In recent times, there has been an increase in enquiries regarding the reorganization of corporate groups, many of which are driven by the desire to separate businesses and improve efficiency. The spin-off is an optimal legal mechanism to achieve both objectives.
Currently, the legal framework for spin-off is regulated by Royal Decree-Law 5/2023, of 28 June. This regulation on structural modifications of commercial companies devotes Articles 58 to 71 to spin-off, referencing the regulations applicable to mergers.
By conducting a partial spin-off, we can divide and separate different activities of a company (the split-off company), transferring them to another company, either newly created or pre-existing (beneficiary company).
For this operation, it is essential that the segregated assets constitute an independent economic unit. This means a set of assets (including material and human resources) capable of operating autonomously. Therefore, in the legal preparation of the operation, it is essential to detail the assets being transferred to the beneficiary company.
Within the scope of partial spin-offs, it is also possible to segregate shares that the company holds in other entities. These are known as financial spin-offs.
Financial spin-offs are not specifically regulated under the regulation on structural modifications; instead, they are regulated in Law 27/2014, dated December 27, on Corporate Income Tax.
The particularity of financial spin-offs lies in the fact that the segregated assets consist of shares held by the split-off company. It is important to note that, to meet the requirement that the segregated assets form an independent economic unit, the shares subject to the spin-off must represent a majority of the share capital. Therefore, the spin-off of minority shares cannot be undertaken under this operation. Additionally, the split-off company must continue to hold similar equity interests in other entities or possess a line of business activity.
At Martí & Associats, we advise our clients on legal operations of corporate restructuring, guiding them through the process of business reorganization, thereby achieving an optimization of resources and, consequently, greater efficiency within their corporate group.
