Delisted shares are those shares of a company that is removed from the stock exchange where it is traded on an enduring basis. Any company can any time freely ask to be delisted, to grow as a privately trading company or any of the shares may be detached from a stock exchange because a particular company is not able to fulfil the listing requirements.
To be recorded in a stock exchange a company need to follow some of the rules and regulations. There are many essential lawful and compliance costs related to a listing, that’s why many companies choose to delisted and in some cases, companies are forced to be delisted. Some companies are cannot be able to fulfil the associated costs via public trading on a stock exchange. This type of companies can apply to delist them and become a privately traded company. This situation frequently occurs when a company is bought by another company or a private equity firm and it will totally reorganize it by its new shareholders.
Any company can be delisted from stock exchange if the company is not able to meet required specifications. To be listed on a stock exchange it is necessary to meet certain stock listing requirements, which are already set by the stock exchange. This requirement includes minimum share prises, financial ratios, and minimum sales level. If any company is not able to fulfil these requirements, then it is delisted by the stock exchange after the warning.
As is evident from the term, it means a listed company removing its shares, from trading on a stock exchange. To voluntary delist, a company normally offers shareholders, a premium to be price at which the shares are being traded on the exchange. So, delisting is the process by which a listed security is removed from the exchange on which it trades.