When a company gets delisted, investors often worry about their shares—learn what it means, why it happens, and how it impacts you with real examples from India—with real-life examples from India
What Is Delisting in Share Market?
Delisting means a company’s shares are removed from the stock exchange. Once delisted, the shares can no longer be traded on platforms like NSE or BSE.
There are two types of delisting:
- Voluntary Delisting – When the company itself chooses to delist.
- Involuntary/Compulsory Delisting – When SEBI or the stock exchange forces the company to delist due to non-compliance, fraud, or low performance.
What Happens to Shareholders After Delisting?
If you own shares in a company that gets delisted, here’s what could happen:
1. You Can’t Trade on Stock Exchanges Anymore
The most immediate impact is that your shares can no longer be bought or sold on NSE or BSE.
2. Company May Offer a Buyback (Exit Opportunity)
In voluntary delisting, companies usually offer a buyback price to public shareholders. This is known as the reverse book building process.
Example:
In 2020, Vedanta Ltd. announced voluntary delisting and offered shareholders ₹87.5 per share. However, the delisting failed because enough shareholders didn’t tender their shares.
3. You Can Still Sell Shares—But Off-Market
Even if the company is delisted, the shares don’t vanish. They remain in your Demat account. You can sell them through off-market transfers or in the over-the-counter (OTC) market, but liquidity is very low.
4. You May Receive Dividends (If Company Performs)
If the company continues operations and makes profits, it can still issue dividends—even if delisted.
🚫 Why Do Companies Get Delisted?
Voluntary Reasons:
- Promoters want full control (e.g., going private)
- Mergers or acquisitions
- Restructuring business
Compulsory Reasons:
- Regulatory violations
- Failure to comply with listing norms
- Poor financials or fraud
Example:
Kingfisher Airlines was compulsorily delisted in 2018 due to failure in meeting regulatory requirements and non-payment of dues.
Should You Worry if a Company Gets Delisted?
It depends on why the company is getting delisted.
- If it’s voluntary and a buyback is offered, you can exit with some returns.
- If it’s forced delisting, it’s often a red flag—and recovering your investment could be very difficult.
Smart Investor Tip: Always monitor company announcements and stay updated through official sources like SEBI, NSE, or BSE circulars.
How to Protect Yourself as an Investor?
- Invest in well-governed, fundamentally strong companies
- Avoid penny stocks or companies with regulatory issues
- Diversify your portfolio—don’t put all your money in one stock
- Read stock exchange notices regularly for updates
Final Thoughts
Delisting doesn’t mean your shares become worthless—but it can make them hard to sell and risky to hold. Understanding the reason behind delisting is key to making informed decisions.
Whether it’s Vedanta’s buyback offer or Kingfisher’s forced delisting, real-life examples show that staying informed and diversified is your best defense.
Have you checked our latest article Top 5 Money Habits to Build in Your Life (Mindful & Practical). Read this post — you’ll be surprised how a few simple money habits in your 20s can completely change your financial future!