Definition
Delisting
Delisting is the removal of a company's shares from a stock exchange, after which they no longer trade publicly.
Voluntary delisting, governed by SEBI's Delisting Regulations, lets a promoter take a company private by buying back public shares, with the exit price discovered through a reverse book-building process and subject to minimum acceptance thresholds. Compulsory delisting is imposed by the exchange for serious non-compliance, penalising defaulting promoters.
Delisting affects minority shareholders' liquidity and exit, so the framework includes price-discovery and approval safeguards. SEBI has periodically reformed the rules to make voluntary delisting fairer and more workable.
Related terms
- Minimum Public ShareholdingMinimum public shareholding (MPS) is the SEBI rule requiring listed companies to keep at least 25% of shares with the public.
- Open Offer (Takeover)An open offer is a mandatory offer to buy shares from public shareholders when an acquirer crosses certain ownership thresholds in a listed company.
- Reverse Book BuildingReverse book building is the price-discovery process used in a voluntary delisting, where public shareholders bid the price at which they will tender shares.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.