Holding shares in a company that is delisting? Check what happens to your investment; how to get your money back

Companies may delist voluntarily or be removed for reasons such as regulatory violations, low market capitalisation or financial distress. Here's what happens to your tied investments.

While companies often seek to list their shares on stock exchanges, there can be instances when they choose to go the other way and withdraw their shares from the exchanges. This process is known as delisting.

Such an event limit a shareholder's ability to buy or sell the specified company's shares through the usual route, leaving them wondering what happens to the shares they hold and whether they can recover their investment.

The process of delisting securities for any company is governed by the markets regulator, Securities and Exchange Board of India (SEBI).

Why can a company's shares be delisted?

A listed company’s shares can be delisted from stock exchanges for several reasons. These include a company having insufficient market capitalisation, violating regulatory norms or facing financial distress leading it to file for bankruptcy, according to a blog post by Groww.

Delisting can also be voluntary, when a company or its promoters decide to withdraw the shares from the stock exchanges. This happens when a company merges with another entity, undergoes amalgamation or is going through a long period of non-performance.

What happens to the shareholders?

When a company delists its shares, investors continue to own the shares they hold, but they can no longer trade them through the stock exchange (NSE or BSE or both) where the shares were listed.

Shareholders can still sell their holdings through the over-the-counter market, which involves finding a buyer outside a recognised stock exchange.