Aabaco will wind up owning approximately 384 million shares of Alibaba Group, representing an interest of about 15 percent, according to a filing with the US Securities and Exchange Commission.
The move was designed to sidestep taxes and appease investors eager to tap into Yahoo's multi-billion-dollar stake in Alibaba.
It is also seen as a chance for Yahoo CEO Marissa Mayer to show she can lead the company to renewed glory.
Yahoo was awaiting a ruling by the US Internal Revenue Service about what portion of the transaction will be tax-free. Yahoo warned in the filing that there could be tax implications.
Under the spinoff plan, which was announced early this year, all outstanding shares of Aabaco will be distributed to Yahoo stock holders, the California-based Internet pioneer said in the filing.
Yahoo will also transfer to Aabaco services for small businesses that it hosts in its Internet cloud.
Yahoo bought a 40 percent stake in the Chinese company in 2005 for $1 billion. The current stake of some 15 percent is worth more than $30 billion based on the Alibaba share price Friday.