Listing denotes permission granted by a stock exchange, to a company, for trading of its particular securities (e.g. equity shares, debentures etc.) on the stock exchange.

Delisting of securities means removal of that particular security for dealing on the stock exchange. As a consequence of delisting, the delisted securities can no longer be traded at that stock exchange.

SEBI has formulated guidelines for delisting as SEBI (delisting of Securities) Guidelines, 2003.

Delisting can be carried out in two ways:

  1. Voluntary Delisting
  2. Compulsory Delisting

In Voluntary delisting, the company or its promoters or any other persons other than stock exchange can opt to remove its securities from the stock exchange. SEBI Guidelines has prescribed its mode, manner & procedure to be adopted by the company. The final exit price to be paid to the shareholder is decided through reverse book building method.
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Compulsory delisting can be initiated by the stock exchanges only for default by the companies with terms of Listing Agreement whereby the trading has been suspended for more than six months or as per the norms laid down in the SEBI Guidelines.
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Delisting may also result as a consequence of Amalgamation, merger, demerger or Winding up of the Company.
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Rights of Investors

Voluntary Delisting :
It is mandatory for the promoter(s) of a Company who desires to delist from the exchange to offer an exit price to the shareholders before delisting of securities. Such price is to be determined through the ‘reverse book building’ process.

Compulsory Delisting :
Where the securities of the company are delisted by an exchange, the promoters of the company are liable to compensate the security-holders of the company by paying them the fair value of the securities held by them and acquiring their securities, subject to their option to remain security holder with the Company. The fair value is to be determined by the arbitrator.