Parent Corporation Board Resolutions for Approval of Spin-Off

Summary

These are template resolutions for the board of directors of a parent company approving a spin-off of its subsidiary, including the transfer of assets and liabilities between the parent and the subsidiary, the declaration of the spin-off dividend, and the transactions contemplated by post-closing inter-company arrangements. This template includes practical guidance, drafting notes, and optional clauses. Board approval should be obtained in accordance with the parent's organizational documents and applicable law. See Board and Shareholder Approvals in Divestiture Transactions. Note that the subsidiary's board will also need to pass resolutions approving the transactions necessary for the subsidiary to execute the spin-off. For additional information and related content, template resolutions for a subsidiary's board are available in the Subsidiary Corporation Board Resolutions for Approval of Spin-Off. Since every spin-off transaction is unique, these resolutions may need to be tailored for a particular transaction, especially with respect to any ancillary agreements or equity grants that require approval of the parent board. For example, if the spin-off is combined with another transaction (e.g., a business combination) or involves the entry into other third-party arrangements (such as new credit and financing agreements), the parent's board (and, if required by applicable law, parent's stockholders) should specifically approve such transactions and agreements in these resolutions. Similarly, a newly spun-off company may be susceptible to the threat of a hostile takeover because it is no longer part of the parent company, and accordingly, a parent's board may want to approve the adoption of anti-takeover defenses (e.g., a staggered board), in its resolutions. For related content on takeover defenses, see Hostile Takeover Defense Strategies. For a broad collection of content related to divestiture transactions, see Divestitures of Divisions and Subsidiaries Resource Kit. These template resolutions assume that (i) subsidiary already exists as a separate business entity, (ii) no parent stockholder approval will be required to execute the spin-off or related transactions, and (iii) 100% of the subsidiary's stock will be distributed in the spin-off.