Divestment Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Divestment, written in plain English, along with examples of how it is used.
What is Divestment?
n. The act which strips one’s investment from an entity.
History and Meaning of Divestment
Divestment refers to the act of selling or disposing of assets or investments in a specific company, industry, or country. Divestment can be done for various reasons, including ethical concerns, financial performance, or regulatory compliance.
The practice of divestment has been used as a tool for social and political movements throughout history. In the 1970s, divestment campaigns were used to protest apartheid in South Africa. In recent years, divestment movements have focused on fossil fuel companies, with institutions such as universities and pension funds divesting from these industries in response to climate change concerns.
Examples of Divestment
A pension fund sells its shares in a tobacco company due to concerns about the ethical implications of investing in a harmful industry.
A university divests its endowment from fossil fuel companies in response to pressure from student activists.
An individual investor sells their stocks in a company that has been found to engage in unethical practices.
A corporation decides to divest its assets in a particular country due to economic instability and political risks.
Legal Terms Similar to Divestment
Disinvestment: This term is often used interchangeably with divestment and refers to the selling off of assets, investments, or properties.
Asset forfeiture: This legal term involves the seizure of assets that are believed to be linked to criminal activity.
Liquidation: This term refers to the process of selling off assets in exchange for cash to pay off debts or distribute assets to shareholders.