ADVOKS GLOBAL · KENYA
The Capital Markets (Public Offers, Listings and Disclosures) Regulations, 2023
41. Special purpose acquisition company initial public offering proceeds and escrow requirements
Edition: 2023-12-15 · In force
41. Special purpose acquisition company initial public offering proceeds and escrow requirements
(1)The issuer shall, immediately upon listing on the securities exchange, place at least ninety per cent of the gross funds raised from the initial public offer in an escrow account opened with and operated by an independent escrow agent and which is part of a financial institution licensed and approved by the Central Bank.(2)The amount placed in the escrow account under subregulation (1) shall not be drawn down except for the purpose of the business combination, or liquidation of the issuer, or such other circumstances as specified in these Regulations.(3)The escrow agent appointed under subregulation (1) shall be independent of the founding shareholders, management team, and associates of the founding shareholders and management team.(4)The issuer shall secure and maintain the escrow arrangement at all times over the funds in the escrow account until the termination of the escrow account in accordance with subregulation (6).(5)The issuer shall hold its assets in permitted investments until completion of a business combination that meets the Authority’s requirements.(6)The escrow agreement governing the escrowed funds shall provide for—(a)the termination of the escrow account and release of the escrowed funds on a pro rata basis to shareholders who exercise their redemption rights and the remaining escrowed funds to the issuer, if the issuer completes a business combination within the permitted time frame; and(b)the termination of the escrow account and distribution of the escrowed funds to shareholders (other than the founding shareholders, management team, and associates of shareholders and management team in respect of all equity securities owned or acquired by them prior to or pursuant to the initial public offering).(7)The special purpose acquisition company initial public offering proceeds that are not placed in the escrow account, and any interest or other income earned on the escrowed funds from permitted investments, may be applied—(a)as payment for administrative expenses incurred by the issuer in connection with the initial public offer;(b)for general working capital expenses; and(c)for the purpose of identifying and completing a business combination.(8)The issuer shall be required to account to the issuer’s shareholders and Authority on the use of the special purpose acquisition company initial public offering proceeds upon the completion of the business combination.