Which of the following is not a characteristic of a spin-off?
A) The parent creates a new legal subsidiary for the business to be spun-off
B) The shares of the new subsidiary are sold to the public
C) The ownership of shares in the new legal subsidiary is the same as the stockholders' proportional ownership of shares in the parent firm
D) The new business once spun-off has its own management and board
E) Spin-offs are generally not taxable to the parent's shareholders if properly structured

Question

Quizplus · Accepted Answer

While all of the other answer choices are characteristics of a spin-off, the shares of the new subsidiary being sold to the public is not necessarily a requirement or characteristic of a spin-off. The shares may be distributed to existing shareholders of the parent company as a dividend in-kind.

Which of the Following Is Not a Characteristic of a Spin-Off