Glossary
Delisting
The removal of a stock from an exchange, either voluntarily or because it no longer meets listing standards.
Delisting is when a company's shares stop trading on a stock Stock exchange such as the NYSE or Nasdaq. It can be the company's own choice, or the exchange can force it when the company falls short of the rules every listed issuer must keep meeting. Delisting does not cancel the shares: owners still hold them, but they lose the liquidity and visibility of an exchange Listing.
Involuntary delisting
Exchanges set ongoing standards for share price, market value, shareholder equity, number of holders and timely financial filings. The best known is the $1 minimum price.
Failing to file a Form 10-K or Form 10-Q on time, a bankruptcy filing or a serious governance breach can also trigger delisting, sometimes faster.
Voluntary delisting
A company may leave an exchange because it is being acquired or taken private, because it is merging into another listed firm, or to switch exchanges. In a buyout, shareholders are usually paid cash or stock, so the delisting is a formality.
What it means for shareholders
After an involuntary delisting, shares typically move to the Over the counter (OTC) market, where trading is thinner, spreads are wider and some investors, such as many funds, may be forced to sell. Prices often fall sharply around the announcement. In a bankruptcy, the shares may end up worthless.