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When equity instruments are removed from recognised exchanges, they stop participating in public trading. However, these holdings do not disappear from electronic records. Instead, they remain reflected in ownership statements, often raising questions about liquidity, valuation, and regulatory treatment.
Delisted shares may continue to appear in a demat account even after a company is removed from recognised stock exchanges. While such securities are no longer publicly traded, they continue to represent ownership in the underlying company.
Delisting of shares refers to the removal of a company’s securities from a recognised stock exchange, making them unavailable for public trading. Delisting of shares eliminates exchange-based price discovery and daily liquidity while ownership continues to exist in electronic form.
The delisting of shares directly affects tradability, visibility, and valuation. Stock exchanges publish circulars identifying companies whose securities have been removed, enabling shareholders to confirm status and review applicable regulatory provisions.
Delisting of shares from a recognised stock exchange can broadly be classified into voluntary and compulsory categories, depending on who initiates the process and the circumstances involved.
Voluntary delisting occurs when a company itself proposes to remove its shares from stock exchange platforms.
Initiated by the company:
The delisting proposal is put forward by the company’s promoters or board, typically as part of a strategic restructuring, ownership consolidation, or corporate reorganisation.
Exit price offered to shareholders:
An exit price is determined through a reverse book-building mechanism, allowing public shareholders to tender their shares. This process is designed to arrive at a price based on shareholder participation.
Regulated by SEBI:
The entire procedure is governed by regulations issued by the Securities and Exchange Board of India, covering disclosure requirements, pricing methodology, timelines, and shareholder protections.
Compulsory delisting is imposed by stock exchanges when a listed company fails to meet regulatory or operational requirements.
Enforced by stock exchanges:
In this case, the exchange initiates delisting without the company’s request, usually after repeated violations of listing norms or disclosure obligations.
Triggered by non-compliance or financial distress:
Common reasons include prolonged failure to file financial results, inadequate public shareholding, suspension of trading over extended periods, or severe financial deterioration.
No assured exit mechanism:
Unlike voluntary delisting, compulsory delisting does not provide a structured exit process for shareholders. While promoters may be directed to facilitate share purchase in some cases, there is no standardised price discovery framework comparable to voluntary delisting
Demat accounts record ownership independent of trading eligibility.
Key structural reasons include:
No automatic deletion mechanism exists
Exit routes may still be pending
Depositories preserve records for legal continuity
Trading suspension on exchanges
Possible exit window during voluntary delisting
Ongoing value uncertainty
Although exchange access ends, ownership rights remain intact.
Different regulatory pathways apply depending on delisting type.
Companies undertaking voluntary delisting provide an exit window where shareholders may tender shares through a reverse book-building mechanism governed by SEBI regulations.
Delisted shares may be transferred privately between demat accounts using a Delivery Instruction Slip (DIS) processed through NSDL or CDSL participants.
Delisted shares may also be exchanged through negotiated bilateral transactions commonly referred to as OTC trades. These are private transfers between parties and do not occur on a centralised SEBI-regulated exchange platform.
Where securities are extinguished or rendered unrecoverable, recognition of capital loss may arise subject to Income Tax provisions and documentation.
Transactions involving delisted instruments may result in capital gains or capital losses depending on holding period and disposal method.
Key aspects include:
Eligibility for capital loss recognition
Retention of acquisition records and transaction evidence
Tax consequences form part of the broader regulatory treatment applicable to such securities.
Sale or extinguishment of delisted shares may incur capital gains or losses under Income Tax Act provisions.
Common records include DIS forms, transfer acknowledgements, and identity documentation where applicable.
Delisted shares remain reflected in demat holdings until transferred, rematerialised, or extinguished through corporate action.
Delisting changes the regulatory and market environment surrounding a company’s securities.
Reduced liquidity
Difficulty locating buyers
Limited post-delisting disclosures
Potential undervaluation during exit offers
Reduced exchange disclosure requirements
There is no single consolidated delisted shares list. Information is released through exchange circulars issued by NSE and BSE, which shareholders may refer to for status updates.
Several Indian companies have undergone delisting through voluntary or compulsory processes, reflecting different regulatory circumstances.
Vedanta Limited initiated a voluntary delisting proposal in 2020. The process did not reach the minimum shareholder participation threshold prescribed under regulations, and the proposal was subsequently withdrawn.
Satyam Computer Services was suspended from trading in 2009 following major accounting irregularities. The company was later acquired by Tech Mahindra and merged into the listed entity.
Kingfisher Airlines was compulsorily delisted in 2016 following prolonged regulatory non-compliance, including failure to meet listing and disclosure requirements enforced by the National Stock Exchange of India and BSE.
Investors often search for consolidated lists and pricing data after delisting. However, no centralised platform provides real-time valuation once trading stops.
Since delisted share price data is limited, investors must rely on alternative channels for valuation.
Delisted securities remain part of ownership records even after exchange removal. Regulatory mechanisms such as exit offers, off-market transfers, OTC matching, or tax treatment define available outcomes. Understanding these structures clarifies how such holdings are managed within India’s electronic custody framework.
This content is for educational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.
Voluntary delisting is initiated by the company and typically includes an exit offer for public shareholders under SEBI regulations. Compulsory delisting is enforced by stock exchanges due to regulatory non-compliance or financial distress, and does not guarantee an exit mechanism.
They may be transferred through off-market demat transactions or negotiated OTC arrangements.
Value depends on factors such as company operations, availability of exit routes, promoter buyback offers, or negotiated pricing in private transfers. Absence of exchange trading limits transparent price discovery.
Capital loss treatment may apply if disposal occurs through eligible mechanisms or when investments become irrecoverable. Supporting documents such as acquisition records and transfer confirmations are required for tax reporting.
No. These holdings remain recorded electronically unless transferred, rematerialised, or extinguished through a valid regulatory process.
OTC transactions may occur as private transfers between parties through depository mechanisms, subject to regulatory compliance.
Removal depends on regulatory pathways such as promoter exit offers, off-market transfers using Delivery Instruction Slips, OTC transactions, or rematerialisation followed by surrender where applicable.
Potential mechanisms include voluntary delisting exit offers, negotiated private transfers, OTC platform transactions, or corporate restructuring outcomes, subject to regulatory provisions.
Yes. Electronic holdings can be converted into physical certificates by submitting a rematerialisation request through the Depository Participant.
They remain recorded in electronic custody but lack exchange liquidity. Any future value depends on company actions or regulatory developments.
Claims apply where ownership is reflected in electronic records or physical certificates, and any entitlement is governed by company or regulatory provisions.
Direct deletion is not permitted. Removal occurs only through transfer, rematerialisation, or extinguishment following approved processes.
Yes, provided the holdings are transferred or rematerialised beforehand, as accounts cannot be closed with residual securities.
A DIS is a form used to transfer securities between electronic accounts outside exchange platforms, enabling movement of delisted or unlisted holdings.
Capital loss recognition may apply if delisted shares are disposed off through an eligible transfer mechanism or if the investment becomes irrecoverable, subject to documentation and provisions under the Income Tax Act. Supporting records such as acquisition details, delisting confirmation, and evidence of transfer or extinguishment are typically required for reporting purposes.
Available options include participation in exit offers, private transfers, OTC matching, rematerialisation, or capital loss recognition, depending on circumstances.
DP or rematerialisation fees may apply.
Timelines vary depending on transfer or exit method.
Tax treatment depends on disposal method and holding period. Capital gains or losses may arise, subject to documentation and Income Tax Act provisions.
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