Definition of Delisting
What is a "delisting" as it applies to the stock market? What is the definition of the term delisting?
Stock market exchanges such as the NYSE (New York Stock Exchange) and NASDAQ have requirements that companies need to meet in order to:
a) initially obtain a listing
b) maintain a listing
In order to initially obtain a listing on the NASDAQ, for instance, minimum standards must be met when it comes to corporate governance, total # of market makers, etc.
In order to maintain a listing on the NASDAQ, certain minimum requirements need to be met in order to avoid being delisted. These requirements include:
a) minimum bid price ($1)
b) minimum number of shareholders (400)
c) minimum market cap (between $5-$15 million)
d) minimum number of publicly held shares
If any listed companies are found to be "deficient" in any of the continued listing requirements, then they will be notified, in writing, by the stock exchange that they are listed on. The company will be given a certain period of time to address the deficiencies. If they are successful, then they will avoid being delisted. If they can't address the problem, then they will be delisted.
If a stock is "delisted", then that means that they will no longer trade on the exchange that delisted them. For instance, if a company is delisted from the Nasdaq, then they could still trade on the Pink Sheets.
The most common (at least in my experience) reason for receiving a delisting notice is due to falling under the minimum bid price ($1). Many companies will address this issue by performing a reverse split.
Companies must maintain a closing bid price of $1.00 for 10 consecutive business days in order to maintain their listing.
Davemanuel.com Articles That Mention Delisting:
KaloBios Pharmaceuticals Files For Bankruptcy
Rupert Murdoch vs Google
101 of All S&P 500 Stocks Now Trading for Less than $10 Per Share
Nasdaq Delistings Way Up in 2008
Knowing the Difference Between a 10-K, 10-Q and an 8-K