Delisting

Investments

Quick Definition

Delisting is the process by which a company’s shares are removed from a stock exchange, making them no longer available for public trading.

Detailed Explanation

When a company is delisted, its shares stop trading on exchanges like the National Stock Exchange or Bombay Stock Exchange.

Delisting can happen either voluntarily (by company choice) or compulsorily (by regulatory action). In India, it is governed by regulations from the Securities and Exchange Board of India.

Types of Delisting

Voluntary Delisting

  • Company chooses to go private
  • Promoters buy back shares from public

Compulsory Delisting

  • Forced by regulators
  • Due to non-compliance or violations

Why Delisting Happens

  • Low trading volume
  • Mergers or restructuring
  • Regulatory non-compliance
  • Strategic business decisions

Impact on Investors

  • Investors may get an exit opportunity (buyback offer)
  • After delisting, shares become illiquid
  • Difficult to sell in open market

Delisting vs Listing

  • Listing: Shares traded publicly
  • Delisting: Shares removed from exchange

Example

"A company buys back all public shares and removes itself from the stock exchange—this is delisting."

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