Web Trader MT5
Delisting is the removal of a company’s shares from a stock exchange, making the shares no longer capable of being actively traded on that venue. It may occur either voluntarily or involuntarily, and the situations are very crucial.
A voluntary delisting is typically something structural: a takeover, a buyout, a move to go private or a consolidation to a single exchange.
This is not the case with involuntary delisting. The exchanges have ongoing responsibility in the financial reporting and minimum share prices, market capitalization, and the standards of governance. Those companies that constantly violate those requirements receive a warning, then suspension, then removal.
Such delisting is practically always an indication of great distress. Delisting a stock does not necessarily mean shareholders lose the money they invested in the underlying company, but liquidity is lost, and with it, easy price discovery. It becomes challenging to sell, valuation is obscured, and recovery is unpredictable.
Example: A small-cap mining firm on the AIM in London is repeatedly late in submitting its accounts and sees its share price plummet to a level below the lowest conceivable. The stock is finally suspended, and later delisted. The shareholders are left with equity in a company having no public market, no visible price, and no obvious way out.
