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A spin-off creates a new independent company by:
ASelling a division to a third party for cash
BListing the parent's equity in an overseas exchange (within the standard regulatory framework)
CMerging two subsidiaries within the parent group
DDistributing shares of a subsidiary to existing parent shareholders pro-rata
Answer & Solution
Correct answer: D. Distributing shares of a subsidiary to existing parent shareholders pro-rata
1. Identify what the question asks: this concept maps to spinoff (§7.2.2).
2. Apply the framework or formula relevant to the topic.
3. Eliminate distractors and arrive at the correct option (D).
_Source: ICAI BoS CA Final Paper 2, Ch 14 "Mergers Acquisitions and Corporate Restructuring"_
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