[boringinvestor]

Delisting involves the removal of listed securities of a company from a stock exchange where it is traded permanently.

Delisting curbs the securities of the delisted company from being traded on the stock exchange. It can be done either on the voluntary decision of the company or forcibly done by regulatory authorities like Securities and Exchange Board (SEBI) in India or Securities and Exchange Commission (SEC) in the US on account of some wrongdoing by the company.

There are certain norms that a company needs to follow while listing on the stock exchange.

In case the company fails to do so, then these authorities take action which generally leads to the delisting of the company from the stock exchange.

Impact On Investors–

There are two types of delisting’s, Voluntary delisting and Involuntary delisting.

Involuntary delisting refers to the forced removal of listed company shares from the stock exchange for various reasons like non-compliance with the listing guidelines, late filing of reports, and low share price, etc.

In this case, promoters are required to buy back the shares at the value determined by an independent evaluator. Though delisting does not affect your ownership of shares, company shares are likely to hold no significant value after delisting.

In the case of voluntary delisting, listed companies voluntarily opt for permanent removal of securities from the stock exchange where the company decides to go private.

Mainly, mergers with another company or amalgamation or non-performance are a few reasons for voluntarily delisting shares. If you own a stock of the company that has opted for voluntary delisting, the company is required to give you two options as per the delisting guidelines. Either you offload your shares or hold till you buy a Buyer.

Remember, the delisted share can be hard to sell, as there will be a decline in liquidity without any over-the-exchange transactions.

Share an incident if any of your portfolio stock got delisted.

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