The only thing delisting does is that the stock doesn't trade on whatever exchange it got delisted from. It would still exist and you would still own it. No one is going to pay you out. It would trade over the counter.
If a delisted company can return to stability and meet the listing criteria, it may re-list later. A company may also voluntarily delist shares due to a merger or acquisition, going private, or if it feels that the costs outweigh the benefits to remain listed.
Delisting of shares can have significant consequences for shareholders, ranging from reduced liquidity to potential loss in value. It's essential for investors to stay informed about the reasons behind the delisting and how it may affect their investments.
What Happens to Shareholders When a Company Goes Private? Shareholders agree to accept the offer to be bought out by investors. They give up ownership in the company in exchange for a premium price that's paid for each share they own. They can no longer buy shares in the company through a broker.
The Bottom Line. It isn't uncommon for publicly traded companies to go private. But you should know what your rights are as a shareholder. You have the right to accept or reject the offer—as long as you know what the consequences are.
For shareholders (own stock outright) what happens to the shares they own when the company gets bought out is more straightforward. In a cash purchase, it's a cash payout. In a stock deal, shareholders get stock of the acquiring company. Depending on the deal terms, they may get both.
Though delisting does not affect your ownership, shares may not hold any value post-delisting. Thus, if any of the stocks that you own get delisted, it is better to sell your shares. You can either exit the market or sell it to the company when it announces buyback.
If the firm has been delisted for more than a year, the shareholder might approach the company and negotiate a private sale of the shares to the promoters. This will be an off-market transaction, with the price agreed upon by the seller and buyer.
If the security cannot be sold in the market, it may be possible to dispose of the worthless security by gifting it to another person who can be related or unrelated to you. If you gift the worthless security to a family member, you will need to ensure that the person is not your spouse or minor child.
Although some brokerages restrict such OTC transactions, you generally can sell a delisted stock just as you would a stock that trades on an exchange. A delisted stock can continue to trade over the counter for years, even if the company files for bankruptcy.
When a stock is delisted, options trading on that stock typically ceases. This means that options holders are no longer able to buy or sell their options on the open market. However, they still have the right to exercise their options if they choose to do so.
If you own securities, including stocks, and they become totally worthless, you have a capital loss but not a deduction for bad debt. Worthless securities also include securities that you abandon.
The Bottom Line. A delisting does not directly affect shareholders' rights or claims on the delisted company. It will, however, often depress the share price and make holdings harder to sell, even as thousands of securities trade over-the-counter.
The Impact of Delisting on Investors
However, a delisted stock often experiences significant or total devaluation. Therefore, even though a stockholder may still technically own the stock, they will likely experience a significant reduction in ownership. In some cases, stockholders can lose everything.
If you still hold shares after they are delisted, you can sell them—just not on the exchange on which they traded before. Stock exchanges are very advantageous for buying and selling shares. When they delist and trade over the counter (OTC), selling shares and getting a reasonable price for them becomes much harder.
When a company delists, investors still own their shares. However, they'll no longer be able to sell them on the exchange. Instead, they'll have to do so over the ounter (OTC).
If the delisting happens a year after the security has been purchased, capital gains tax is not charged. However, if the delisting takes place within a year, whatever gain is made will be taxable, based on the tax slab of the individual.
If a stock is untradeable on Robinhood, you won't be able to buy or sell shares of it.
However, there is one way to claim the losses on shares which are delisted and still lying in your demat account. You can transfer these shares from your demat account through off market transaction for a very nominal price to any of your friends or relatives.
Delisting of shares can significantly impact the shareholders' holdings as they have to sell the shares even if they do not want to. Furthermore, once the shares are delisted, they lose their value and may result in losses for the investors in case they aren't sold at the right time.
What happens when an investor maintains a short position in a company that gets delisted and declares bankruptcy? The answer is simple: The investor never has to pay back anyone because the shares are worthless. Companies sometimes declare bankruptcy with little warning. Other times, there is a slow fade to the end.
If you own shares of stock in a privately held company, your options for selling the are limited. You can sell them back to the company, to an accredited investor, or on a private-securities market. You could also encourage the company to do an initial public offering (IPO).
Different symbols imply different classes of shares. For example, "pf" means the shares are preferred stock.
Often, the stock price will rise dramatically when it's acquired for a significant premium. As a result, investors may sell the stock after the merger. However, it's important to determine whether the company's fundamentals are better after the merger or acquisition. If not, it may be time to sell.