Delisting is when a company’s shares are removed from the stock exchange and are no longer available for public trading. Once delisted, you cannot buy or sell the shares on the exchange.
There are two types:
- Voluntary delisting – The promoter decides to take the company private. A structured exit is offered to public shareholders through a reverse book building process. You can tender your shares at or below the discovered exit price and exit.
- Involuntary delisting – SEBI or the exchange forces the company off the exchange for regulatory violations or prolonged non-compliance. There is no structured exit offer in this case.
If a voluntary delisting is announced, participating in the exit window is important. Holding shares of a delisted company means your investment is illiquid; you can only sell through off-market transfers, which is difficult and often at a significant discount.
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