What is the de-listing of worthless shares?
It is the process whereby shares in a company that are deemed worthless are removed from the list of the relevant stock market. In most jurisdictions, delisting can be either at the request of the company or the insistence of the market authorities.
Where have you heard about the de-listing of shares?
As an investor, you may have been unfortunate enough to learn that a stock you hold has been de-listed or is in danger of being so. Financial media will highlight the de-listing of prominent companies and the information services of most stock markets will announce when a de-listing has happened.
Delisting can happen to just about anyone. After filing for bankruptcy in June 2017 the Canadian department store Sears was delisted from a number of stock exchanges including the Canadian TSX and the US NASDEQ. The retailer had piled up losses and had seen stock nosedive losing more the 80% of its value as it failed to fight off competition from traditional and new retail operators.
What you need to know about the de-listing of shares.
A stock-market listing is no guarantee that the company concerned will be successful. But there are usually minimum standards that must be met if a company is to keep its shares listed. There may be rules on the firm's capitalisation, for example, or the liquidity of the stock in terms of a minimum number of market members trading it. External events such as a corporate insolvency may have forced the de-listing, which can be either requested by the company or demanded by the stock market concerned. Investors holding worthless shares may be entitled to tax relief on their loss.
Find out more about the de-listing of shares.
The de-listing of shares is a function of the running of financial markets, about which you can read more in our definition.