Delisting

Short Description

    • The process of removing the security from a stock exchange. This can be done on a mandatory basis by the Exchange or on a voluntary basis by the company itself.
    • After a stock has been delisted it can no longer be traded on that exchange and no official on-exchange price building is being tracked.

Definitions

    • From a Swift Perspective, the Delisting Event can be seen as a subtype of the “Change in Trading Status” Event (Delisting, Suspension, Activation).
    • If a company wants to issue shares or debentures to the public, it will need to have it’s securities listed on a stock exchange. Issuing securities helps you raise more capital because the investor pool is larger. Also, being listed on a Stock Exchange comes with a certain prestige. Everybody will know the company complies with all the listing requirements from the Stock Exchange and this will instill a certain amount of trust in the company. This in turn can help build the brand. It will especially help with brand awareness. So, a delisting means that a company won’t be able to benefit from these features any longer.

Asset Classes that can be affected / Involved

    • Equities
    • Bonds
    • Debentures (Debt Instruments – not backed by collateral)
    • ETF’s
    • Fund Units

Longer Description from the point of view of different market participants

The issuer will no longer have to pay the fees to the Exchange and it won’t have to deal with the bureaucracy that comes with being a listed Company anymore. On the other hand, they will also not be able to benefit from the advantages anymore, such as larger pool of investors, brand building opportunities.

The Company Registrar needs to amend their records on the Effective Date of the event to record the change.

Unless the Delisting is part of a larger Reorganisation of the Company, the Agent Bank will not really have a role to play in the Delisting Event. This event does not involve Stock or Cash Transactions. The Company could hire an agent bank to manage communication about the event.

Numbering Agencies need to update the status of the shares to “non-listed” if applicable

Any exchange that is listing the security will no longer allow the security to be traded publicly through its systems.

Any Index that included the security will have to remove the security from its Index and replace it with another Company’s.

At CSD level, Messaging is generated and sent down the chain. This event does not involve Stock or Cash Transactions. Static Data will have to be updated.

At Custodian level Messaging is received and ingested and in turn new messaging is generated and sent further down the chain. This event does not involve Stock or Cash Transactions. Static Data will have to be updated.

At BrokerDealer level Messaging is received and ingested and in turn new messaging is generated and sent further down the chain. This event does not involve Stock or Cash Transactions. Static Data will have to be updated. Broker Dealers will probably have to find ways to trade the stock “over the counter” going forward.

If the stock is on loan or held as collateral, then both the stock lending brokers (or all 3 if it’s 3rd-party lending) and collateral agents need to negotiate what the event means for them and what action they want to take as a result of it. Stock may have to be recalled before the important dates of the event.

Fund Manager need to include the change in the fund accounting and possibly in the NAV (the latter may be harder to establish)

Vendors will have to update their systems with the correct information for the securities and send messaging to their clients about it. Price data will no longer be built at the exchange but a network of OTC sources will have to be built.

      • At Retail Bank level the messaging is received and ingested and needs to be forwarded to the Beneficial Owners.
      • When the beneficial owner holds the securities through for example a Fund or an ETF, then the Retail Bank does in that case not need to take action on the event (it’s part of the fund manager’s tasks)

Beneficial owner will have to take note of the changes and reconcile these within their systems (if applicable).

Background

In some countries a delisting is seen as a Corporate Actions Event, whereas in others (France for example) the event is seen as a Static Data update or as “Information” to shareholders. However, in reality this type of information is relayed to shareholders through Swift Corporate Action Messaging, so the Qualifier CAEV = DLST is used.

      • The Company no longer complies with the Listing Requirements of the Exchange (see for more info below)
      • The Company becomes a private company (the company might get bought by private equity buyers or the company might want to omit the additional bureaucratic procedures that come with being listed on a stock exchange like publication and disclosure requirements)
      • Trading volumes on the exchange it wishes to delist are not sufficient to justify the listing fees (A company could have listed its shares on for example 7 exchanges. This means it has to pay 7 times the listing fees. If volumes on one of the exchanges don’t merit those fees, the company might want to chose to delist itself.
      • The company (usually the legal entity) is being liquidated (for example the owners of a subsidiary company that is listed independently on an exchange might choose to liquidate the subsidiary and bring all the assets into the parent company and have only the parent company listed on the exchange).
      • The company declares Bankruptcy (for example a company can default on paying their debt and file for bankruptcy protection).
      • The company may be Merging with another company in which case the two “old” companies are delisted and a newly created combined entity is listed instead.

A company or security can be delisted for many reasons. It often involves the company ceasing to exist. But it also happens when companies are taken private (so are no longer listed on an exchange).

Other Aspects

Swift designates the Delisting event as a separate Event Type. Typically a GENERAL Event (22F CAEP = GENL) is used whereby the 22F CAEV qualifier is DLST.

SMPG does not designate the Delisting event as a separate Event Type in their CA Event Types Template Grid. Typically a GENERAL ANNOUNCEMENT Event is used whereby one of the qualifiers (CAEV) is DLST.

  • Depending on which Stock Exchange, a request form needs to be completed after which the process will start.
  • Every Exchange is free to set its own listing requirements so they will all differ. In summary, most of them will include factors like the market capitalisation of the company and minimum turnover. Most exchanges will also automatically proceed to delist stocks after they’ve become penny stocks (stocks worth less than a USD equivalent).
  • In case a delisting is initiated by the Exchange, often it will issue warnings to the company first. If the company still does not comply with the listing rules after a while, the exchange will proceed to announce a Delisting.
  • If a Company decides to delist itself it has to request approval from the exchange and complete the appropriate documentation.
  • The decision to delist the company has to be announced and made public.
  • All shareholders will be notified and given time to think about what they want to do with the shares. (Often delisting from an exchange is followed by removal from the security from the Central Securities Depository of a country and cross border settlement to another country has to be arranged).
  • On the effective day of the Delisting the shares will cease trading on the Exchange and they will be booked out of the accounts of custodians, banks and broker dealers.
    • Announcement Date
    • Effective Date

With a Delisting Event there are no transactions (neither cash nor stock) so there will not be any claims or transformations.

There’s no ratio involved in a Delisting Event so there will also be no fractions.

MW TOPS Limited (the “Company”)

Delisting of Company’s shares from Euronext Amsterdam

Further to the announcement of the half yearly financial results of the Company released on 21 May, the Board of Directors of Euronext Amsterdam have now approved the request for the delisting of each class of shares in the Company (Euro shares: ISIN GG00B39VXT49, Sterling shares: ISIN GG00B39VY027, US$ shares: ISIN GG00B39VY134).

In accordance with the requirements of Euronext Amsterdam, the last day of trading of the Company’s shares on Euronext Amsterdam is expected to be 30 June 2009, with the delisting becoming effective on 1 July 2009. The Company’s shares will continue to be listed on the UK Official List and traded on the main market of the London Stock Exchange plc.

This document is for information purposes only and is not an offer to invest. “The Company is registered with the Dutch Authority for the Financial Markets as a collective investment scheme which may offer participations in The Netherlands pursuant to article 2:66 of the Financial Markets Supervision Act (Wet op het financieel toezicht).” All investments are subject to risk. Past performance is no guarantee of future returns. Prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decision. The value of investments may fluctuate. Results achieved in the past are no guarantee of future results.

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