Delisting
Delisting is the process by which a company's shares are removed from the trading platform of a stock exchange, either voluntarily (at the company's initiative) or compulsorily (by SEBI or the exchange for regulatory non-compliance).
Voluntary delisting in India is governed by SEBI (Delisting of Equity Shares) Regulations, most recently updated in 2021 and further amended in 2024 to introduce a fixed-price delisting route alongside the traditional reverse book-building (RBB) mechanism. Under RBB, public shareholders tender their shares at prices they find acceptable, and the acquirer must accept the discovered price — which must be at least at the floor price determined by a formula — only if at least 90% of the total shares are tendered.
The Vedanta delisting attempt of 2020 was a landmark episode in Indian delisting history. Promoter group Vedanta Resources sought to delist Vedanta Ltd from Indian exchanges at a floor price of ₹87.5 per share. Public shareholders tendered shares, and the reverse book-building process resulted in a discovered price of ₹87.5 — at the floor — but the 90% threshold was not achieved, causing the delisting attempt to fail. The episode highlighted the power that minority shareholders collectively hold in the Indian delisting framework.
Compulsory delisting, in contrast, is a punitive action by SEBI or exchanges against companies that fail to comply with listing requirements — such as non-payment of listing fees, failure to hold AGMs, non-compliance with LODR regulations, or promoter share pledge disclosure failures. Shares of compulsorily delisted companies become extremely illiquid; shareholders can only exit through an exit window mandated by SEBI, typically at a formula-based price.
For retail investors, holding shares in a company that is undergoing voluntary delisting can be lucrative if the acquirer pays a significant premium to the market price. Conversely, getting stuck in a compulsorily delisted company is one of the more painful investing outcomes — the shares may trade on regional exchanges at steep discounts with minimal liquidity. Staying invested in companies with high promoter pledging, poor governance, and persistent LODR violations carries this delisting risk.
Post the 2024 SEBI amendments, a fixed-price delisting route was introduced for certain categories, allowing acquirers to set a fixed price (at a minimum premium to the floor) for the exit offer without the uncertainty of reverse book building. This change was welcomed by acquirers who had been deterred by the unpredictability of the RBB price discovery.