If a stock is delisted, the shares can still be traded over-the-counter on the OTC bulletin board. Shareholders can still trade the shares, although it is likely that the market will be less liquid. Compliance with the current listing standards of the stock exchanges on which the shares are listed is a surefire way to avoid delisting. Compliance assures investors of the credibility of the company in question. On the contrary, if a company does not meet these standards, it is forced to leave an exchange. The list of delisted shares can be found on the BSE and NSE websites. Some of the delisted companies are: Simply put, there is no benefit to delisting from a stock exchange. There are certain regulations and compliances that a publicly traded company must follow. This includes the mandatory publication of the annual accounts and quarterly reports as well as the annual holding of the annual general meeting within a certain period.
If you`re aware of the possibility that a company could be removed from the list, deciding to sell your shares is probably a smart move. Involuntary delisting and the events that lead to it reduce the value of a business, and if it`s bankruptcy, there`s a good chance you`ll lose your entire investment. If a stock is delisted as part of a merger or as a result of the privatization of the company, you only have a limited amount of time to sell your shares before they are converted into cash at a predetermined exchange rate or exchanged for shares of the acquiring company. In May 2021, the company fell to a level of Rs 88-89 per share. The indicative price of Vedanta`s delisting offer was Rs 87. This does not mean that the company will buy its shareholders` shares solely at this price. Once a stock has been delisted, it can be traded over-the-counter (“OTC”) on one of three different exchanges. There are certain advantages to trading over-the-counter, such as access to start-ups that are not large enough to trade on the NYSE or Nasdaq (like Walmart at the time) or access to foreign companies that trade on non-US companies. Exchanges (such as Nestlé, which are traded on the SIX Swiss Exchange).
However, lower barriers to entry in the CTA mean a higher risk of fraud and less transparency in a company`s operations. It is rare for a delisted stock to return to more traditional stock exchanges. To do this, it would be necessary to avoid bankruptcy, solve the problem that forced the delisting and return to the standards of the stock exchange. When a stock is delisted, the company can still be traded via two different platforms, namely: the over-the-counter bulletin board (OTCBB) or the pink leaf system. Although both are significantly less regulated than the major exchanges, OTCBB is by far the stricter of the two. Recently, Sintex Industries made headlines for a potential delisting. Reliance and Assets Care & Reconstruction Enterprise (ACRE) submitted an offer to acquire Sintex Industries and Sintex Industries` Creditors Committee (CoC) accepted the offer. Reliance-ACRE proposed to delist the shares of Sintex Industries following the acquisition. So, if one of the shares you own is delisted, it is best to sell your shares. You can either exit the market or sell it to the company when it announces the buyout. We often hear about companies that want to go public. The opposite can also happen and this is called delisting.
If a company voluntarily delists, shareholders will receive a cash buyback or shares of the new acquiring company. A company must comply with certain rules to be listed on the stock exchange. While you`re probably familiar with the larger U.S. on exchanges such as the New York Stock Exchange (NYSE) or the Nasdaq, there are nearly 30 exchanges registered in the U.S. and each has its own listing standards. A company must follow certain rules in order to maintain a good reputation and maintain its registration. If a company does not meet the requirements, it will be removed from the list or removed from the exchange. To give a unique example, an executive order by former President Trump led to the delisting of a number of Chinese companies. These companies are suspected of having links to the Chinese military or, among other things, refusing to allow audits. Several events can put a company at risk of being removed from the list. These include failure to meet a minimum closing price of at least $1.00 for 30 consecutive trading days, failure to meet a certain market capitalization, or failure to meet a myriad of requirements related to trading volume, equity or earnings results. Understanding the delisting process is helpful for better understanding the mechanics of the stock market, but keep in mind that most investors would be better off avoiding delisted stocks because they risk losing everything if a company goes bankrupt.