Delisting Law and Legal Definition
Delisting refers to the practice of suspending the stock of a company from a stock exchange. This is done so that investors can no longer trade shares of the stock on that exchange. The following are some of the instances wherein delisting occurs:
1. When a company goes out of business,
2.When a company declares bankruptcy,
3.When a company no longer satisfies the listing rules of stock exchange,
4.When a company has become a private company after a merger or acquisition,
5.When a company wants to reduce regulatory reporting complexities and overhead.
However, delisting does not necessarily mean a change in company's core strategy. Delisting is disadvantageous to shareholders of a company because it renders the stock less liquid. [In re Eagle-Picher Indus., 167 B.R. 102, 103 (Bankr. S.D. Ohio 1994)].