Delisting in the United States

Delisting of securities significantly impacts firms and their shareholders. This chapter surveys the law governing delisting in the United States, looking both at the corporate and securities law aspects. Corporate law governs the going-private transaction that often precedes a delisting, which is typically a freezeout merger. Fiduciary duties governing such transactions have continued to evolve in the past ten years, as has the role of valuation. In recent years, the Delaware courts have become more deferential to valuation negotiated under market conditions. The securities law aspects of delisting are complex because firms typically not only seek to delist but also need to deregister to avoid the application of disclosure requirements. "Going dark," which means deregistering while there are still public shareholders, is possible under some circumstances. Involuntary delisting is controlled by rules of the stock exchanges and the SEC, primarily those of the exchange, given that a delisting decision becomes effective without the SEC's approval.