A split-off occurs when the parent corporation distributes the stock of a subsidiary to stockholders who do not surrender any of their stock in the parent for stock in the subsidiary.

Question

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In a split-off, shareholders must surrender shares of the parent company in exchange for shares of the subsidiary, unlike in a spin-off where shareholders receive shares of the subsidiary without surrendering any parent company shares.

A Split-Off Occurs When the Parent Corporation Distributes the Stock