What Is Delisting of Shares? How Does It Work and What Does It Mean for Shareholders?

Suppose! you hold shares in a company and suddenly receive information that the shares of the company you were holding will no longer be available to trade on the stock exchange. After such information, numerous questions may come to the mind of the shareholder(s), i.e., now what’s next…

1. What will happen to his /her shares?

2. How can it be sold?

3. Ownership of the Shares.

4. Price to exit

What Is Delisting of Shares?

Delisting means when a company’s shares are not available to trade on a recognized stock exchange such as NSE /BSE. In delisting, the mode of share trading gets changed, but it does not mean the company stops existing or shareholders lose their ownership.

According to the SEBI (Delisting of Equity Shares) Regulations, 2021, delisting can be voluntary or compulsory, with steps and ways for shareholders to exit. SEBI’s current rules show that these rules were last updated on September 3, 2025.

The process depends on whether the delisting’s done voluntarily or forced. This article explains what the delisting of shares means, how the process works, how prices are set, and what shareholders need to know when shares are removed from a stock exchange.

Why Do Companies Delist Their Shares?

There are different reasons to delist a company’s shares. The first one is voluntary delisting, in which a company’s promoter or acquirer wants to run the company under private ownership; hence, they initiate the process of delisting its shares from the stock exchange.

Another is compulsory delisting; in this process, the stock exchange/regulator initiates delisting because the company has failed to comply with the listing requirements or specified regulatory guidelines.

The type of delisting of shares is important for shareholders as it defines the process, price, and exit route; hence, shareholders should identify the route and read the official disclosures.

What Are the Types of Delisting?

Broadly, there are two categories through which a company’s shares can be delisted

1. Voluntary Delisting
2. Compulsory Delisting.

Both routes remove the company’s shares from the exchange; however, the processes differ.

Voluntary Delisting

Voluntary delisting occurs when a promoter or buyer wants to take the company’s shares off the stock exchange through the applicable regulatory process. Eligible voluntary delisting can use reverse book building or, for eligible frequently traded shares, a fixed-price method.

In the fixed-price method, the acquirer specifies a delisting price according to SEBI’s requirements.

Compulsory Delisting

Compulsory delisting occurs when a recognized stock exchange removes a company’s shares from the trading list due to noncompliance with listing requirements or regulatory norms. The company also gets an opportunity to clarify its stand before the delisting order.

For public shareholders, the exit process is different from voluntary delisting. SEBI states that the promoter must acquire the delisted shares from public shareholders at the value determined by an independent valuer, subject to applicable provisions and the shareholder’s option to retain the shares.

How Does the Delisting Process Work?

The exact steps depend on the method of delisting. A voluntary delisting includes the following steps:

1. Proposal and approvals: The promoter or acquirer initiates the whole process of sending a proposal for delisting and obtains the required approvals.

2. Public announcement: It is mandatory to publicly announce the delisting of the company’s shares; required disclosures pertain to the delisting, its route, process, and timelines.

3. Floor price and pricing: The floor price is determined as per SEBI’s framework. For eligible frequently traded shares, the fixed-price route requires the fixed delisting price to be at least 15% above the applicable floor price.

4. Shareholder participation: Shareholders can offer their shares through the prescribed process of delisting.

5. Price determination: In reverse book building, shareholders indicate the offer price they are interested in, and in the fixed price method, the promoter/acquirer specifies the price.

6. Success of the offer: The prescribed 90% shareholding threshold, subject to applicable regulatory provisions, must be achieved for the voluntary delisting to succeed. Under the fixed-price route, the acquirer accepts the tendered shares when the threshold is reached at the fixed delisting price.

7. Completion: When all the regulatory norms are fulfilled, the shares are taken off the stock exchange.

SEBI’s 2025 amendment also added specific provisions for eligible public sector undertakings, excluding banks, NBFCs and insurance companies. These provisions include a fixed-price process and specific floor-price requirements. They are a PSU-specific framework and do not replace the general delisting framework.

Shareholders should refer to the public announcement, letter of offer, and stock-exchange disclosures for exact dates and requirements.

What Happens to Shareholders When Shares Are Delisted?

After the shares are delisted, shareholders retain ownership; however, the shares are no longer available for public trading on the stock exchange.

Under voluntary delisting, shareholders who didn’t participate in the reverse book building of the fixed-price process get an exit opportunity to offer their shares to the company’s promoter at the applicable exit price, subject to prescribed rules and timelines. Once the shares are accepted as per the applicable process, the consideration is paid to the shareholder through the prescribed settlement mechanism and, as applicable, credited to the shareholder’s designated bank account.

SEBI’s FAQ says this option is usually available for at least one year after the delisting ends. The promoter must take the shares at the exit price.

Can You Sell Delisted Shares?

After shares are permanently delisted, they cannot be sold through the stock exchange. However, eligible shareholders may have an opportunity to offer their shares to the promoter during the exit period.If the shares are accepted, the applicable consideration is credited to the shareholder’s designated bank account through the prescribed settlement mechanism.

So, if you want to know how to sell shares that are no longer listed in India, first check the company’s delisting papers for the status, the exit price, and the time frame. For compulsory delisting, the exit mechanism involves valuation by an independent valuer

Voluntary vs Compulsory Delisting: Key Differences

Particular	Voluntary Delisting	Compulsory Delisting
Initiation	Promoter or acquirer of the company	Initiated by the stock exchange where shares are listed.
Circumstances	Request /Proposal to remove shares from the exchange, as per applicable requirements.	Due to non-compliance of listing requirements or specified regulatory/listing-related grounds
Pricing	Reverse book building or applicable fixed-price process	Value determined by independent valuer
Shareholder exit	Exit opportunity to shareholders under applicable process	Exit opportunity to shareholders under applicable process
Shareholder choice	Shareholders have opportunity to participate in applicable exit process	Shareholders can tender their shares to promoters or retain shares, as per the applicable rules

Key Takeaways for Shareholders

• Delisting of shares means that they will not be available for trade on the stock exchange; it does not affect the ownership of shareholders.
• The exit mechanism and process of Voluntary and compulsory delisting are different.
• Eligible voluntary delisting may use reverse book building or a fixed-price method.
• The price should be as per SEBI Guidelines in the fixed-price method, including the prescribed premium on the floor price.
• The September 2025 amendment added specific rules for eligible public sector undertakings; it did not replace the delisting framework.
• The shareholders should read the official delisting documents very carefully before participating in the process.

Disclaimer: This article is for information purposes only and is not investment, legal, tax, or financial advice. Delisting steps, time frames, pricing, and shareholder rights can vary by company, delisting type, and applicable rules. Investors should read the announcement, offer letter, and stock exchange details and talk to a financial, legal, or tax expert before making any decision. Share India does not promise any result from taking part in a delisting process.

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