A spin-off in a business organization refers to the creation of a new and independent company or entity from a larger parent company. This strategic maneuver involves separating a specific division, product line, or business unit from the main organization to operate as an autonomous entity. Spin-offs can occur for various reasons, including strategic restructuring, focusing on core competencies, unlocking hidden value, and capitalizing on unique growth opportunities. The process of a spin-off involves several key steps, starting with the identification of the division or unit that will be spun off. This unit is then legally separated from the parent company through a variety of methods, such as distributing shares of the new entity to existing shareholders or conducting an initial public offering (IPO). This results in the creation of a distinct, standalone company with its own management, operations, and financial structure. Spin-offs offer several potential benefits to both the parent company and the newly created entity. For the parent company, it can lead to increased focus on core activities, streamlined operations, reduced operational complexity, and improved financial performance. Additionally, the parent company might generate funds through the spin-off, which can be reinvested in its core businesses or used to pay down debt. The spin-off company, on the other hand, gains greater operational autonomy, allowing it to adapt quickly to market dynamics, make independent strategic decisions, and attract specialized talent. It often has the potential to unlock its full potential by operating as a standalone entity, focusing its resources, and pursuing its own growth strategies. Investors and stakeholders often closely monitor spin-offs, as they can present unique investment opportunities. While spin-offs can be beneficial, they also pose challenges, such as establishing a new corporate identity, managing transition periods, and ensuring that the newly independent entity has the necessary resources to succeed. In conclusion, a spin-off in a business organization is a strategic move that involves creating a new independent entity from an existing company. This process can provide benefits for both the parent company and the spin-off entity, allowing each to concentrate on their strengths and pursue distinct growth strategies in their respective markets.

1. PRESENTATION ON
SPIN OFF IN A BUSINESS ORGANISATION
PRESENTED BY
MUHAMMAD HASHIM ANHAR MEMON
ADVOCATE HIGH COURT| REGISTERED INTERMEDIARY OF SECP
ANHAR & BURNEY

2. CONTENTS
PART I
1. Forms of Business Organization
2. Types of SECP Registration
3. Method of Registration
PART II
4. Spin-Offs
5. Recap of Key Points
6. Conclusion and Q&A

3. FORMS OF BUSINESS ORGANIZATION

4. • The sole trader/Proprietor
• Partnership
• Company

5. TYPES OF REGISTRATION SECURITIES EXCHANGE
COMMISSION OF PAKISTAN

6. a. Single Member Company
(cl. (65) of sub-sec. (1) of Section 2 of the Act’17)
b. Private Limited Company
(cl. (52) of sub-sec. (1) of Section 2 of the Act’17)
c. Public Limited Company
(cl. (49) of sub-sec. (1) of Section 2 of the Act’17)
d. Limited Liability Partnership
(Limited Liability Partnership Act 2017)
e. Foreign Company
(Sec. 434 of the Act’17)
f. Trade Organization
(section 42 of the Act’17)
g. Non-Governmental Organisation
(section 42 of the Act’17)

7. METHOD OF REGISTRATION PROCESS

8. SMC (PVT.) LTD. | PVT. LTD.| LTD.
• Step 1. Reservation of Name
 Applicant may propose up to three names in order of priority for
reservation.
 Registrar, if satisfied that any one of the proposed names in the order of
priority, fulfills the criteria specified in the Act and regulations, may issue
availability of name.
Name is reserved for Sixty Days period.
• Step 2. Filing of Incorporation Documents
 NOC/Letter of Intent/ License (if any)/ approval letter*
 Incorporation Application;
 AOA (where required)
 MOA;
 CNIC of nomiee; copy of valid Passport in case of a foreigner
 Cell number registered on the CNIC
 Two witnesses in case of Physical filing
 Examination;
 Issuance of Certificate of Incorporation

9. LLP.
• An agreement in writing made between the partners.
• Document shall state the:
• Name of the limited liability partnership;
• State general nature of its main business and any other incidental or ancillary objects
thereto, which it proposes to carry on as a limited liability partnership
• State the province or the part of the Pakistan not forming part of a province, as the
case may be in which the registered office is to be situated;
• State the name and residential address of each of the persons who are to be partners
of the limited liability partnership on incorporation;
• Specify which of those persons are to be designated partners or state that every
person who from time to time is a partner of the limited liability partnership is a
designated partner on incorporation;
• State that the liability of its partners shall be limited

10. FOREIGN COMPANY
• A company which is incorporated or formed outside Pakistan which
establishes its place of business within Pakistan is called a ‘Foreign Company’.
 The Foreign Companies Regulations, 2018
 Seek Availability of Company Name
 Memorandum and Articles of the company
 Address of registered office or principal office of the company
 Original paid bank challan or other evidence of payment of fee
 Certified documents from country of origin
 Consent of persons authorized to accept on behalf of the company service of
process / any notice / document
 Valid approval letter from Board of Investment, Government of Pakistan, in
certain cases Ministry of Interior.

11. TRADE ORGANIZATION
• U/s 42 of the Companies Act 2017
• License is to be obtained from DGTO, Ministry of Commerce, Islamabad
• Company name reservation and then Registration of company
• Copy of availability of name letter
• Memorandum and Articles of Association.
• A list of promoters of the association with their occupations and addresses
and their CNIC/passport
• Resume of all promoters along with Affidavit for their skills.
• Affidavit on stamp paper by all the promoters affirming that they are not
associated with money laundering or terrorist financing activities, not
defaulters of loans, etc.

12. NOT FOR PROFIT ORGANIZATION
• Same process as Trade Organisation except there is no requirement of
License is to be obtained from DGTO, Ministry of Commerce,
Islamabad

13. SPIN OFF

14. Understanding Spin-offs
• A corporate spin-off is generally defined as when a company splits off a
part of its business to create a separate business or entity from the
original. This independent business is usually separated from the
company to realize larger and more sustainable revenue and earnings.

15. EXAMPLES OF SUCCESSFUL SPIN-
OFFS
•
Johnson & Johnson Kenvue
Mondelez International Kraft Foods Group
eBay Pay Pal
Intuit QuickBase

16. CASE STUDY
Intuit Ecosystem of Financial
• Quick Books
• Turbo Tax
• Mint
• Professional Tax
• QuickBase (Spinoff)
• Demandforce (Spinoff)
• Quicken (Spin off)

17. QUICKBASE
• Quick Base is a low-code platform, consumer can use to build applications
without writing any computer code.
• A Low-code platforms like QuickBase empower a wide range of people with
little to no programming skills – known as ‘citizen developers’ – to build
enterprise-class applications that run on mobile, desktop, or web.
• Such applications can meet the needs of the business quickly and efficiently,
and can be an important part of how transformed IT organizations empower
self-service capabilities as part of broader enterprise digital transformation
initiatives.
• But the market of QuickBase and its competitor OutSystems is a $15B
opportunity but delivering a great low code platform to the enterprise requires
a huge R&D investment
• private equity firm Welsh, Carson, Anderson & Stowe (WCAS) acquired Quick
Base
• This allows redoubling its focus on the small business and consumer markets.
This move puts QuickBase squarely in competition with established enterprise
low-code platform vendors Mendix and OutSystems

18. CHALLENGES
• Complexity of Transaction
• Resource Allocation
• Operational Disruption
• Employee Morale and Retention
• IT Infrastructure and Systems Separation
• Customer and Supplier Relationships
• Regulatory and Legal Compliance
• Financial Considerations
• Communication and Investor Relations
• Valuation and Market Reception
• Intellectual Property
• Governance Issues