ADX and DED submit region's first SPAC framework proposal

Global Publication November 2021

On November 9, 2021, the Abu Dhabi Securities Exchange (“ADX”) and the Abu Dhabi’s Department of Economic Development (“DED”) submitted to the Securities and Commodities Authority (“SCA”) the region’s first Special Purpose Acquisition Company (“SPAC”) regulatory framework proposal.

A SPAC is a shell company formed to raise capital through an initial public offering (“IPO”), with the goal to acquire or merge with one or more unspecified private operating companies, allowing the target(s) to go public more quickly and cost-efficiently than a traditional IPO.

The ADX and the DED have collaborated with international investment and legal specialists to model the proposed SPAC regulations on recognized industry best practices. The proposed regulations will facilitate the listing of SPACs on the ADX for both UAE and international sponsors solidifying Abu Dhabi’s reputation as the leading regional and global financial centre for international capital.

This initiative comes as part of the DED’s commitment to support the economy of Abu Dhabi by promoting innovation and enhancing the business environment based on robust regulations, and a stable, low tax and fixed exchange rate environment.

The ADX states that following several months of rigorous simulations, operational readiness testing and preparation of educational materials, it is ready to respond to enquiries from sponsors and investors regarding the proposed framework.

The proposed SPAC framework remains subject to formal SCA approval.

In addition to being the region's second largest stock exchange, the ADX is also the liquidity hub for the development of companies in growth sectors such as alternative energy, biotech, pharmatech and AI. The market capitalisation of the ADX recently exceeded USD$408 billion.

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