Delisting is the process in which a stock is removed from the exchange listings. Delisting can be broadly classified as:
► Voluntary exclusion of trading – When initiated by the Company; or
► Exclusion of trading determined by the exchange – When the Company fails to comply with listing rules and such failure cannot be remedied, unless this measure would be likely to cause damages on the interests of the investors or on the regular functioning of the market.
Just as an IPO may be a natural step in the lifecycle of a company, under occasional circumstances delisting may also be a rational choice at a certain stage of companies’ life. Being listed is not a definitive condition and the law foresees mechanisms for delisting as presented below.
Additionally, under specific circumstances the Regulator or the Stock exchange may force the exclusion from trading. Nonetheless, in most cases the Issuer has the opportunity to resolve the problem and revert the involuntary delisting process altogether.