What is Voluntary Delisting? How Indian Companies Exit Stock Exchanges
Voluntary delisting happens when promoters decide to take a company private.
Voluntary delisting occurs when a company's promoters choose to remove it from stock exchange listing. The promoter wants to take the company private, eliminating public market obligations like quarterly reporting, disclosure requirements, and minority shareholder oversight.
Famous Indian cases include Vedanta's attempted delisting (failed first, succeeded later) and several MNC subsidiaries going private. Promoters typically do this when they believe the stock is undervalued by the market or want operational freedom.
How does the process work?
Board approval and shareholder vote. Appointment of merchant banker. Reverse book building opens. Public shareholders bid their exit price. Floor price is set by SEBI formula. If 90% tendering is achieved, delisting succeeds.
What is the floor price?
SEBI mandates a minimum floor price based on average traded prices over the previous 26 weeks. The discovered price through reverse book building is usually above the floor. Promoters must accept this discovered price or abandon delisting.
Evaluate companies at risk of voluntary delisting on Stockk Equity by tracking promoter holding trends. Open a free demat account to manage all your equity holdings.
Investments in securities market are subject to market risks. This article is for educational purposes only and does not constitute investment advice. INDIRA SECURITIES PRIVATE LIMITED : SEBI REG. NO.: INZ000188930, NSE TMID: 12866, BSE TMID: 663, CDSL DPID: 17000, MCX TM ID: 56470, NCDEX TM ID: 01277, CDSL REG.NO.: IN-DP-90-2015, CIN:U67120MP1996PTC085111, RA SEBI REG. No.: INH000023269, IA SEBI REG No.: INA000021410. For any complaints pertaining to securities broking please write to [email protected], for DP related to [email protected].
Frequently Asked Questions
Should I participate in reverse book building?
If you want to exit, bid at a price you consider fair. If you are happy holding, you can skip but must sell within one year at the discovered price. Use StockkAsk at stockk.trade/stockkask for valuation guidance.
Can delisting fail?
Yes. If 90% threshold is not met or promoter rejects the discovered price. Vedanta's first delisting attempt in 2020 failed because shareholders demanded too high a price.
What happens to F&O contracts?
F&O contracts are settled at fair value upon delisting. Open positions are closed automatically.
Is there a lock-in after relisting?
If the company relists within 5 years, promoters cannot sell shares for a certain period. This prevents delisting-relisting arbitrage.
How to profit from delisting?
Buy shares below the expected delisting price and tender in reverse book building. This is speculative and risky because delisting may not succeed.
Investments in securities market are subject to market risks. This article is for educational purposes only and does not constitute investment advice.
INDIRA SECURITIES PRIVATE LIMITED : SEBI REG. NO.: INZ000188930, NSE TMID: 12866, BSE TMID: 663, CDSL DPID: 17000, MCX TM ID: 56470, NCDEX TM ID: 01277, CDSL REG.NO.: IN-DP-90-2015, CIN:U67120MP1996PTC085111, RA SEBI REG. No.: INH000023269, IA SEBI REG No.: INA000021410
