BOSTON - The board of directors of Eaton Vance Corp., an investment management firm, has approved a plan to spin off the company's 77% ownership of Investors Bank and Trust Co. to the company's shareholders in a tax-free distribution of shares.

The transaction would free Investors from the 1987 Competitive Equality Banking Act, which limits bank subsidiaries of nonbank holding companies to a 7% growth in balance sheet assets in any 12-month period.

The law also prevented $128 million-asset Investors from offering any new products, such as commercial lines of credit, forcing the bank to refer more than $400 million in business to its competitors.

The divestiture, which is subject to regulatory approval and a favorable tax ruling from the Internal Revenue Service, is expected to occur by the end of 1995.

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