Delisting

Delisting is the process of removing a company's shares from a stock exchange. Delisting can be voluntary—when a company chooses to go private (e.g., through a leveraged buyout or acquisition)—or involuntary, when a company fails to meet the exchange's continued listing standards. Common reasons for involuntary delisting include sustained share price below $1, failure to file financial statements, bankruptcy, or market-cap requirements. Once delisted, shares typically move to the OTC (over-the-counter) market, where they trade with less liquidity, wider bid-ask spreads, and less regulatory oversight. For investors, delisting usually means significantly reduced liquidity and often substantial capital losses, particularly in involuntary cases. Companies may attempt to avoid involuntary delisting through reverse stock splits or compliance plans.