Since the demonetization in India, the number of people willing to invest in shares and mutual funds has been increasing. Though it is helpful for our country, in investors point of view there are certain risks associated with investment in shares. Here we are explaining one of the rarest of such risk; delisting of a company from stock exchanges. If one company is delisted from stock exchanges in India, shareholders are no longer allowed to sell or buy securities of the company through a stock exchange. In such situation how can a shareholder sell his delisted shares in India?
This article teaches small investors to protect themselves from such a situation and guides how to cash their delisted shares legally in India.
What is Delisting by Stock Exchanges?
We can say a company is delisted when securities from the company are prevented from trading through stock exchanges. It can happen in two ways.
- Voluntary Delisting
Here the promoters of the company decide to Buyback shares from minority investors at a premium price. in this scenario, the investors are able to sell the share units they possess at a higher price than current market price. SEBI (Securities and Exchange Board of India) has strict guidelines on voluntary delisting to protect the rights of minority investors. - Compulsory Delisting
In this case, the company is kicked out from Stock Exchanges(SE) due to its failures to keep up the terms of listing agreement. Here we can say all investors who hold the delisted firm's equity are punished by Stock Exchange for the mismanagement by the promoters.
How to Sell Delisted Share Units?
If you possess equity of an unlisted company, you will find difficulty in selling them through NSE and BSE. However, one firm is delisted does not mean the equity you possess become worthless.
Those units are still worthy and if that company is making profits, you may even receive dividends too. If you are anxious about the future of unlisted securities you possess, you have following options.
- Sell to Promoters at a premium price
If the firm opted voluntary de-listing from BSE and NSE, promoters have to buyback the equity from minority shareholders at a premium price within one year period. Premium price must be higher than the market price. - Check Regional Stock Exchanges
Kicked out from BSE and NSE does not mean the securities from the same company is not listed in regional stock-exchanges. You should check whether the same enterprise is listed in any regional SE in India. - Wait till the Firm got Relisted
It is possible that once the company has fulfilled the SE guidelines, they will relist the same firm. If it happens, you can sell the units you hold through them. - Sell Though Brokers
There are brokers and companies who are willingto buy stocks of delisted firms. However, the price will be decided by them. If you need to know the names of companies who buy delisted stocks, they are given below.- 3A Financial Services LTD
They buy stocks of unlisted enterprises in physical and demat form. You can reach their website by visiting the link given below.
http://www.3acapital.in/ - Abhishek Securities
Another company which buys and sells unlisted equity is Abhishek Securities. They claim, they buy and sell unlisted company's share units at the best price available. To learn more about their offered price, visit the page below.
http://www.abhisheksecurities.com/unlisted.htm - Kajaria Securities & Finance
Another broker who is buying and selling unlisted share units is Kajaria Securities & Finance. You can find their offer price and selling price of unlisted stocks on their website.
http://www.kajariasecurities.com
- 3A Financial Services LTD
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If you know any other companies who buy and sell unlisted equities, I suggest you to inform us on comments.
