DEFINITION of Relisted
A relisted company is one that returns to the public market after a period of not being quoted on an exchange. Companies can delist for two primary reasons: They fail to comply with various listing requirements, or they willingly remove shares from the market like Dell in 2013.
Other potential reasons for delisting a stock include a forthcoming bankruptcy, failure to file mandatory reports, or share prices below the exchange's minimum threshold. When the company puts its house in order and meets the listing requirements, it can apply to relist its shares. Oftentimes, relisting a company is met with mixed opinions from investors and experience limited success during its second stint on the market.
BREAKING DOWN Relisted
A relisted company, unlike a hot initial public offering (IPO), is often received with mixed reactions and may even weigh down share prices. Investors may factor the company's previous indiscretions when evaluating the relisted shares. If the conditions that triggered the delisting were fundamental, meaning issues in the income statement like shrinking revenue or profit, the stock's appeal would likely fall even further.
Historically, few companies have reached similar highs or valuations after relisting shares, but it's certainly not a death sentence. Many companies can and have returned to compliance and relisted on a major exchange like the NASDAQ after delisting.
Overview of the Delisting Process
Listing on a major exchange requires companies to meet several requirements, including a minimum share price, a certain valuation of all publicly issued shares, a code of conduct applicable to all employees, and ongoing disclosure of all material news, among other factors. If a company fails to meet any of these conditions, the exchange will send a deficiency notice before beginning the delisting procedures.
The company has 30 consecutive days to address the outstanding problems before receiving an official delisting notice. Some requirements like falling below the minimum share price are difficult to fix but others like listing fees have a simple solution—pay the fee.
If the company believes the delisting notice is unwarranted, they can file an appeal to the exchange within 7 days of receiving the delisting letter. They can also appeal to the Securities and Exchange Commission (SEC) or a federal court in the event it fails to convince the exchange listing qualification panel. Neither the OTC Markets Group or the OTC Bulletin Board have listing standards, but the SEC still requires companies to file current material before issuing a stock over the counter.