The quotation list of any stock exchange changes periodically. Shares of some companies enter the market, while securities of others leave it. For MICEX these are standard operating processes.
The situation when the issuer's securities are excluded from the quotation list and cease to be traded on the stock exchange is called delisting.
As soon as a company announces the start of such a procedure, shareholders are faced with a number of questions. What to do? Should I sell or keep the issuer's shares? What actions will be most beneficial? Let's figure it out.
There are 4 main reasons for delisting:
- the issuer's securities no longer comply with the list of requirements imposed by the exchange platform;
- problems with the financial position of the company or, as a last resort, the beginning of bankruptcy proceedings;
- refusal or unwillingness of the issuer to provide required reporting;
- The company's desire is to voluntarily leave the stock exchange.
Interestingly, delisting can take two forms.
- The listing level of the company's shares is being lowered. For example, I was the first, but became the second.
- Trading in the issuer's securities on the relevant exchange platform is terminated.
All special cases of delisting can be classified according to the party that initiated the process. This is the exchange or the issuing company itself.
When the initiator is the exchange
This type of delisting should be called forced. The trading platform unilaterally makes such a decision, focusing on the adopted rules and requirements for issuers’ securities.
The procedure under consideration is a mechanism to ensure transparency and create favorable conditions for investment and work of market participants. In peak situations, the issuer's shares are excluded from the quotation list and cease to be available for trading.
When an issuer no longer meets the criteria established by the exchange, its securities are downgraded. This form of delisting is intended to signal to traders and investors that the company's reliability has decreased and trading its shares has greater risks than before.
In simple words, the listing level is a clear indicator for market participants of how well the issuer meets the exchange’s expectations of reliability and is suitable for low-risk, conservative investments.
When the initiator is a company
This type of delisting is voluntary. In this case, the solution comes from the issuer and does not necessarily indicate the existence of any problems or difficulties.
For the company, this decision has both positive and negative sides. In a specific case, the sum of factors and possible consequences are considered. Only after this can delisting be announced.
- the company does not have to spend money to maintain the listing;
- the internal structure of the issuer is simplified;
- document flow is reduced;
- Free time is freed up for ordinary employees and top management of the company.
- formation of a negative information background in the media and professional communities;
- credit limits are reduced;
- institutional investors are leaving the issuer's shares, the number of minority shareholders is also decreasing;
- stock exchange quotations decrease;
- The company's rating from leading rating agencies is downgraded.
The main reason for delisting initiated by a company is the process by which securities are consolidated with key shareholders.
In addition, issuers are withdrawing shares from stock exchanges due to the start of a restructuring process or a change of jurisdiction.
Mechanism or how it works
The delisting procedure is regulated by the norms of national financial legislation. In developed Western countries and a number of Asian countries, this mechanism has been clearly developed. But in Russia, until recently, there were gaps in this area.
The stumbling block, due to which the domestic delisting mechanism was recognized by investors and experts as imperfect, was the lack of a time gap from the moment the decision was made to complete trading in shares until they were actually removed from the quotation lists.
What did this lead to in practice?
Individual companies made decisions to delist and left the exchange market without additional notification to the public. As a result, many investors lost the opportunity to sell the securities of the relevant issuer at market prices.
This couldn't go on for long. Numerous complaints from investors sent to the Federal Service for Financial Markets of Russia did not go unanswered.
The Moscow Exchange has clearly defined and formalized the delisting process. It all starts with a statement that the issuer sends to the MICEX special committee. A calendar month is allotted for its consideration. Based on the recommendations of the said committee, a decision is made according to which the company's shares leave the quotation list. An additional 15 days are allotted for this stage.
Thus, at least one and a half months pass between the moment the issuer decides to delist and the suspension of trading in the investment instrument. This time is more than enough for shareholders to decide what to do with the relevant securities.
What should the shareholder do?
Putting the company's bankruptcy aside, delisting is by no means the end of the world. Therefore, first of all, investors should not panic. As a rule, this is the sin of novice market participants who lack the experience to make an informed and calm decision. The result of throwing around in such a situation is often losses.
