
FRA Approves Egypt’s First SPAC and Establishes New Regulatory Framework
On September 25, 2024, the Egyptian Financial Regulatory Authority (FRA) marked a milestone by approving the country’s first Special Purpose Acquisition Company (SPAC) under Decree No. 2323/2024. This move comes on the heels of FRA’s Decrees No. 140 and No. 148, introduced in July 2024 to define the requirements and regulatory framework for SPACs in Egypt.
What is a SPAC?
A Special Purpose Acquisition Company, or SPAC—often referred to as a “blank check company”—is a corporation established solely to raise funds through an initial public offering (IPO). Its aim is to acquire or merge with a target business within a specific time frame, a process known as a De-SPAC Transaction. Until it identifies a target, the SPAC operates as a shell company with no active business or assets other than the funds raised from its IPO.
From a legal standpoint, SPACs in Egypt are structured and licensed by the FRA as Venture Capital Companies. They are limited to a single purpose: acquiring businesses across various economic sectors, financed by underwriting capital increases through private subscriptions.
SPACs made their initial appearance in Egypt in 2021, when the FRA issued Decree No. 171/2021, which identified them as a novel financing vehicle for emerging sectors like technology and digital innovation. For many target companies, SPACs serve as an efficient alternative to the traditional IPO, allowing for quicker access to public markets. The goal of FRA’s SPAC initiative is to enhance investment opportunities in high-growth industries.
Licensing and Incorporation of SPACs under Egyptian Law
According to Egyptian regulations, a SPAC is classified as a Venture Capital Company and must comply with Capital Market Law No. 95/1992 and its Executive Regulations. FRA requirements specify that SPACs must be licensed and listed in the FRA’s official register. They are restricted to two corporate forms: Joint Stock Companies or Partnerships Limited by Shares.
Additionally, FRA Decree No. 177/2024 outlines the preliminary approval requirements and license conditions for non-banking financial institutions, including SPACs, along with timelines for initiating and finalizing their operations.
The SPAC Lifecycle in Egypt
- Formation and Capital Raising: Once formed and licensed, a SPAC raises capital through private subscription.
- Target Search and Approval: The SPAC identifies a target company, subject to a shareholder vote. If shareholders approve, the merger or acquisition (De-SPAC) proceeds.
- Exit Option for Shareholders: Shareholders who oppose the acquisition may exit within 30 days and recoup their initial investment.
- Time Limits: If no acquisition is identified or completed within two years, the SPAC’s shares are delisted, its license is revoked, and the entity is liquidated.
Key FRA Regulations for SPACs
- Decree No. 140/2024:
- Defines SPACs under Egyptian law and mandates listing on the Egyptian Exchange (EGX) within one month of receiving a license.
- Ties SPAC licensing to listing status, mandating revocation of the license if the SPAC is delisted.
- Decree No. 148/2024:
- Updates listing and delisting rules for SPACs on EGX, effective July 24, 2024.
SPAC Timeline Overview
- Listing Request: Submit to EGX within 1 month of obtaining the license.
- Untradable Shares: Temporary listed shares are untradable for 3 months post-listing.
- Capital Increase: Raise capital to 100 million EGP within 3 months of listing.
- Nullification of Temporary Listing: If conditions are unmet within 3 months of listing, the temporary listing becomes null.
- Acquisition Decision: Extraordinary shareholders meeting must decide within 6 months of listing.
- Shareholder Quitting Period: Objecting shareholders have 30 days post-vote to exit.
- Acquisition Completion: Finalize acquisition within 2 years of listing.
- Compulsory Delisting: Company must purchase freely tradable shares or ensure their purchase by others within 3 months of receiving a delisting notification.
- Grace Period for Compliance: Companies have 3 months from the decree’s effective date to align with Fund Membership requirements and Insider Dealings.

Requirements for SPAC Listings on EGX
To list temporarily on EGX, SPACs must meet these conditions:
- Minimum Capital Requirements: SPACs must have an initial paid-up capital of at least EGP 10 million, increasing to EGP 100 million within three months.
- Qualified Investor Restrictions: Private subscriptions are limited to qualified investors, as defined by the FRA. Investors must be notified that their shares cannot trade above nominal value until either the acquisition disclosure report or the first 12-month financial statement is published.
- Shareholder and Shareholding Structure: The SPAC must have at least 50 shareholders after the subscription, with free float shares comprising a minimum of 5% of total shares.
- Bank Deposits for Acquisitions: IPO proceeds must be held in an Egyptian bank for acquisition purposes.
- Nullification of Temporary Listing: If the above conditions are unmet within three months, the temporary listing is nullified (subject to an FRA extension).
- Acquisition Decision Deadline: An extraordinary shareholders meeting must approve an acquisition within six months of listing. Shareholders who dissent may exit within 30 days of the vote.
- Two-Year Acquisition Limit: Acquisitions must be completed within two years of listing, either by merger or acquisition, following Companies Law No. 159/1981 for mergers.
The founders of the SPAC must retain 100% of their shares until (1) ratified financial statements meet profitability criteria, (2) two years have passed, and (3) two fiscal years’ accounts have been published.
Conditions for SPAC Delisting
SPAC shares may be delisted if:
- No Acquisition Decision: The extraordinary shareholders meeting does not approve an acquisition within six months (unless extended by the FRA).
- Acquisition Not Executed: The acquisition is not completed within two years of listing.
SPACs: A New Path for Investors
Egypt’s SPAC framework offers an innovative, regulated vehicle for investing in emerging sectors with high-growth potential. For companies, SPACs provide an alternative, streamlined path to public listing that mitigates the lengthy, complex IPO process. For investors, SPACs create access to promising industries led by seasoned management teams, while the FRA’s robust regulatory oversight seeks to enhance transparency and reduce investment risks.