In this method, promoters of the company offer to buy back the shares by making a public announcement. They are required to send out the letter of offer to the eligible shareholders along with a bidding form. As a shareholder, you can sell your shares by applying for a buyback.
As these stocks are not listed on the stock exchange, you need to approach the broker or buyer privately to sell unlisted shares in India. You need to provide Demat A/c details, CMR copy, and bank details to the buyer after which the shares need to be transferred.
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 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.
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.
You can go down the liquidation route and sell excess inventory to organizations that specialize in taking on dead stock items.
The delisted company would have to avoid bankruptcy, solve the issue that forced the delisting, and again become compliant with the exchange's standards. What's more common than a relisting is that a delisted company goes bankrupt and the delisted stock becomes worthless.
A delisted stock can be relisted only if SEBI permits it. The market regulator lays out different guidelines for relisting such shares. Relisting of voluntarily delisted stocks: Such shares will have to wait five years from their delisting date to get relisted again.
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.
So though the shares are not traded on the stock exchanges after delisting, they are still there in your demat account. So, delisting cannot amount to extinguishment of the shares or your rights in the shares.
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.
A suspension can be the harbinger of some bad news, but equally it can herald the announcement beneficial to the shareholders. What it does mean is that, while the suspension is in force, the stock cannot be traded.
Types of delisting
In this case, companies typically offer a buyback window to investors. Did you know? To close an account with delisted shares, they must be transferred to a different demat account using DIS or CDSL easiest if the ISIN is active. Delisted shares cannot be gifted.
Value of Shares: The value of delisted shares may drop, especially if the delisting is due to financial issues. This can result in significant losses for shareholders.
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.
The corporation must honour the delisting price. 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.
The value of shares doesn't automatically rise or fall with a delisting, but when an involuntary listing takes place, it's often a sign that a company is approaching bankruptcy. In this case, there's a chance investors might lose their investment.
If someone misses applying for the delisting, they can tender the shares offline directly to the company, and the company will buy them back. Shareholders will have a one-year period from the date of unlisting to tender the shares to the company.
If you own delisted shares, you can still sell them on the Over-the-Counter Bulletin Board (OTCBB) or on the Pink Sheets, which have more relaxed regulations and few listing requirements. OTC trading is volatile, and this level of risk is typically not suitable for beginning investors.
Sell Worthless Stock if Your Broker Holds the Shares
Many brokers have a plan to let their good customers sell them worthless stock for $1 or 1c for the lot. If you are a good customer, and stock is with the broker, ask. You should be able to negotiate some solution that will be satisfactory to both sides.
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.
Low Liquidity: Stocks with low trading volumes may lack buyers, making it difficult to sell. Shares in Pledge: Shares pledged as collateral cannot be sold unless they are unpledged. Stock in Ban or Restrictions: The stock may be under an exchange-imposed ban or regulatory restrictions, preventing trading.
Yes, there are regulations governing selling shares without a broker. You must comply with securities laws and ensure transactions are properly reported. You must understand these laws to avoid legal complications.