Spin-Offs
In a "spin-off," a parent company distributes shares of a subsidiary to the parent company's shareholders so that the subsidiary becomes a separate, independent company. The shares are usually distributed on a pro rata basis. State law and the rules of the stock exchanges determine whether a company must seek shareholder approval for a spin-off.
Concept at a glance
Definition and explanation
In a "spin-off," a parent company distributes shares of a subsidiary to the parent company's shareholders so that the subsidiary becomes a separate, independent company. The shares are usually distributed on a pro rata basis. State law and the rules of the stock exchanges determine whether a company must seek shareholder approval for a spin-off. [1]
The spin-off company does not have to register the shares of the spin-off under the Securities Act of 1933 if it meets certain conditions. One of the conditions requires the parent company to provide adequate information about the spin-off to its shareholders and the trading markets. [1]
When registration is required, however, the spin-off company must file a registration statement with the SEC. In these situations, the SEC's Division of Corporation Finance may examine the registration statement to determine whether it complies with our disclosure requirements. Please note, however, the SEC does not evaluate the merits of the spin-off, nor does the SEC determine if the securities offered are "good" investments. You can find a company's registration statement on the SEC's EDGAR database . [1]
For more information about spin-offs, please read the SEC's Division of Corporation Finance staff legal bulletin . [1]
Source-supported connections
Frequently asked questions
What does Spin-Offs mean in the cited reference?
In a "spin-off," a parent company distributes shares of a subsidiary to the parent company's shareholders so that the subsidiary becomes a separate, independent company. The shares are usually distributed on a pro rata basis. State law and the rules of the stock exchanges determine whether a company must seek shareholder approval for a spin-off. [1]
Spin-Offs connection map
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Sources and review dates
Reviewed 23 October 2026. Historical dates and award-time affiliations retain their original context. A review date is not an event date. Background sources are identified separately from official records.