Granthara01.02.04Listing, delisting and suspension0%

01.02.04 · Listing, delisting and suspension

One morning a stock simply does not trade. No price, no orders, nothing moves. Three completely different things can cause that, and they mean three completely different things for the money you have in it.

The day your share stops trading

You still own it. You just cannot sell it today.

Part 01 · Where Shares Are Born and Where They Trade
  1. 01.02.01 IPO, FPO, private placement and QIP
  2. 01.02.02 Fresh issue vs offer for sale in an IPO
  3. 01.02.03 Why buying a share sends the company nothing
  4. 01.02.04 Listing, delisting and suspension
  5. 01.02.05 How to read an IPO prospectus
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Learn

Listing is permission, not a property

A share trades because an exchange has admitted it and the company keeps meeting the conditions of that admission — filing results on time, disclosing what it must, maintaining enough public shareholding.

Listing is a standing arrangement between the company and the exchange. It is renewed by conduct, and it can be withdrawn.

Owning a share and being able to sell it are two separate things.

See it

Three ways trading stops

Tap each one. Your shares survive all three — what changes is whether there is anyone to sell them to.

The distinction that matters is whether someone is obliged to offer you an exit.

Learn

Why compulsory delisting is the bad one

In a voluntary delisting there is a buyer by design: the promoters want your shares, and the rules make them offer for them. There is a process, a price, and a window.

In a compulsory delisting nobody wants anything. The share is off the exchange, the daily market is gone, and what remains is a private holding in a company that was removed for failing to follow rules.

Try it

A company you hold is compulsorily delisted. What happens to your shares?

All of this — the conditions, the risks, the exit terms — is written down before you ever buy into a public issue. It is written down at enormous length.

Before you read this, which was true?

Remember

Listing is permission that the company must keep earning. Losing it does not take your shares away — it takes away everyone you could have sold them to.

Everything this chapter has told you, in order

  1. 01.02.01New shares are created in the primary market and paid for in ownership. Everything you do on the exchange screen happens somewhere else entirely.
  2. 01.02.02A fresh issue funds the business and dilutes you. An offer for sale funds the seller and dilutes nobody. The headline size hides which is which.
  3. 01.02.03The company was paid once, at issue. Every trade since is between investors, and the business receives nothing from any of them.
  4. 01.02.04Listing is permission that the company must keep earning. Losing it does not take your shares away — it takes away everyone you could have sold them to.
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01.02.05 — How to read an IPO prospectus

Before a company lists, it has to write down everything that could go wrong. Almost nobody reads it.