In fact, with an announced delisting, the shareholder has 3 options:
- sale of securities before their removal from the quotation list;
- retention of shares in ownership;
- use of the terms of the offer.
Let's look at each of these points in detail, but first we'll touch on the worst possible scenario. If the reason for delisting is bankruptcy, the shareholder will lose all funds invested in the company's shares.
However, such a situation does not arise overnight. If we recall the situation with the bankruptcy of the Transaero company, this process took several months. And the issuer's shareholders had enough opportunities to exit the paper with limited financial losses.
Sale of shares
The first thing that comes to mind for many investors when delisting is announced is the sale of securities. But as practice shows, in most cases this is not the best idea.
The fact is that information about delisting is generally considered negative news. Against this background, the company's stock quotes are sagging. Large-scale sales often occur, as a result of which securities lose tens of percent.
Thus, panicked investors sell their assets at an obviously unprofitable price. At the same time, such actions, although they result in losses, save a large number of nerve cells for traders.
If you are determined to sell the securities of an issuer that has announced delisting, then the correct strategy would be to wait for a rebound and sell them on growth. However, this approach has significant risks and will require endurance and fortitude from the trader.
Saving shares
Newbie traders do not even consider this possibility. And in vain! After all, when a security ceases to be traded on the stock exchange, it continues to exist. The investor is still its owner. And trading in the issuer's shares is carried out on the over-the-counter market.
Delisted securities continue to be kept in the depository of the brokerage company. Such shares retain the rights to receive dividends. In addition, quotes for such investment instruments change. That is, if a trader bought a similar security during a fall close to global lows, then in the future he has a chance to earn tens or hundreds of percent on its growth.
It should be taken into account that working with delisted shares is more difficult. The investor will have to contact a broker representative or independently understand the rules of trading within the RTS Board over-the-counter market.
The difficulties for such trading primarily lie in low liquidity. Within the over-the-counter market, there are fewer participants, therefore, obtaining the desired price will require more time than the same operation on the MICEX.
Offer from the issuer
Delisting of shares, which is carried out at the initiative of the company, in accordance with Russian legislation, cannot be done without a voluntary repurchase program. What it is?
When the issuer decides to remove shares from the quotation list, he is obliged to provide investors with the right to sell the securities at a weighted average price. How is it formed?
The stock exchange quotes of the company's shares for the last six months of trading are taken and the average figure is displayed. It is at this price that shareholders will be able to sell their existing assets.
Experience shows that for those investors who want to sell securities of a company that has announced delisting, this path is the most profitable.
Uralkali – will there be delisting?
Each case of delisting has its own individuality and develops according to its own scenario. Let us illustrate this statement using the example of the situation that currently exists with PJSC Uralkali.
In the fall of 2017, the Board of Directors of this largest producer of potash fertilizers decided to leave the MICEX. There were 3 reasons for this:
- low free float value of the issuer's shares;
- transfer of securities from the first to the third level of listing of the Moscow Exchange;
- decreased trading volume of the asset in question.
This issue was submitted to the General Meeting of Shareholders of the company. Stock market participants considered the issue practically resolved and were simply waiting for the actual delisting date to be set.
However, subsequent events took an unexpected turn. The decision to leave the exchange was never made. But there was no refutation.
As of mid-November 2018, the situation remains as suspended. Now no one can say for sure whether the delisting date for ordinary shares of PJSC Uralkali will be announced.
conclusions
For most investors and traders, despite changes in legislation, delisting remains a negative event. It's good that there is a strategy that can reduce the risk of getting into this situation.
To do this, firstly, it is necessary to diversify the stock portfolio. That is, invest your capital in several different companies. Even if one of them is delisted, the investor will risk only a small share of his own funds.
Secondly, invest in shares of proven issuers: blue chips and securities of second-tier companies.
This approach will minimize risks and give the investor a sense of stability.
From time to time, for various reasons, shares of individual companies are withdrawn from the exchange - they are delisted. What should minority shareholders do if their shares are delisted?
What is delisting and why is it carried out?
Delisting of securities is the exclusion of securities by the exchange from the list of instruments admitted to trading, including their exclusion from the quotation list. Delisting is possible in the event of a lower listing level (for example, from the first or second level to the third), or in connection with the cessation of trading in a given security.
