Financings in connection with Listings and how these may be applied in the UAE

Listings are increasingly accompanied by bespoke financing arrangements put in place ahead of, or alongside, the offering to bridge funding needs, manage valuation uncertainty, or provide structured access to equity markets. One structure frequently encountered in this context is the Share Subscription Facility Agreement (“SSFA”) – and the UAE nexus questions it raises deserve a closer look.

Share Subscription Facility Agreements

A Share Subscription Facility Agreement is a capital markets–driven structure typically used at or following listing, pursuant to which an investor commits to subscribe for listed shares over time, at the election of the issuer and subject to detailed conditions.

Based on prevailing market structures, SSFAs typically feature:

• Commitment period: the issuer may issue subscription notices requiring the investor to subscribe for shares.
• Market-linked pricing: often set at a discount to prevailing market price or VWAP over a defined pricing period.
• Staggered drawdowns: capital is raised progressively rather than through a single equity issuance.
• Share lending mechanics: existing shareholders lend listed shares to the investor upfront; newly issued shares are later delivered to replace them back to the original shareholders.
• Extensive conditions precedent: continued listing, minimum liquidity thresholds, ownership caps, regulatory compliance, and absence of market disruption events.
• Embedded fee economics: commitment or arrangement fees payable in cash or listed shares, sometimes backed by escrow or top-up mechanisms.

Although not an underwriting arrangement, an SSFA often performs a quasi-underwriting or liquidity support function in practice.

UAE law considerations

From a UAE contractual law perspective, the starting point is that a Share Subscription Facility Agreement is not recognised as a named instrument under UAE law. This does not, in itself, prevent their use. UAE law generally permits parties to agree contractual arrangements creating future or conditional obligations.

When analysing these structures from a UAE law perspective, careful consideration should be given to the existence and nature of any UAE nexus, including whether the issuer is incorporated in the UAE, whether the contemplated listing is to take place in the UAE, whether the investors or financiers are located in the UAE, and whether the Share Subscription Facility Agreement is governed by UAE law. Where the issuer is a UAE entity, particular attention must be paid to corporate law requirements, including the need to obtain requisite shareholder approvals, the application of pre-emption rights, compliance with authorised share capital and future equity increase procedures, and the practical enforceability of the instruments under UAE law.

Together, these UAE nexus and corporate law considerations mean that SSFA structures cannot simply be transplanted into a UAE context without careful review. Please get in touch with us if you would like to discuss how these issues may apply to your transaction.