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The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders.

When a spin-off occurs, the shareholders of the parent corporation are not required to surrender any of their parent corporation stock in exchange for the subsidiary's stock.

In the event that the distribution of stock to the parent corporation's shareholders amounts to a dividend, the distribution can be taxed pursuant to provisions of Income Tax statutes.

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INTERIOR design firm Dapa started off with humble beginnings but has grown over the past five and half years to employ 24 staff and launch two off-shoot businesses.
On the right extremity is another small off-shoot of the cottage-cluster - Westbury Terrace.
Athole McKillop, director of Land Factor North-East, said: "It's great news for rural communities that something which is found naturally plentiful in the countryside is set to cause a boom regionwide, help reduce carbon emissions and could lead to future jobs from new businesses and off-shoots.