All traders and investors should always be updated of the stocks/companies they are holding or trading. As lately we read and heard news of PSE trying to delist Calata(involuntary) for violating disclosure rules.
Another on the brink of being delisted is EDC (voluntary) with its tender offer by the bidder to buy the common shares from the public starting August 10, 2017.
If ever you come across with the term, it simply means they will no longer be open for public trading and will be out from the stock exchange (PSE).
Basically from given two examples involuntary delisting is more related to violations or non compliance to PSE minimum requirements. The fact that involuntary delisting will reflect the type of leadership who runs the company which is quite not good for the company's image.
Voluntary delisting simply means either the company or other private investors interested to buy back the common shares from the public and decides to turn private.
Update: Board of directors of EDC already approved its voluntary delisting from PSE
Update: Board of directors of EDC already approved its voluntary delisting from PSE
If the company feels or has difficulty to comply with the 10% minimum public ownership set by PSE due to either low participation of the public to meet the volume expected this may also be a ground for voluntarily delisting by the company and not wait for PSE to take the action.
Delisting in short will put back the security to private whereas the reverse are Listed securities coming from private to public.
That is why you have those IPO(Initial Public Offering) so they can be listed and be traded publicly just take example of ALI (Ayala Land Inc.)went through an initial public offering in 1991, others may undergo backdoor listing to avoid costly expenses through IPO and the year to prepare which they can be absorbed by an existing listed security or listed under their shell.
What would be the impact to small retailers or individuals, either the tender offer could be lower or higher from the current trading price once a certain stock goes delisting.
Since they can no longer be found in the stock exchange it would be a hassle to look for interested buyers compared when they are listed and open to public that they can easily be traded.
Despite of being private you may still be receiving dividends if they are giving one but again just take note of the hassle when you decide to sell your shares unless there are other interested co-stock holders who wants to buy your shares inside the company.
So what is really happening in EDC right now is the bidder Philippines Renewable Energy Holdings Corporation(PREHC) will acquire Eight Billion Nine Hundred Million (8,900,000,000) Common Shares (representing approximately 31.7%, once this tender offer is met, EDC's public float (portions of shares owned by the public) would still be in excess of the 10% minimum required by PSE to be listed.(p2).
PREHC is wholly-owned subsidiary by MIRA and GIC. Click image to view its full size.
To know more about the details read here
The main problem is SEC announced a proposal of changing the minimum public float from 10% to 15% at the end of 2018 and 20% by the end of 2020 by which EDC have not yet given any updates of any proposals to increase their public float after the Tender offer which gives every investor's the benefit of the doubt.
But reading further on the plans of the "Bidder" under (b) Plans and Proposals of the Bidder (ii)Listed Status of the Company and Reportorial Requirements it states that they aim to convert the company from public to non public company(p12).
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More or less just for my personal take I highly advise to accept those tender offers which is more liquid and without the hassle for looking for interested buyers in the future and as per reading you will be imposed with higher tax from your gains than traded publicly.
Again at the end of the day final decision would still come from you, as long as you have faith with the company delisted or not you should always have a plan for that.
A good reading and reference can also be found here.
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