Delisting of Shares: What Does It Mean and How To Buy Delisted Shares

Delisting of shares is no longer a phenomenon – it is not even rare. If you are into the share market, you must have heard about “delisting.” During our initial research, we found that over 2000 companies were delisted from NSE and BSE in 2022. Ever wondered what does delisting of shares meaning? Why do stock exchanges delist companies, and what happens to investors and shares after delisting?

Read about the delisting of shares meaning, why it occurs, and how to buy delisting stocks in India.

Delisting Of Shares Meaning

Putting it straightforwardly, the delisting of shares refers to removing the listing securities from the stock exchange. Delisting of shares means that the company’s shares can no longer be traded on stock exchanges. Usually, companies opt to go public, but most sell delisting stocks in the unlisted share market.

The Process of Delisting Shares

Major stock exchanges like NSE and BSE usually delist the companies when they fail to comply with the listing requirements. However, the delisting of shares does not happen overnight. Companies will receive warnings, notifications will be made, and time will be granted to get affairs in order.

Types Of Delisting & Why Does Delisting Of Shares Happen

Delisting of shares can be voluntary or involuntary. Below is a simple definition of voluntary and involuntary delisting of shares.

Voluntary Delisting

Voluntary delisting is permanently removing the securities from the stock exchange and going public. Usually, voluntary delisting is done to avoid regulatory compliance with stock exchanges, which can be a very time-consuming and cumbersome process. Most companies opt for voluntary delisting in case of merger & acquisition, undervaluation, negligent trading, absolute ownership of shares & promoter control, and compliances.

Involuntary Delisting

Forced delisting of shares from the stock exchange is involuntary delisting that is done in case of violating the regulations, late or misleading reporting, or failure to meet the minimum financial requirements like share price, financial ratio, and sales volume. Various factors that are primarily based on the company’s health, ownership, share value, etc., may predict or give a hint on delisting threats. Here are the prime reasons for the delisting of shares.

If the company fails to comply with the stock exchange criteria
If the company declares bankruptcy
In case of merger and acquisition

Pros and Cons of Delisting of Shares

Given that you understand the delisting of shares, let’s have a look at the pros and cons of delisting of shares.

Advantages

Post-delisting companies are not obliged to release their annual revenue reports or shareholding patterns.
Delisted companies also do not need to maintain a minimum listing limit.
It helps cut business expenses including listing fees and annual trading costs.
Private firms are less likely to take over

Disadvantages

After delisting, companies become private so they can not raise funds from the public in the stock exchange so they have to look for funding via pvt placement.
Losing public trust is one of the fears
It negatively impacts the share price due to liquidity concerns.

What Does It Mean For Investors?

If the company delists, you still hold the shares. However, you can not trade those shares anymore on any exchange. Good News is you can sell delisted shares on the over-the-counter markets, so you will have to look for buyers outside the market.

Simply put, the delisting of shares will impact investors regardless of whether the delisting of shares is voluntary or involuntary. In voluntary delisting, investors hold shares till they find a buyer, while in involuntary delisting, your stakes will be forcibly removed from the stock exchange. However, you will still have the ownership, but shares may not hold any value post–delisting.

How To Buy and Sell Delisted Shares In India?

Stockify is India’s most trusted source for buying and selling unlisted and delisted shares. We have experts that evaluate the company’s financial performance, EBITDA, EPS Growth, and other important factors. Whether you are looking to buy or sell delisted shares, we are here to help you.

Want to buy or sell delisted shares? Trust Stockify for your aid. Call us right away!

FAQ

If the company delists voluntarily, you, as a shareholder, will receive an equal amount of shares in the newly acquired company. However, in forced delisting, you have just two options – either connect with delisted share brokers, or you’ll be left with stocks of a company that no longer exists.

If you still hold the shares after the company is forcibly delisted, you can connect with Stockify to sell your delisted shares in India.

With Stockify, you can buy delisted stocks of top companies with huge growth potential or companies that will soon buy back their shares.

Delisting is bad, but not always as people have made it out to be. Many big brands, such as HP and Dell, have chosen to delist willingly and go private.

No, the companies are not obliged to provide an exit offer because its presence will remain nationwide, and shareholders can exit when they find a buyer.