Delisting refers to the removal of securities from the list of exchange-traded instruments available for purchase or sale, meaning the security essentially ceases to be traded on the exchange.
In Russia, delisting can also refer to:
the transition of shares to the over-the-counter market, accessible only to qualified investors
a shift of shares from a list of more reliable stocks to that of less reliable ones.
A company may depart from the exchange either voluntarily or by decision of the exchange.
The main reasons for delisting companies at the initiative of the exchange include:
non-compliance of securities with exchange requirements
violation of trading rules
inaccurate financial reporting
bankruptcy or poor financial conditions of the company.
On its own accord, a company may opt to leave the exchange, for instance, if key investors wish to concentrate a larger portion of shares in their hands. This situation can also arise during corporate reorganizations (mergers, divisions, or acquisitions).
So, what should an investor do?
It depends on the situation. Therefore, it's crucial to first gather all relevant information regarding the delisting of the specific company.
If the company is undergoing reorganization, there is no need to panic. For foreign assets, brokers automatically credit compensation or shares of newly formed companies. For example, this occurred during the separation of the REIT Aimco into two entities (now trading under the tickers AIV and AIRC).
As for Russian stocks, you should receive an offer with an average price over the past six months or a more favorable proposal if the management is particularly keen on consolidating a maximum of shares in their hands.
So, don’t rush to sell your shares if the probability of delisting arises.
