Saudi Arabia's Capital Market Authority (CMA) has opened a public consultation on a draft regulatory framework to introduce special purpose acquisition companies (SPACs) as a new investment product on Nomu Parallel Market. The proposal would set rules for registering and offering SPAC shares, ongoing obligations, and the conditions for completing an acquisition or merger with a target company, with the stated aim of increasing listings and liquidity and giving qualified Parallel Market investors access to previously hard-to-reach unlisted companies. Under the draft, a SPAC would need to be established as a joint stock company with redeemable shares, and have post-offer capital of at least SAR 100 million. A CMA-licensed capital market institution would act as sponsor, with defined obligations and restrictions on share disposals, and sponsor ownership required to remain between 5% and 20% of the SPAC’s capital. At least 90% of capital raised would be placed in a dedicated escrow account at a local bank, usable only in specified cases including completion of the acquisition or merger. Shareholders would have redemption rights in defined circumstances, including when a shareholder votes against the proposed transaction. Deal conditions include prohibiting the sponsor and any fund managed by the sponsor from holding any shares or interests in the target, requiring the target’s value to be at least 80% of escrowed funds, and requiring SPAC shareholders to hold at least 30% of the target’s shares upon completion. The acquisition or merger would need to be completed within 24 months of the SPAC’s listing on the Parallel Market, with a possible extension of up to 12 months subject to extraordinary general assembly approval where the sponsor and its affiliates cannot vote and the CMA must be notified. The consultation runs for 30 calendar days and closes on 8 May 2025, after which feedback will be considered in finalising the proposed amendments.

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