A complete list of reasons for delisting can be found on the Moscow Exchange website http://fs.moex.com/files/257. In general, there are three main reasons:
- Failure of securities to comply with exchange requirements or the issuer’s failure to provide required reporting.
- Unsatisfactory financial position of the issuer or its bankruptcy
Issuer's desire
Thus, all cases of delisting can be divided into two categories - at the initiative of the exchange and at the initiative of the issuer itself.
Delisting initiated by the exchange
One of the objectives of the exchange is to ensure transparency and create favorable conditions for exchange trading. For this purpose, the stock exchange has, among other things, several levels of listing, entry into which gives a certain status to the securities. The higher the level, the more reliable the issuer is, and the more attractive its securities are for investment. Each level meets certain criteria, such as reporting disclosure, the number of shares in free float, the life of the issuer and corporate governance requirements.
If such a gradation did not exist, then it would be more difficult for the ordinary ordinary investor to understand the wide list of securities traded on the MICEX. Listing levels serve as an indicator to guide you when choosing an investment option. If an investor is considering more conservative investments, then his choice is limited to securities from the first quotation list. If, for the sake of greater profitability, he is willing to take risks, then he can take a closer look at the securities from the third-level list.
When a company no longer meets the requirements for issuers whose securities are traded on a list of the same level, its securities are delisted - moved to a list at a lower level or removed from trading altogether. This mechanism is designed to protect investors from investing in securities with a greater level of risk than they are willing to take on.
MICEX requirements for securities http://www.moex.com/s19
List of securities admitted to trading: http://www.moex.com/ru/listing/securities-list.aspx
Delisting at the initiative of the issuer
There are several reasons why companies initiate delisting proceedings. The most common is the consolidation of the main package of securities in the hands of one or more key shareholders. Trading volumes for such shares are quite small and do not always make economic sense for the company itself. Withdrawal of a company's shares from public trading allows one to reduce costs for maintaining a listing, administrative expenses, and simplify the structure of document flow and some other business processes.
The main disadvantage for the company in this case will be difficulties in selling the business or its share. When shares are freely traded on the market, it is much easier to determine its fair value based on current quotes. If trading does not take place, then the issue of price becomes opaque. A company faces a similar problem when receiving a large loan from a bank and needs to evaluate the value of the collateral.
The issuer may also withdraw shares from trading due to company restructuring or change of jurisdiction.
What to do if your shares are planned to be delisted
Depending on the reason why your stock is leaving the market, this could be a bit of exciting news or very bad news. Of course, the saddest option is if the company goes bankrupt. In such a situation, shareholders in most cases lose their funds. In general, you can do one of the following:
Sell shares before exclusion from trading
With this option, you get rid of papers and look for another investment instrument. Quite often people resort to this option, which causes certain difficulties. Sales in the market provoke a fall in the price of the security, and investors who did not have time to exit the securities before others are forced to sell their asset at a significantly lower price. Thus, in this case, you will have to incur losses, but you will save part of your capital and save your nervous system from worrying about the future fate of the delisted share.
Despite the security's withdrawal from organized trading, you still remain its owner. Your shares are still kept in the broker's depository, and you retain all rights to them, including the right to dividend payments. So, if a company has a good dividend history or good prospects in this direction, then holding the shares may be profitable. It happens that a company that has never paid dividends begins to pay them after delisting.
The main difficulty will arise at the moment when you want to sell them. This can be done through your broker over the phone or independently, for example, on the over-the-counter market RTS Board. The challenge is that there is little liquidity in the over-the-counter market, and it can take time for shares to sell at the price you're interested in. For comparison, it’s like selling a rare product through an ad. You publish an ad on the website and wait for your buyer. Final price negotiations are conducted over the phone. Pretty much the same thing happens on the RTS Board. Waiting for your buyer who will be interested in your number of shares at a reasonable price, although difficult, is still possible.
