What does delisting mean?

Delisting of securities means removal of securities of a listed company from a stock exchange. As a consequence of delisting, the securities of that company would no longer be traded at that stock exchange.

When the company announces an exit offer, SEBI has a provision of an exit mechanism to the existing shareholders in the following manner:

Voluntary delisting whereby the exit price is determined through the Reverse Book Building process- (Reverse Book Building (RBB) is a process that allows companies to buy back shares from shareholders to delist themselves from a stock exchange)The floor price( i.e., the minimum price at which it is willing to repurchase the shares) is calculated in accordance with the regulations and the shareholders have to make a bid at a price either on or above the floor price. The exit price would be decided on the basis of bidding by the public shareholders. If the exit price so determined is acceptable to the promoter, the promoter pays that price to the investors and the investors can exit.

The Securities and Exchange Board of India (SEBI) has announced significant reforms to the voluntary delisting process, offering companies a new fixed price mechanism as an alternative to the existing reverse book building (RBB) model.

 Delisting in India can also be involuntary, where the equity shares are delisted by the regulators based on non-compliance with the SEBI listing regulations or other legal issues.

Unfortunately, investments in delisted stocks are generally considered a loss and may need to be written off entirely, unless the client is able to find a buyer through an off-market transaction