8 hrs ago
What Shareholders Can Do When a Company Delists
When a company delists, its shares stop trading on the stock exchange where they were listed.
People who already own shares still own them.
They may not be able to sell them in the usual way on the exchange.
If the delisting is voluntary, the company’s promoters or an acquirer may offer to buy shares through a bidding process.
If an investor misses that offer, they can try to find a buyer privately, but that may be hard.
In an involuntary delisting, promoters must offer to buy shares at a price set by an independent evaluator.
Some delisted shares may trade on an exchange again if SEBI permits it.
A company that delisted voluntarily must wait five years before seeking to relist, according to the article.
Delisting removes a company’s shares from a stock exchange, but shareholders continue to own their shares.
Delisting may be voluntary or involuntary, with different buyback processes and exit options.
In a voluntary delisting, promoters or an acquirer may offer a buyback through a reverse book-building process.
Shareholders who miss the voluntary buyback window can seek an over-the-counter buyer, though finding one may be difficult.
For involuntary delisting, promoters must buy back shares at a price set by an independent evaluator.
- Who
- Shareholders of companies whose shares are delisted, and the companies’ promoters or acquirers.
- What
- An explainer on what happens to shares after delisting and how shareholders may seek an exit.
- Where
- India; the article discusses shares listed on the NSE or BSE.
- When
- No specific date is given.
- Why
- Companies may delist for reasons including insufficient market capitalisation, regulatory violations, financial distress, mergers, or prolonged non-performance.
Investor exit opportunities
Limits and risks after delisting
Voluntary buyback
Investor exit opportunities
A buyback offer can give shareholders a temporary opportunity to exit, potentially at a premium.
Limits and risks after delisting
Shareholders who miss the offer may have difficulty finding an over-the-counter buyer, and the article says the stock price is likely to drop after the window closes.
Keeping delisted shares
Investor exit opportunities
Shareholders retain ownership and can seek a buyer outside a recognised stock exchange.
Limits and risks after delisting
They can no longer trade through the exchange where the shares were listed, and finding a buyer may be difficult.
Key facts
- Regulator
- Securities and Exchange Board of India (SEBI)
- Share ownership
- Shareholders retain their shares after delisting.
- Trading after delisting
- Shares can no longer be traded through the exchange where they were listed; shareholders may seek an over-the-counter buyer.
- Voluntary delisting exit
- Promoters or an acquirer may offer a buyback through reverse book building.
- Voluntary buyback price
- The final exit price is based on the price at which the maximum number of shares is offered.
- Involuntary delisting exit
- Promoters must buy back shares at a price determined by an independent evaluator.
- Relisting after voluntary delisting
- The company must wait five years before relisting.
Sources
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