When a company is delisted, its stock no longer trades on one of the major stock exchanges. In a direct sense, nothing happens to a shareholder when delisting occurs. The shareholder still owns the same percentage of the company as before, and he is free to sell the shares to any willing buyer. However, in financial reality, the delisting of a company is usually a huge negative. It often occurs after a company goes bankrupt or as it approaches bankruptcy.

Ownership

When you buy a stock, you own it until you either sell it or, in some cases, the company redeems it from you. If a stock gets delisted, you don't have to hand over your ownership rights. However, those rights often become worthless. In many cases, delisting occurs due to corporate bankruptcy, which typically wipes out original shareholders in favor of newly issued stock. Even if you hold on to your delisted shares, you often won't receive any shares in the company when it emerges from bankruptcy.

Private Buyout

In some cases, a stock getting delisted might actually turn out to be a good thing for shareholders. If a company decides to go private instead of remaining publicly traded, it is essentially buying out existing stockholders. In exchange for your shares, the company will offer you cash. After the buyout, the shares will be delisted. If you don't accept the buyout offer, you will keep your shares but they will become worthless upon delisting.