In the context of finance and economics, contraction can refer to various scenarios including the distribution of assets and economic downturns. It is important to distinguish these different contexts to understand the implications fully.
A divisive reorganization involves the transfer of all or part of a division, subsidiary, or corporate segment in a tax-free manner. It includes three main types: split-up, split-off, and spin-off.
A split-up is a form of reorganization by which a corporation divides into two or more smaller corporations. The stock of the new corporations is distributed tax-free to the shareholders of the original corporation, who surrender their stock in the old corporation.