Take advantage of the offer
Another possibility is the right of minority shareholders to demand the redemption of securities. If delisting occurs at the initiative of the issuer, then delisting will be preceded by an offer under which those wishing to be able to sell their shares at a price not lower than the weighted average price of securities trading over the past six months. For example, PJSC Dorogobuzh will make a decision on delisting at an extraordinary meeting of shareholders on October 6. The offer involves the repurchase of shares at a price of 40.15 rubles. per piece, which is 15% higher than the weighted average price for six months and 5% higher than the closing price of the auction on the eve of the decision to hold a meeting.
Cases of company reorganization stand apart. In this case, the offer may imply the replacement of old securities with new ones issued by a newly formed legal entity. Exchange conditions vary in different situations.
Each case of delisting is individual and it is impossible to offer one solution for all cases. However, in order to reduce the risks of such an event, it is recommended to diversify your investment portfolio well, giving preference to companies from the first and second echelons with stable financial performance. Riskier assets should be a small portion of your portfolio, and you should keep a close eye on their financial position, dividend prospects, and management's overall attitude toward minority shareholders.
BKS Express
Why do issuers end up delisting and what to do about it?
Just before the New Year, on December 28, several issuers announced that they were withdrawing their shares from trading on the MICEX stock market. Among them were such third-tier shares that were relatively popular among investors, such as Ufaorgsintez and Ufaneftekhim, as well as the fairly popular paper of the strong second tier, Power Machines. All issuers simply wrote to the stock exchange to remove their securities from the list of securities admitted to trading—this is the delisting procedure allowed today. At the same time, Kalina is preparing to leave the stock exchange, which Unilever plans to turn into a private company. Analysts talk about the likely delisting of the Seventh Continent. According to Expert, delisting from the MICEX is being discussed in Krasny Oktyabr. On my own delisting has been hanging over investors like a sword of Damocles for many years - it’s just that previously cases of companies leaving the stock exchanges were rare, but now they are becoming more frequent, and we are talking about increasingly large companies. It is high time for officials to decide how the procedure for leaving the stock exchange should change so that the interests of both companies and small shareholders are respected.
I should have watched
During the existence of the Russian stock market, there were not so many cases of issuers leaving the exchange, but quite enough. Both those companies that became virtually private (like Lebedyansky and Wimm-Bill-Dann, completely bought out by PepsiCo) and those that simply do not want their shares to be traded on an organized market resorted to delisting at their own request. At the same time, they do not buy back shares from minority shareholders before delisting, and private investors are left with the securities in their hands. An example of such issuers is MDM Bank, which removed its preferred shares from the stock exchange, as well as Ufaorgsintez, Ufaneftekhim and Power Machines.
Investment company analysts and large portfolio managers do not see delisting as a particular problem. “If an investor was left with shares in his hands after delisting, we can assume that he was not very attentive to what was happening with his securities,” believes Vladislav Metnev, head of the analytical department of BCS. — Before delisting, there is always the opportunity to sell securities on the market or to a large investor under an offer. It must be understood that the investment history of this issuer is over. And if the company did not have a clear strategy for working with the public market, then the question is why buy its shares at all.”
“Usually, long before delisting, the stock is already illiquid, this was the case with ChelPipe and MDM Bank,” adds Alexander Golovtsov, head of the analytical research department at UralSib Management Company. “In addition, the buyout price on the part of a major shareholder can ensure an exit from the paper at a good price, this was the case with VBD and is now happening with Kalina.”
However, if you look at the situation through the eyes of a minority shareholder, delisting does not seem to be such a clear and harmless thing. Yes, indeed, when a company is acquired by a large Western holding, it often gives small shareholders the opportunity to exit through an offer, and at a decent price. So, apparently, this will happen with Kalina; the buyback price of its shares was set at 4,268 rubles - this corresponds to the price at which its main stake was acquired by Unilever, and still exceeds market quotes. However, this is rather an ideal example. “A minority shareholder who bought shares under an owner who wanted the company to go public should not suffer if the new owner sees the company as private. In the meantime, shareholders have to take into account both financial risks and such risks of disappearance of liquidity, although investors should be freed from the latter,” says Managing Director of Veles-Capital Investment Group Mikhail Zak.
