Delisting is the process of removing a listed security from an exchange, such as the NASDAQ. An issuing business will be subject to delisting if it does not meet the minimum listing standards of the applicable exchange, such as a minimum stock price, sales level, and profit level. When delisting occurs, investors can no longer trade the issuer’s securities on the applicable exchange. Instead, they must trade the securities on the over-the-counter market. Delisting is considered a major flag that a business is experiencing significant financial difficulties.
A business may request that its securities be delisted in those situations in which the firm has chosen to go private. Going private can be a reasonable economic decision, since it is quite expensive to conform to the many rules associated with being a public company.