Not on My Nickel: The Aptness of Blank Check Companies for Islamic Finance

Abstract

This work assiduously analyses the aptness of ‘blank check’ companies, also known as special purpose acquisition companies (SPACs), for Islamic finance. By so doing, I divulge that SPAC structure terms, that is, having no substantive assets, operations, or commercial substance underlying the investment stipulate covenants that involve Gharar (ambiguity) to the degree that adulterates blank check IPOs under the ambit of Islamic jurisprudence—vernacularly referred to as Shariah. The inaptness of the basal SPAC covenants and the devoid of Gharar in financial activities under Shariah can cause collusion in the manner in which this niche faith-based financial segment operates. It is, thus, postulated that blank check IPOs are a hard pass under Shariah jurisprudence except if the SPAC structure terms are redux to comply with the rudimentary principles of the Islamic banking business model. Jusque-là, the outlook for a Shariah-compliant SPAC is bleak.