It happens that delisting is carried out simply at the whim of the issuer, who for some reason does not want his shares to be traded on the stock exchange. Igor Repin, deputy head of the Association for the Protection of Investor Rights, recalls that delisting is sometimes used to bring down the market, and cites the example of the story of Nutrinvestholding, which removed its securities from the stock exchange in 2008, about a year and a half after the IPO. As a result, the shares fell several times in price (see “How Nutrinvestholding was missed”).
The argument that there is no need to buy a company that does not have a clear strategy for working with the public market does not seem correct: in Russia there are, in principle, few issuers with such a strategy, and moreover, growth stories are concentrated in the second and third echelons- securities on which you can make one hundred percent or more, and investors know this, of course, well. Finally, we must not forget that shares may be inherited by a person or may come into his possession during privatization - in this case, it is unlikely that the minority shareholder will follow stock exchange news. Of course, even in the case of delisting, there is almost always the opportunity to sell securities on the over-the-counter market. But, firstly, this requires a special request to the broker, secondly, an increased commission, and thirdly, there will be no price reference for the securities. “On the stock exchange, investors purchased liquid securities of the issuer with certain increased (compared to those established by law) guarantees in the field of corporate governance, and when delisting they are left with illiquid securities in the absence of the mentioned guarantees, the value of these securities falls,” explains a member of the subgroup on legal regulation corporate relations of the working group on the creation of the MFC Denis Spirin. — Termination of listing also entails the risk of violation of shareholders’ rights in the event of such possible subsequent corporate events as a mandatory offer and forced repurchase. The fact is that when determining their price, stock quotes must be taken into account. Delisting cancels such an obligation, which creates the risk of shares being repurchased, including forced ones, at an unfair price.”
Not so easy
It is clear that the issuer must be able to leave the exchange, in Russia this opportunity is easy to implement- a simple statement is enough. Moreover, a decision on delisting can be made either by the board of directors of a joint stock company or by its general director personally, and this decision itself is not even a significant fact, that is, it should not be published by the issuer. The MICEX explains that the “rules of listing, admission to placement and circulation of securities on the MICEX Stock Exchange” have always provided for the possibility of excluding securities based on receipt of an application from the issuer. True, the exchange has the right to request additional documents to make a decision on the exclusion of securities.
The regulation on activities for organizing trading on the securities market, developed by the Federal Financial Markets Service - it is with this that the exchange coordinates its listing rules - also does not in any way prevent the issuer from wanting to remove its shares from trading. Meanwhile, the practice of foreign platforms shows that the cessation of trading in securities may be accompanied by a “sanitary period” during which securities are available for transactions. In addition, the legislation of some countries provides for a special procedure when making an issuer’s decision on delisting (for example, this decision must be made by at least 75% of the votes of security owners at the general meeting of shareholders), the MICEX adds.
Based on the fact that issuers are increasingly using their right to leave the exchange, without providing a decent exit for minority shareholders, it is logical to change the conditions of delisting on our site. “Since in Russia there is virtually no concept of “business reputation” and a person who created a business, brought it to an IPO, and then ousted the minors who believed in him during the IPO, can successfully create and bring a new company to the stock exchange, the delisting rules must be changed.” , says Igor Repin from the Association for the Protection of Investor Rights. Several measures will do, he said. Firstly, a waiting period before delisting, so that after the relevant decision of the issuer, the shares can still be traded for some time. Secondly, it seems to make sense to introduce fines for violations of listing rules, which could lead to delisting by decision of the exchange. It would be reasonable to fine not the company, but specific officials. Thirdly, it may be necessary to increase the powers of the Federal Financial Markets Service so that fines are imposed promptly, and not after proceedings in court. Alexander Golovtsov adds that it would be logical to introduce such a rule: if the issuer intends to remove its shares from the stock exchange, it must completely buy out the shares of minority shareholders, that is, make the company one hundred percent private. If a more or less large company has minority shareholders, for example, a free-float of more than 5%, then it makes sense to oblige such a company to have a listing.
