Are you holding any delisted shares? How to deal with such delisted shares in online stock trading? Delisting of shares is a complex process and you also need to follow certain guidelines to tender shares.
So, what is all about delisted shares?
Delisted shares mean it will not be available for online stock trading in exchanges. Normally a company delists from stock exchanges due to expansion, restructuring, or when acquired by other company. Delisting can be done voluntarily if the company decides to delist its shares from stock exchanges. If there is any compliance issue not fulfilled then stock exchanges can forcefully delist the stocks.
If you are one of those investors who stuck and wants to exit from delisted shares then don’t worry. Securities and Exchange Board of India (SEBI) (Delisting of Securities) Regulations, 2009 provide an exit mechanism to you if you hold any delisted shares.
How can you deal with delisted shares?
The exit price is determined through the Reverse Book Building process by a company when they announced voluntary delisting. As a shareholder, you 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 like you. If the exit price is accepted by the promoter of the delisted company, then they pay you the exit price.
If you do not participate in the Reverse Book Building process you can offer shares for sale to the promoters. The promoters can accept the shares at the same exit price. This facility is only available for one year from the date of closure of the delisting process. So, if you have any delisted shares then make an offer for sale before one year.
If a small company decides to voluntary delist from stock exchanges, then promoter can finalize the exit price in consultation with their merchant banker. However, a company with paid-up capital of less than Rs. ten crore and net worth less than Rs. Twenty-five crores don’t require to follow the reverse book building process. In addition, if companies equity shares have not been traded on for a period of one year can also skip reverse book building process.
It doesn’t matter whether a company listed on more than one stock exchange as it has to provide you exit offer. If a company delisted shares from a stock exchange but continues to remain listed on another exchange it doesn’t require to provide an exit opportunity to you.
Read also: 5 Best Share Market Investment Strategies
How you tender delisted shares?
In case you hold equity shares in a Demat form you may tender it through your stock broker. You can do so by indicating the details of equity shares to be tendered under the delisting offer.
Recently Bombay Stock Exchange (BSE) compulsorily delist 200 companies and also ban promoters for 10 years from accessing the stock market. As per SEBI delisting regulations, promoters of these delisted companies will be required to buy the shares from the public shareholders. The exit price will be as per the fair value determined by the independent valuer appointed by the BSE.
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Author: Ratan Kumar
Ratan Kumar, an enthusiast stock market trader & blogger. Forecasting stock market moves with the use of technical analysis since 2008. For the technical trader & investor, new or experienced, he provides legitimate and valuable advisory from day trading to long-term investment horizon and helped thousands of investors to make money out of stock market.