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LSDefine
Simple English definitions for legal terms
divestment
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A quick definition of divestment:
Divestment: When a business sells off parts of itself or its investments for different reasons like money, ethics, or politics. This means they have to take it off their financial records. They can sell it, close it, or go bankrupt. In property law, divestment means someone has something that they might lose in the future if something else happens.
A more thorough explanation:
Divestment is a term used in business and property law. It means selling off assets, investments, or subsidiaries for financial, ethical, or political reasons. This can be done by removing the asset from the company's financial records. Divestment can happen through sale, closure, or bankruptcy.
Example 1: A company decides to divest its subsidiary that is not performing well. The company sells the subsidiary to another business.
Example 2: A university decides to divest from fossil fuels. It sells its investments in oil and gas companies and invests in renewable energy instead.
Example 3: A property owner gives their property to their child, but with a condition that the child will lose the property if they don't take care of it properly.
These examples illustrate how divestment can be used for different reasons, such as improving financial performance, aligning with ethical values, or setting conditions for property ownership.