Delisting is a significant event that can impact the value and tradability of your investment. If you're uncertain about what to do, you might want to consult with a financial advisor to get personalised guidance
What is delisting and why does it happen?
Delisting refers to the process where a security (usually shares or funds) are removed from a stock exchange. This means the stock can no longer be bought or sold on that particular exchange. Delisting can be voluntary or involuntary and examples of why delistings occur include:
- A company not meeting certain financial or regulatory requirements set by the exchange
- The company decides to go private
What happens after the stock I own goes through delisting?
It’s important to note that each delisting is unique. If a stock you own is going through a delisting process, it’s best to follow official communications directly from the source. Some general scenarios are:
- The stock is removed from the stock exchange and is no longer tradable
- Depending on circumstances, the stock may be deemed worthless and cease to exist. In this instance it may be removed from your portfolio
- The administrators of the stock or fund may seek relisting or alternative options. There are no clear guidelines or timeframes and such actions may take weeks or months to resolve
- A ‘buyout’ may occur and shareholders may receive cash at a predetermined price. This price may be favourable or unfavourable, depending on the delisting circumstances
- Stock is removed from the stock exchange however becomes tradable on the OTC market. OTC trading is usually available for a limited time only, but dependent on the delisting circumstances
- Sometimes when the instrument is tradable on the OTC market, the ticker of the instrument changes. This helps investors and traders understand that the stock is no longer trading on a major exchange but is now on the OTC market