The Capital Market Authority (CMA) called upon relevant and interested persons participating in the capital market to share their feedback on the introduction of a new investment product in the Parallel Market, represented by the offering of Special Purpose Acquisition Companies (SPACs), which is expected to positively impact liquidity levels by increasing the number of listings. The consultation period will last for 30 calendar days, ending on 10/11/1446H, corresponding to 08/05/2025.

The proposed draft aims to encourage private sector companies to list on the Parallel Market through SPACs, which contributes to meeting the financing needs of the economy and supports the growth and depth of the capital market by introducing a diversified range of investment products.

The offering of SPACs requires the presence of a sponsor from capital market institutions licensed by CMA to manage investments and operate funds. The proposed regulatory framework defines the role and obligations of the sponsor in the SPACs, including restrictions on disposing of its shares during specified periods. The sponsor's ownership must not fall below 5% of the SPAC's capital at any time and must not exceed 20% of its capital.

The draft proposed by CMA will enable qualified investors in the Parallel Market to invest in unlisted companies that were previously difficult to access directly. It will also allow shareholders to request the redemption of their redeemable shares in exchange for a cash amount from the escrow account, proportional to their ownership in the company established for the purpose of acquisition or merger. This applies in specific cases outlined in the proposed regulatory framework, including, for example, the completion of the acquisition or merger transaction with the target company and the shareholder voting against the transaction.

If the draft is approved, SPACs will be offered on the Parallel Market and subsequently listed on Nomu – Parallel Market – in accordance with the Rules on the Offer of Securities and Continuing Obligations, similar to other listed companies in the capital market. At least 90% of the SPAC's capital following the offering must be deposited into a dedicated escrow account held with a local bank. These funds may not be accessed except in specific cases outlined in the proposed regulatory framework, including, for example, the completion of an acquisition or merger transaction with the target company.

One of the key elements proposed in the draft is the regulation of the terms and requirements for registering and offering shares of SPACs on the Parallel Market, along with the ongoing obligations applicable to such companies. These include adopting the structure of a joint stock company, ensuring that the offered shares are redeemable at the discretion of shareholders, and requiring that the capital of the SPACs is not less than one hundred million Saudi riyals after the offering, in order to support liquidity in the Parallel Market.

The proposed draft also includes regulating the terms and requirements for completing an acquisition or merger transaction between the SPACs and the target company, in a manner that ensures enhanced protection of shareholders' rights. Among these conditions is that neither the sponsor nor any investment fund managed by the sponsor may hold—directly or indirectly—any shares or interests in the target company. Additionally, the value of the target company must represent at least 80% of the funds deposited in the escrow account, and the shareholders of the SPACs must hold no less than 30% of the shares in the target company upon completion of the transaction.

The proposed draft, if approved, requires the SPACs to complete the acquisition or merger transaction with the target company within a period not exceeding 24 months from the date of its listing on the Parallel Market. This period may be extended for an additional 12 months at most, provided that approval is obtained from the extraordinary general assembly. The sponsor and its affiliates, if any, must not participate in the voting on the resolution issued by the extraordinary general assembly, and the Capital Market Authority must be notified accordingly.

The CMA emphasized that the comments of relevant and interested persons shall be taken into full consideration for the purpose of approving the final Proposed Amendments, which in turn shall contribute to the aim of enhancing and developing the regulatory environment. Opinions and comments can be received through any of the following:

·The Unified Electronic Platform for Consulting the Public and Government Entities (Public Consultation Platform), affiliated with the National Competitiveness Canter through the following link: (istitlaa.ncc.gov.sa ).

·The prescribed form through the following email: (Laws.Regulations@cma.org.sa).

The Draft can be viewed via the following link:

The Draft Regulatory Framework to Allow Offering Special Purpose Acquisition Companies (SPACs) on the Parallel Market ​

 Prescribed form for providing comments​