Then another country’s government may ban investment, whether public or private, in that country. In this way, investment and divestment can be seen as either ethical or unethical, based on moral foundations. One of the major problems was liquidating the essential assets can even pose a risk to the security of the nation. Selling the Public Sector Undertakings that are acquiring profit and also impact the revenue of the country. Also, according to the experts, this can focus on short-term problems, selling the assets will not help the economy to deal with fiscal deficits in the longer run. This can even lead to a surge in the autocratic power of the private sector.

The aspirants preparing for the UPSC exam must have an in-depth knowledge of these topics in order to grasp the core concepts. The formula for performing exceptionally well in the exam roots from the preparation of the basic topics. The disinvestment, DIPAM, and disinvestment policy hold enormous importance for the candidates to rank well in the UPSC exam. Several states and localities did pass legislation ordering the sale of such securities, most notably the city of San Francisco.

Related Words

After the disinvestment, the company could allocate both the sales proceeds and recurring capital expenditures to the industrial division to maximize its ROI. Disinvestments, in most cases, are primarily motivated by the optimization of resources to deliver maximum returns. To achieve this objective, disinvestment may take the form of selling, spinning off, or reducing capital expenditures.

In other words, the organization is looking to divest itself of certain assets rather than invest in them. Whereas, liquidation is the act of liquidating an asset—that expense form template is, turning something with a lesser “liquidity”, like property, into ready cash. A divestment is the act of “divesting” oneself (i.e. getting rid) of assets.

Ill-Fitting Assets

Sometimes, as in Italian, it is reduced to s- (as in spend, splay, sport, sdain for disdain, and the surnames Spencer and Spence). Kison Patel is the Founder and CEO of DealRoom, a Chicago-based diligence management software that uses Agile principles to innovate and modernize the finance industry. As a former M&A advisor with over a decade of experience, Kison developed DealRoom after seeing first hand a number of deep-seated, industry-wide structural issues and inefficiencies.

As part of the sale, shares were sold to the general public, and several franchises were awarded separate routes and regions to operate. The North Carolina Department of State Treasurer follows several divestment and do-not-contract mandates. For example, an electric generator manufacturer might sell off its consumer generator product lines and manufacturing facilities in order to raise money that can be used to expand its industrial generator product line. 1590s, “act of putting on vestments” (a sense now found in investiture); later “act of being invested with an office, right, endowment, etc.” (1640s); and “surrounding and besieging” of a military target (1811); from invest + -ment. When the subject matter is corporate growth, the topic of investment is rarely far off.

Types of divestiture

Disinvestment policy in India means selling off or liquidating the assets to dissolve the shares in the public sector. The transfer of ownership is not mandated in the case of disinvestment. The main types of disinvestment policies are minority and majority disinvestments.

• One criticism of divestment focuses on the belief that institutional selling of a certain stock lowers its market value.
• These examples are programmatically compiled from various online sources to illustrate current usage of the word ‘disinvestment.’ Any opinions expressed in the examples do not represent those of Merriam-Webster or its editors.
• The funds attained from the disinvestment will assist in more purveying of the public sector enterprises.
• Some religious organizations have also viewed divestment as a moral obligation.

Both arguments assume a long time line and the necessity for cooperative effort by the divesting institutions. Reasons for divestment at the institutional level may be political, legal, financial, or ethical in nature. A company may respond to shareholder or consumer pressures and close down its operations in a country with a poor human rights record, doing so for financial and ethical reasons.

Divestitures & Divestments: Quick Guide

The passage of this law was widely seen as a reprisal for an incident in which Cuban military aircraft shot down two private planes flown by Cuban exiles living in Florida, who were searching for Cubans attempting to escape to Miami. If the organization believes that a sale of the asset will leave them in a better position strategically or financially, they will be motivated to sell. The most common example of asset maximization is that of companies disinvesting from non-core assets to focus on their core areas of business. Meanwhile, Weyerhaeuser Co. (WY) is an example of strategic disinvestment.