A spin-off is a form of demerger. It is when a company splits up and one or more parts of it are either sold or operate as newly incorporated companies.
How will shareholders be affected?
If you own shares in a company subject to a demerger, you should receive a message to let you know when the demerger will happen and what will happen to your current holding.
There are a number of potential outcomes.
If part of the company splits into a new listed company that Freetrade is able to support, your investment may be split into two separate holdings; the shares you originally owned and the newly formed company. Each new stock will be reviewed for addition to the platform but there is no guarantee that we can add it. You may receive a cash payment instead.
Any entitlement to shares may be rounded down to the nearest whole share, in which case you would receive a cash payment for any fractional share entitlement. Alternatively, your shares may be issued including a fraction of a share, up to 8 decimal places.
Once the corporate action has been processed and your portfolio has been adjusted accordingly, you will receive a confirmation message in-app. Due to our current corporate action process, any cash in lieu or newly received shares will not appear as an item in your Activity feed, but will be added to your account.