As reported by the FFMS, the service is currently consulting with exchanges, as well as with market participants, to develop proposals to determine the parameters of the delisting procedure. At the same time, the subgroup on the legal regulation of corporate relations of the working group on the creation of an international financial center has developed a number of proposals for regulating delisting that can change the situation. They provide that in case of voluntary delisting (that is, when delisting is carried out by the exchange on the basis of a voluntary decision of the issuer), the protection of the rights of minority shareholders will be ensured by several provisions. First of all, the decision on delisting from the last exchange must be made by the general meeting of shareholders with a majority of 85% of the total number of all shares - not from the number of those present with a quorum of 50%, but from all shares and only on the proposal of the board of directors. “Shares can be listed on several exchanges. In this case, it is proposed to consider leaving the last of these exchanges as a violation of the rights of portfolio investors,” comments Mr. Spirin. “The majority shareholder who decides to delist the issuer has the right to choose how he will obtain the 85 percent of shares necessary to make such a decision: make a voluntary offer, buy the missing shares on the market, or somehow persuade other shareholders to vote for the delisting decision.”
Further. Shareholders who did not vote or voted against the decision to delist shares from the last exchange will have the right to demand the repurchase of their shares by the issuer at a fair price, which should not take into account the fall in the value of shares as a result of their delisting. At the same time, the norm of the Federal Law “On Joint-Stock Companies”, which states that the issuer has the right to use an amount not exceeding 10% of net assets to repurchase shares, should not be applied. Finally, a decision to delist from a non-exchange exchange (where shares are traded on multiple exchanges and the issuer intends to exit one of them) will have to be made by the board of directors.
For now companies can disappear from the stock exchange whenever they want, and use it for your own purposes. Thus, the offshore Highstat Limited, which in December last year became the owner of 95.57% of Power Machines and has still not made an offer to minority shareholders, although it should have done so, since it exceeded the threshold of 75%, now, after the disappearance of the shares “ Power Machines" with the MICEX, will theoretically be able to make an offer not at the market price, but at a price more convenient for itself.
Listing is a regime regulating the admission of securities to quotation on a stock exchange. Quotation refers to the actions of the Exchange Quotation Commission, providing for the achievement of the following goals:
admission of securities to trading on the stock exchange after studying the financial position of the company issuing these securities;
determining the rate of securities, as well as registration and publication of their rates (prices) in exchange bulletins.
Based on the level of requirements imposed by the exchange on securities and their issuer, a distinction is made between listing and pre-listing. Pre-listing is considered as a preliminary stage for going through the listing procedure. The introduction of the procedure for listing and pre-listing of securities is aimed at ensuring the protection of the interests of investors and exchange members from possible losses due to the bankruptcy of issuers.
The listing procedure includes the following steps:
filing an application for listing of securities from the issuer or its authorized representative, who is a professional intermediary;
concluding an agreement with the stock exchange to conduct an expert assessment;
provision of documents necessary and sufficient for the examination of constituent documents, balance sheets and reports, and other documents of the issuer of securities;
conducting an examination of securities based on an analysis of the duration and volume of their circulation; profitability of the issuer's activities, liquidity ratios, coverage based on the balance sheet, changes in the authorized capital, etc.
consideration of the results of the examination at a meeting of the Securities Admission Commission, or the quotation commission of the exchange with the participation of issuers, their intermediaries, and exchange specialists.
Securities that have undergone the listing procedure i.e. that meet the exchange's minimum requirements for securities are included in the exchange's quotation list.
Securities that have partially passed the listing procedure, i.e. according to any individual indicators, are included in the pre-listing list for circulation on the stock exchange. All transactions with securities that have not been listed must be executed outside the exchange's trading system. The Exchange does not bear professional responsibility for the reliability and legality of such transactions.
After passing the listing commission, the securities are transferred to the quotation commission, which determines the price of the security when it is first sold on the stock exchange. The quotation commission determines the liquidity of securities, forecasts demand for them, and determines their attractiveness for investors based on information received from the issuer and its intermediaries.
