08 Mar 2022


Authored by: Ahmed Hadeed

In Brief:

  1. On 14 January 2022 the SCA published the SPAC regulations.
  2. A SPAC provides a simplified and accelerated route for a company to go public.
  3. Traditional public offering rules do not apply to SPACs.

The special purpose acquisition company was first introduced into the UAE onshore legal framework through the recently promulgated Federal Decree Law 32 of 2021 Concerning Commercial Companies (Companies Law), which came into effect on the 2nd of January 2022.

On 14 January 2022 the UAE Securities and Commodities Authority (SCA) published the SCA Board of Directors' Decision No. (1/TM) of 2022 on the Regulations on Special Purpose Acquisition Companies (SPACs) (SPAC Regulations).

SPACs are generally exempt from the application of the provisions of the Companies Law to the extent provided under the SAPC Regulations.

Special Purpose Acquisition Company

A SPAC, also sometimes called a ‘blank check company’, is a non-operational company specifically incorporated to raise capital for acquiring or merging with another company or companies and to list on a stock exchange.

Such targeted acquisition or merger companies are not identified during the incorporation of the SPAC, thus the IPO investors will have no information at that stage about the company or companies they are ultimately investing in. This is why they are also called ‘blank check companies’.

The SPAC Regulations stipulate that the objects of a SPAC are limited to issuing shares and warrants and finding a target company to acquire or merge with. Such target company can be any commercial enterprise whether based inside or outside the UAE, but cannot be a listed public joint stock company.


The founders have to contribute at least AED 100,000 as initial capital before the public offering and following the completion of the subscription the capital should be at least AED 100 million.

Exemptions from Companies Law

In order to simplify and accelerate the IPO and listing of SPACs, provisions of the Companies Law, in relation to the following subjects, do not apply:

  • public offering;
  • receipt of subscription funds;
  • underwriting;
  • statutory subscription periods;
  • allotment of shares;
  • refunds;
  • capital increase procedures;
  • preemption rights;
  • subscription rules;
  • nominal value of shares;
  • lock-up period;
  • share buyback;
  • strategic investor contribution; and
  • company conversion, merger and acquisition rules.

Offering prospectus

A SPAC’s IPO prospectus shall include the following information:

  • details of shares and warrants;
  • rights attached to each class of shares;
  • investment risks;
  • refund terms;
  • target sectors /  industries;
  • target date for completion of acquisition and extensions;
  • experience/history of founders and managers;
  • managers’ exclusive management powers; and
  • potential conflicts of interest.


The SPAC’s founders and directors sign the public offering application that will be submitted to the SCA and become liable for the validity of the included information.


For the purpose of carrying out the public subscription, a SPAC shall appoint a listing advisor, financial advisor and receiving bank.

At least 3% and up to 20% of the issued shares shall be subscribed to by the founders.

An invitation for public subscription shall be published in two UAE newspapers before the opening of the subscription.

Shares and warrants shall be offered to two categories of investors- professional investors and retail investors.

Shares and warrants shall be fully paid up on subscription.

Subscription shall remain open for at least 5 business days and up to 30 business days.

If the shares and warrants are not fully subscribed during the subscription period, a 10 days’ extension to the subscription period can be granted upon an application to the SCA.

A SPAC shall list on an onshore stock market within 3 business days of the issuance of the SCA registration certificate. 

Allocation and refunds

Allocation shall be made within 5 business days of the close of subscription and in accordance with the allocation policy stated in the prospectus. This policy can simply state that allocation decisions are based on the discretion of the SPAC’s founders.

Refunds shall be made within 5 business days of allocation.

Cancellation of offering

If the shares are not fully subscribed during the subscription period the offering shall be cancelled and the SPAC may not list and shall liquidate.


At least 90% of the subscription proceeds shall be deposited in an escrow account within two business days of receiving the subscription amounts from the investors.

The escrow subscription proceeds can only be used for:

  • funding the acquisition;
  • refunding investors amounts; and
  • paying escrow account fee.

Complementary private offering

Following the listing, a SPAC may, upon the approval of the majority of its investors and the SCA, offer:

  1. shares and warrants through a private subscription process for a price that can be below the price of the shares and warrants offered in the public subscription; and
  1. payable warrants to the founders.

The proceeds of such private offering do not have to be maintained in escrow.

Valuation of targeted entity

Valuation of the targeted entity shall be carried out by an independent valuer approved by the SCA.

The estimated value of the entity company as per the valuation report must be equal to or more than 80% of the available escrow funds.

Completion of acquisition

For the purpose of the acquisition, the SPAC’s managers shall provide detailed information to the SCA and the investors in relation to the targeted entity, including the valuation of the targeted entity and the acquisition price.

Completion of the acquisition requires the approval of the SCA and 75% of the investors.

The shareholders of the targeted entity shall not be subject to the compulsory acquisition provisions as provided under the SCA Acquisition and Merger Regulations.

Extension of acquisition period

The SPAC must complete the targeted acquisition or merger within the period specified in the offering prospectus or within 24 months as of listing, whichever is earlier.

Upon the approval of the majority of the investors and the SCA, the period required to complete the acquisition or merger may be extended up to 36 months from the date of listing.

Return of investments

An investor may request a redemption of their shares in the following situations:

  1. if the general assembly of the SPAC decides to extend the deadline for the completion of the acquisition and the investor did not agree to such resolution; and
  1. if the SPAC completes the acquisition, irrespective of whether the investor voted in favour of the acquisition decision or against it.

Failure of completion of the acquisition

If the SPAC fails to complete the acquisition by the stated deadline, the SPAC’s managers shall:

  • notify the SCA;
  • return the investment amounts to investors on a pro rata basis; and
  • appoint a liquidator to liquidate the SPAC.


The availability of the SPAC as a vehicle, provides opportunities for companies to list on a stock market without incurring substantial expenses. Should you require further information about the opportunities provided by the SPAC regime, please contact Ahmed Hadeed, Partner.


This article, together with any commentary, does not constitute legal advice. It is provided solely for information purposes on a complimentary basis, without consideration of any specific objectives, circumstances or facts. It reflects then current views of the writer which may modify in time and based on differing objectives, circumstances or facts. A writer's view may differ from views of colleagues and/or the firm. You should seek legal advice on each specific matter. Access to this article does not form an attorney-client relationship.