The end result of a spin-off transaction is the creation of a separate, independent, publicly traded company, with SpinCo having its own board of directors, management team, employees and head office. At some point in the transaction, it will be necessary to determine who will form the management of SpinCo (i.e. Chairman, Chief Executive Officer and Chief Financial Officer), which officers and employees will join SpinCo and who will remain with RemainCo. Sometimes it is obvious whether the company being split is a segment or department that has worked largely independently with a clearly identifiable management team, and sometimes it is not so clear whether the company created is closely linked to the entire company. Particular challenges may arise due to the joint functions of the company and regional or international management teams, particularly if the combined organization typically works with government or departmental officials as the “single face” of the organization. BEFORE AND AFTER THE SPIN-OFF: We present the balance sheet of LITTMAN I S.A. before and after the spin-off: SpinCo`s overall board of directors is typically formed after the spin-off, but inherits the governance structure and transaction agreements introduced by ParentCo. Therefore, as a matter of practice, ParentCo should consider holding an informal meeting of SpinCo`s Board of Directors that will be constituted prior to the date of the SpinCo to guide it through these agreements, including the Separation and Distribution Agreement, and to outline the governance structure in order to obtain buy-in from SpinCo`s new Board of Directors. Similar to a traditional IPO, any Form 10 filed confidentially must be filed publicly 15 days prior to its effective date (since a split does not involve a submission-based roadshow, the 15-day requirement refers to the effectiveness of the registration statement instead of a roaming launch). After this 15-day period, effective date may be requested at any time after completion of Form 10 and the disclosure statement (including, with limited exceptions, rotational details such as dates, payout ratios and number of shares).

Efficiency is desirable, but not mandatory, prior to printing the shareholder mailing statement, as no changes should be made after printing begins. Efficiency is required prior to the commencement of the issued negotiation as well as any non-trade roadshow and is also required for the transfer officer to initiate eligibility discussions with DTC. In the event of a division, the shareholders of the parent company are not obliged to sell shares of their parent company in exchange for the shares of the subsidiary. For the division to take place, the recipient company or companies must have the same members or shareholders of the transferred company or have them as partners or shareholders. Did I understand correctly from the above discussion (fob) that if a parent company owns 51% of its subsidiary (before the split), it can only own a maximum of 20% of the derivative separation company? A traditional spin-off transaction is a distribution or dividend under state law, and the dividend declaration must comply with the requirements of the law of the state in which the parent company is organized. For Delaware companies, boards must determine that ParentCo has a sufficient “surplus” (the excess of net worth over capital) to pay the dividend. In the event of a spin-off, the dividend consists of the value of the distributed shares of SpinCo. In this case, the company being divided will assign, without dissolving its legal personality, part of its assets to an already constituted company called LITTMAN II S.A.

(hereinafter referred to as the “beneficiary company”), itself having the same shareholders as LITTMAN I S.A. (hereinafter referred to as the “divided company”). The company being divided is required to notify its intention to be divided to the General Tax Directorate within thirty days prior to the date on which the division is to be completed only if the division concerns assets or property located in the Republic of Panama. For most derivative transactions, SpinCo`s management often waits for SpinCo`s first quarterly results after the transaction closes before issuing an annual guidance. This schedule allows SpinCo`s management to review its forecasting policy and actual guidance with SpinCo`s Board of Directors, which will be replenished upon closing of the transaction.