1. The divestiture shall be horizontal when the shares of the new companies are held by the same shareholders of the parent company before the divestiture and at the same equity stakes. The divestiture shall, on the other hand, be vertical when it involves the separation of part of the assets or activities into a new subsidiary company that is owned by the parent company. In both instances, the division of assets and obligations shall take place based on the book value, unless the Ministry or the SCA, as the case may be, approves any different method of valuation according to the controls to be issued in this respect. In addition, the shareholders' equity, capital, reserves and retained earnings shall be divided based on a special resolution to be issued by the General Assembly of the Company. The company that survives and continues to operate under the same legal personality shall be labeled as the "parent company", while each separate company arising out of the divestiture shall be labeled "divested (new) company". 2. The divestiture shall be carried out through issuance of the shares of the parent company in light of the post- divestiture net assets of the company, either by amending the number of shares or the nominal value of the share, and issuing new shares for the divested (new) company in light of its share in the net assets of the parent company.
Interpretation and application must be checked against the official text and current version.