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Plans to distribute the 52 per cent stake in F&C have been in the pipeline since January, after the board decided the business did not fit with its core offering.

The demerger follows an offer period, ending in March, during which Friends Provident and F&C held discussions with interested third parties.

At an EGM in June, over 99 per cent of Friends Provident shareholders voted in favour of the demerger and now that the plans have received court approval, existing shareholders are in line to receive one F&C share for every 10 shares they hold in the new Friends Provident group.

The terms of the plan will see the nominal value of F&C shares reduced to 5 pence to facilitate the demerger, creating £190m of distributable reserves.

Shareholders who receive 250 F&C shares or less will have their holdings sold and the monies returned to them.

As a result of the demerger, F&C chief executive Alain Grisay will leave the board of Friends Provident. While, Adrian Montague, chairman of Friends Provident and Trevor Matthews, chief executive, will both leave their positions on the board of F&C.

The demerger is the final chapter for F&C, which has been the subject of much uncertainty after Friends Provident decided it was surplus to requirements.

A strategic review sealed the fate of F&C in January 2008, with preliminary plans to redistribute Friends Provident's 52 per cent holding announced in October.

Friends Provident itself has been the focus of takeover speculation over the past couple of years, and had been in an offer period until April 2008 the point when JC Flowers ended its interest in acquiring the company.

The company had been in advanced discussions over a merger with Resolution in 2007, before plans collapsed later that year.

It has since been linked with a takeover by Clive Cowdery's newly-relaunched Resolution, the acquisition vehicle for companies in the financial services industry.