This is what actually happens when a stock is delisted

Spiders, fossil fuels, governments and company delistings generally get poor press in Australia. They're seen as irredeemably bad. That's harsh, particularly for spiders, which are vital to a healthy ecosystem.

As are delistings.

Admittedly, being tangled in the web of a company that is removed from a public market can be sticky. But it doesn't always result in a painful bite.

According to the deListed Australia website, the go-to source for information on companies that have been removed from public exchanges in Australia, about 6500 companies have delisted domestically over the past 100 or so years.

That's an average of 65 a year across all listing venues. Clearly, delistings are common and a normal feature of a dynamic market.

But some investors worry that delistings have become too common, resulting in the disappearance of beloved listed names such as Altium, Boral, CSR and Newcrest Mining.

There were more than twice as many delistings of entities (mainly companies but trusts and debt listings too) than new listings in 2024, according to ASX data - 67 on and 142 off. It was a similar story in 2023.

Yet the total number of entities listed on the ASX remains above 2000 and has done for more than a decade.

How does delisting work?

Here we'll focus on the ASX, Australia's primary listing venue, rather than one of the smaller operators such as the National Stock Exchange of Australia (NSX).

A company is delisted when it is removed from the ASX's official list and its shares are no longer available for trading on the ASX market.

Companies delisted from the ASX also stop trading on venues where ASX-listed stocks are offered for trading, such as Cboe Australia (the former Chi-X).

Under its listing rules (Chapter 17), the ASX may at any time initiate a delisting and end quotation of a company's shares if either:
• the company requests it or 
• ASX instigates it because the shares no longer meet the requirements necessary for quotation.

A variety of circumstances could trigger either reason for delisting. ASX Guidance Note 33 (asx.com.au) provides excellent detail.

At the company's request

Most delistings are at the request of the company. In the six months leading up to the time of writing, 64% of delistings were the result of an entity's request.

The ASX must be satisfied that the delisting is for an acceptable reason. The most common reasons include:
• completion of a takeover by another ASX-listed company (for example, BHP's takeover of Oz Minerals in May 2023), a company listed elsewhere (Japan's Kirin Holdings' acquisition of Blackmores in August 2023) or an asset manager or private equity firm (Healthscope's sale to Brookfield in May 2019);
• assessment by the company that it's no longer in the interests of it or its shareholders to remain listed because, for example, it's undervalued, its shares lack liquidity, it has difficulty raising capital or can no longer bear the costs of remaining listed (the online bicycle marketplace BikeExchange, which delisted in June 2024, or the weighing technology firm Shekel Brainweigh, removed in February 2025).

The ASX's approval is often subject to the satisfaction of conditions to ensure that shareholders are not unduly prejudiced by the delisting, and that trading in the company's shares can take place in an orderly manner up to the date of its removal.

The conditions may include:
• the need for shareholder approval and the requirement for at least 75% support of votes cast;
• voting exclusions if, for example, the ASX is concerned that certain shareholders are likely to obtain a material benefit from the delisting that's not available to all shareholders.

In all circumstances, shareholders (and the market generally) must be kept informed, including about the reasons for seeking to delist, what arrangements will be in place to enable shareholders to sell or otherwise realise the value of their shares, and the timeline towards delisting.

Unacceptable reasons for delisting include:
• avoiding the requirement to obtain shareholder approval to undertake a particular transaction, such as with a person in a position of influence;
• avoiding the disclosure obligations the company would otherwise have under the listing rules or Corporations Act; and
• denying minority shareholders a market for their shares in order to coerce them into accepting an offer from a controlling shareholder to buy their shares cheaply.

Delisting need not be permanent. The consumer finance company Pepper Money listed in July 2015, was taken off market by private equity firm KKR in November 2017, and relisted in May 2021.

Similarly, the gold producer Westgold Resources delisted from the ASX after merging with Metals X in 2012, then relisted after demerging in December 2016.

Perhaps the most anticipated relisting is Virgin Australia, which was acquired by Bain Capital in 2020 and has been a hot favourite to return to the market for over a year.

Some delistings result in a corresponding new listing. This typically happens when the acquiring company, already listed elsewhere, decides to dual-list on the ASX. This provides local investors with exposure to a larger international business.

Recent examples include US firms Alcoa (which took over aluminium miner Alumina in July 2024), Block (which bought buy now, pay later operator Afterpay in January 2022) and Newmont (which acquired gold producer Newcrest in October 2023).

Initiated by the ASX

Delisting a company denies its shareholders the ability to trade. It's a power the ASX doesn't exercise lightly but will deploy to protect the reputation and integrity of the market and to prevent future investors from buying into a company that should not be listed.

The ASX has exercised its power to remove companies for: 
• persistent or egregious breaches of disclosure obligations;
• refusing to comply with obligations under the minerals reporting JORC Code;
• breaching obligations to have an adequate and appropriate structure, level of operations and financial condition; and
• failing to maintain a spread of shareholders sufficient for an orderly and liquid market for its shares.

While delistings for these reasons are rare, the cannabis company Melodiol Global Health (formerly Creso Pharma) was removed in October 2024 because it was "unable or unwilling to comply with the listing rules".

There are also circumstances when delisting is generally automatic, including:
• following compulsory acquisition in a takeover by another company (Namoi Cotton was delisted after the compulsory acquisition of its remaining shares by Louis Dreyfus Company in October 2024);
• failure to pay annual listing fees (the online book retailer Booktopia was one of 14 companies delisted on the same day in August 2024 for failing to pay its annual listing fee for the year ending June 2025);
• failure to lodge certain material documents, such as an annual report, for a continuous period of one year after the deadline for lodgement (Eagle Health, supplier of lozenges and masks, was delisted for failing to lodge audited financial statements in April 2021); and 
• following a period when a company's shares have been suspended for two continuous years (the recycling and disposal site operator M8 Sustainable was delisted for being a long-term suspended company in February 2025).

Delisting is usually effective from the close of trading on a date decided by the ASX. The timing varies according to the circumstances, as do the consequences for the companies removed by the ASX.

Some, such as Melodiol, are placed in liquidation. Others, such as Booktopia, are being revitalised under private ownership.

A growing liquid and diverse listings market is critical for economic prosperity and a key source of wealth generation for investors.

While not every delisting is worry free, delistings can help keep our market healthy - be it by creating new investment opportunities, cleaning out dormant or dying firms, protecting investors from potentially hazardous entanglements, or initiating a process with a monetary offer too good to refuse.

As with our eight-legged friends, delistings mightn't be cuddly and we don't want to be overrun by them, but they do serve an important purpose.

What happens to shares when a company delists?

• If a company chooses to delist, the ASX will generally make it a condition that investors have a period to sell or be cashed out.
• In the case of mergers and acquisitions, investors generally have a choice to transfer their shares to the new company or sell their shares to the acquirer. 
• Sometimes a share buyback or other facility will be offered to allow shareholders to sell or redeem their shares for a period up to and/or following the delisting.
• If a company is moving its listing to another jurisdiction, the ASX will consider if the shares are 'readily able' to be traded on that other exchange, including at a fair price.
• Sometimes shareholders may have to trade off-market and over-the-counter, which provides less transparency and liquidity.
• Even less desirable is if a company goes into administration or liquidation, given shareholders - as holders of equity in the company - tend to be ranked below other creditors, such as debt holders, in the payout pecking order.

If in doubt, contact the company's share registry.

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