public. Sponsors will be required to raise a minimum of AED100 million ($27.2 million) in the Initial Public Offering (IPO) and units sold will comprise warrants that give investors and sponsors the right to convert them into shares. To protect investors, once the IPO is complete a SPAC must ensure that 90% of proceeds are placed in a non-interest-bearing account.

Mohamed Ali Al Shorafa Al Hammadi, Chairman of Abu Dhabi Department of Economic Development, commented: “The introduction of a regulatory framework to support SPAC IPOs is testament to Abu Dhabi’s commitment to being at the forefront of innovation. Abu Dhabi’s strong regulations, coupled with its tax-free status, stable business environment and a strong pipeline of fast-growing regional companies, have created attractive opportunities for SPAC sponsors looking to take companies public.

“By enhancing the dynamism of our capital markets and continuing to connect issuers with investors, we are contributing to the growth and diversification of Abu Dhabi’s economy. A robust financial services sector will serve to attract a wider range of professionals to live, work and invest in the Emirate.”

Hisham Khalid Tawfiq Abdulkhaliq Malak, Chairman of the Abu Dhabi Securities Exchange, added: "We are excited to be creating a regional hub for SPACs on ADX. SPACs provide investors seeking to diversify their portfolios with growth opportunities that are protected by some of the world’s strongest regulations.

“We are committed to rolling out the SPAC framework in a timely manner and preparing the exchange to be operationally ready to support sponsors with listings, marketing, and communication advice. The introduction of SPAC regulations complements our efforts to execute our ‘ADX One’ strategy by bringing the most sought out products and services to investors, including Covered Short Selling, Securities Lending and Borrowing, market making and Exchange Traded Funds. We will continue to encourage the listing pipeline on the exchange as we introduce more innovative investment tools.” – 

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