Stock delisting from the exchange is often bad news for retail shareholders. They need to take quick action regarding their stocks.
What is Delisting?
The removal of the stocks of a listed company in the form of a stock exchange, such as the National Stock Exchange (NSE) or Bombay Stock Exchange, is called Delisting.
The market regulator, India’s Securities and Exchange Board (SEBI), entirely governs the Delisting process; you cannot trade them in this process.
The list of companies that are delisted from the exchange for various reasons is voluntary and Involuntary, which include:
- The company has an insufficient market capitalization with an excessive stock price fall.
- It has filed for bankruptcy.
- The company needs to comply with the exchange or the regulator’s requirements.
Top Delisted Companies
| Company | Delisted Date |
| MIDEAST | 24 February 2023 |
| Penta media
Graphics Ltd |
24 February 2023 |
| VISHVAKAR INV | 24 February 2023 |
| Mefcom Argo Industries Ltd | 24 February 2023 |
| Sanghi Corporate Services Ltd | 24 February 2023 |
| Sriyansh Steel Ltd | 24 February 2023 |
| Vertical Industries Ltd | 24 February 2023 |
| Bee Electronic Machines Ltd | 24 February 2023 |
| Sun Source India Ltd | 24 February 2023 |
| Detroit Industries Ltd | 24 February 2023 |
| Nu Tech Corporate Services Ltd | 24 February 2023 |
| Geefcee Finance Ltd | 24 February 2023 |
| Texplast Industries Ltd | 24 February 2023 |
| Gangotri Iron & Steel Company Ltd | 24 February 2023 |
| Auroma Coke Ltd | 24 February 2023 |
| Global Land Masters Corporation Ltd | 24 February 2023 |
| TSL Industries Ltd | 24 February 2023 |
| South East Agro Industries Ltd | 24 February 2023 |
| Bluechip Stockspin Ltd | 24 February 2023 |
| NovaGold Petro Resources Ltd | 24 February 2023 |
| Sheetal Bio Agro Tech Ltd | 24 February 2023 |
| Dina Iron & Steel Ltd | 24 February 2023 |
| Ram Minerals and Chemicals Ltd | 24 February 2023 |
| Roselabs Ltd | 24 February 2023 |
| Womens Next Loungeries Ltd | 24 February 2023 |
| Dwitiya Trading Ltd | 24 February 2023 |
| Tej Info ways Ltd | 24 February 2023 |
| Pincon Lifestyle Ltd | 24 February 2023 |
| Funny Software Ltd | 24 February 2023 |
Fate of Shareholders in case of Delisting?
As a shareholder of a delisted company, you cannot sell or exchange those shares. But you can sell them over the counter by making deals through other channels.
Let’s have a look at these two:
- Voluntary Delisting
- Involuntary Delisting
Voluntary Delisting: It is the listed company that opted for the removal of its securities from the stock market exchange.
It has some reasons which include:
- Mergers and amalgamation with another company.
- Non-performance in respect of the share price.
If you want the share of a company to opt the Delisting, then the company is required to give you two options:
Reverse book building to sell your shares back at the company.
The promoters must offer to buy back the shares by sending a letter to all eligible shareholders. The promoter will buy the shares by reversing the book building.
In the next option, you have the tendering of the shares; the maximum number of shares offered determines the purchase price.
Share offers by the shareholder must exceed a certain limit before Delisting can be considered successful.
Keep your shares safe until you find a buyer.
As you keep your shares until you find a buyer, over the counter market, if you are unsuccessful in selling them via the reverse book-building or exit window period, you should keep them until you send them.
It isn’t easy to sell the shares that have been delisted because traders tend to stay away from such major negative events.
As most companies choose the delist for the expansion related to them, which they will offer to the investors at attractive prices, this can lead to significant gains.
The investor will gain a temporary advantage as they will know the stock price, which will drop after the buyback window closes.
As most companies choose the delist for the expansion related to them, which they will offer to the investors at attractive prices, this can lead to significant gains.
Involuntary Delisting
This category involves removing the listed company’s shares from the stock exchange due to their non-compliance with the listing guidelines, low share price and late filing of reports.
The promoters are also forced to buy back the shares at a value determined by an independent evaluator. As the shareholders may hold on to your shares, their value is again highly likely to fall post-delisting.
Holding on to the stocks expecting a revival of the company, which is in terms of stocks of the company getting relisted on the stock exchange, this can only be the possible SEBI permits that setting out the guidelines for relisting such shares.
After 5 years of the delisting date, the stock is relisted from voluntarily delisted. However, the company whose own accord has been delisted must wait ten years before it can be relisted on the exchange.