Usually, when a stock is taken from the market because it no longer satisfies the requirements of its exchange, the term “delisting” is used. Companies and their stocks need to adhere to specific standards to be listed on a significant exchange like the Nasdaq. The basic requirements for being listed on the Nasdaq Global Market are:
(1) A share price of at least one dollar
(2) A minimum of 400 shareholders overall
(3) 50 million dollars in market value, 10 million dollars in stockholders’ equity, or 50 million dollars combined to form assets and revenue.
Additionally, businesses must promptly notify the Securities and Exchange Commission (SEC) of any relevant news, file their quarterly and annual reports on time, and adhere to a number of continuing corporate governance standards. The company’s shares could be removed from the exchange if any standards are not met. A corporation may relist on the exchange if the listing conditions are once more satisfied.
A firm must follow the regulations the exchange set forth to be listed on the exchange. In the event that they don’t, they are taken off the exchange. Exchange issues notice to a firm for being out of compliance with a deadline. Theoretically, a delisted stock may be relisted on a significant exchange, but this rarely happens. The delisted company would need to avoid bankruptcy, address the situation that led to the delisting, and then meet the requirements of the exchange. A delisted company that goes bankrupt and delisted shares that loses all of their value is a more frequent occurrence than a relisting. The business may be liquidated or bought out of bankruptcy by a private owner. The business may also reorganize before eventually going public through an IPO and issuing new shares to new investors.