Delisting is a procedure for excluding securities from the exchange list. This procedure is organized on the exchange in the following cases when:
the issuer is declared bankrupt or its financial position is recognized as unsatisfactory based on subsequent quarterly balance sheets and reports;
the scale of public offering of securities has decreased, or the securities no longer meet the minimum requirements for exchange listing;
the issuer, upon a written application, withdraws its securities from the listing list, for example, in connection with the exchange of its securities of one issue for newly issued securities, during a split of shares, a merger with another company, etc.
the issuer does not submit annual (quarterly) reports on its activities within the deadlines established by the agreement, violates the terms of payment for the examination or other terms of the securities listing agreement.
It should be noted that in recent years, in world practice, secondary exchange markets have been developing on large exchanges, where securities are traded without going through the listing procedure. However, in these markets the investor's risk increases significantly.
From the quoted exchange lists, that is, the withdrawal of assets from circulation.
Some companies, leaving trading, offer their investors to buy the same shares from them in advance.
But this doesn't always happen. Just a couple of years ago, MDM Bank “left” without warning.
After him, the preferred securities were subjected to delisting company " Ufaneftekhim" And " Power machines».
To withdraw assets from the exchange, organizations only need to submit a corresponding application to its management.
This is what the third-tier companies mentioned above did. The companies' shares were traded on the MICEX. Delisting in Russia gaining momentum.
The phenomenon began with the withdrawal of securities of small enterprises from trading. Then large companies also got involved.
Wimm-Bill-Dann was one of the first to take advantage of the opportunity to “retire”. This company seized assets due to its merger with PepsiCo.
That is, the previous shares became irrelevant because the company was bought out.
However, the followers of Wimm-Bill-Dann carried out the delisting without any “valid” reasons, the companies simply did not want to be included in the organized one.
The concept " organized market" Shares are withdrawn from circulation only within its framework. Delisting is permitted by securities on over-the-counter platforms.
Moreover, in Russia you can continue to sell assets at stock trading, with the only difference being that they will not be listed on the quoted list.
In other words, the company that seized the documents actually remains public. The West does not agree with this position of the Russians.
There, delisting automatically transfers the organization that resorted to it from the category of public to the category of private.
In international circulation, the continued sale of assets on organized markets is not permitted.
Why resort to delisting? There are advantages to withdrawing shares from trading. Thus, the issuer (the company that issued securities) simplifies its internal structure and reduces document flow.
The organization's costs for listing are reduced. This is the name for the procedure for including assets in the list of quoted assets on stock exchanges.
For this to happen, you need to pay for the services and other intermediaries. In addition, the lack of open information about shares reduces the risks of companies.
The advantages are obvious. But they are not taken into account by the media, creating a negative aura around enterprises conducting delisting.
This becomes the main disadvantage of withdrawing valuables from organized markets. Newspapers, television, radio instantly “scatter” with assumptions about the collapse of the company, its dishonesty towards asset holders, and so on.
In addition, delisting reduces companies' lending capabilities. The credit limit for private organizations is naturally lower. Finally, the company loses some investors.
The disadvantages listed above sometimes fall out of the blue. The fact is that with regard to delisting, domestic legislation is imperfect.
The acts do not stipulate the obligations of stock exchanges to verify the actions and powers of the sole executive body.
It is he who signs the issuer’s documents asking to remove assets from the quoted lists. It is he who transmits the petition to the organized one.
But the sole executive body may also have malicious intent and act outside its competence.
Hence, albeit rare, notes in the press about the unexpected seizure of assets, and, moreover, unexpected for the very enterprise that released them.
It is interesting that according to the law, not only the board of directors of the company, but also its individual director can decide to withdraw shares.
Abroad, by the way, at least 75% of the organization’s securities holders must sign the application. There is no obligation to publish the decision.
Exchanges have the right to request additional information regarding the delisting of securities of a particular company. True, in reality such requests are rarely made.
Investors are often dissatisfied with the lack of a sanitary period in Russia.
In other countries, this is the name for the period of time after delisting during which it is still allowed to trade assets with full, so to speak, rights.
Although the law is not complete, it exists, or rather, there are 9 positions that control delisting process.
Among them: federal laws “on the securities market” and “on joint stock companies”; order of the Federal Financial Markets Service on the standard for issuing valuable assets; regulations on activities for organizing trading in securities, on the procedure for issuing permission to place them and on the disclosure by issuers of data on assets.
