Delisting is the process by which a company's shares are taken off the stock exchange and trading in its shares stops thereafter. According to a Securities and Exchange Board of India (SEBI) directive, at least 25 per cent equity shares of a listed company must be held by the public. A company that wishes to delist must buy back shares from the public. This buyback is done through an open offer. Promoters must acquire at least 90 per cent stake to delist. The outstanding shares are purchased in the open market at a fixed price.
A delisted stock is no longer traded on a major stock exchange. Corporations sometimes voluntarily withdraw their stocks; in other cases, government regulators force a stock to delist. Regardless of the reason, delisting a stock has consequences and, in some rare cases, benefits.
Delisting can happen on two situations and can be done by the stock exchange or by the company itself. If it is done by the stock exchange then it is called compulsory delisting and if it is done by the company itself it is called voluntary delisting.
In the case of compulsory delisting, the stock exchange might remove the shares of the company if it finds that there is a breach of, on the part of the company, the legal requirements of the stock exchange. This has got its own process.
In the case of voluntary delisting, the company voluntarily would decide to go for delisting and remove its shares off the stock exchange. This is a lengthy process because the interests of the shareholders are involved. The voluntary delisting requires the mandatory meeting of all regulations including approval from board members, providing an exit opportunity for all public shareholders at a price quoted by them, and in-principle approval from the stock exchange among others.
A delisted stock is no longer traded on a major stock exchange. Corporations sometimes voluntarily withdraw their stocks; in other cases, government regulators force a stock to delist. Regardless of the reason, delisting a stock has consequences and, in some rare cases, benefits.
Delisting can happen on two situations and can be done by the stock exchange or by the company itself. If it is done by the stock exchange then it is called compulsory delisting and if it is done by the company itself it is called voluntary delisting.
In the case of compulsory delisting, the stock exchange might remove the shares of the company if it finds that there is a breach of, on the part of the company, the legal requirements of the stock exchange. This has got its own process.
In the case of voluntary delisting, the company voluntarily would decide to go for delisting and remove its shares off the stock exchange. This is a lengthy process because the interests of the shareholders are involved. The voluntary delisting requires the mandatory meeting of all regulations including approval from board members, providing an exit opportunity for all public shareholders at a price quoted by them, and in-principle approval from the stock exchange among others.
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