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The process of being delisted from the Toronto Stock Exchange (TMX), which includes the TSX and TSX Venture Exchange (TSXV), can be either voluntary (initiated by the company) or involuntary (initiated by the exchange). Here’s a breakdown of the typical processes:
Voluntary Delisting:
A company may choose to delist for various reasons, such as:
* Going private (often due to acquisition by a private equity firm).
* Being acquired by another company where the separate listing is no longer required.
* Listing on another exchange and deciding to consolidate listings.
* The costs and administrative burden of maintaining a public listing outweighing the benefits.
* Low trading volume not justifying the listing.
The general process for a voluntary delisting from the TSX typically involves:
* Board Approval: The company’s board of directors must pass a resolution authorizing the application for delisting.
* Written Application to the TSX: The company submits a formal written application to the TSX, outlining the reasons for the delisting request.
* Press Release: The TSX generally requires the company to issue a press release announcing the voluntary delisting, the reasons for it, and the proposed delisting date. This press release needs to be pre-cleared by the TSX. The delisting date is usually no earlier than ten business days after the dissemination of the press release.
* Shareholder Approval (Generally Required Now): Amendments to the TSX Company Manual generally require approval by a majority of the holders of the affected class or series of securities for a voluntary delisting of the principal equity class(es), unless the TSX is satisfied that an acceptable alternative market exists or will exist for the securities. Shareholder approval may also be required for other listed securities that are not convertible, exercisable, or exchangeable into another class of listed securities. A draft of the information circular or form of written consent used to obtain security holder approval must be submitted to the TSX for pre-clearance.
* TSX Approval: The TSX will review the application and the results of any shareholder vote before making a decision on the delisting.
Involuntary Delisting:
The TSX can initiate the delisting of a company’s securities if the company fails to meet certain continued listing requirements. These requirements are in place to ensure a certain level of quality and investor confidence in listed companies. Reasons for involuntary delisting can include:
* Failure to Meet Financial Requirements: This can include falling below minimum thresholds for:
* Market value of outstanding securities.
* Market value of public float.
* Share price (e.g., trading below a certain price for a defined period).
* Financial ratios, revenue, or assets.
* Failure to Comply with Listing Rules: This can include:
* Failing to file required reports (e.g., financial statements) on time.
* Failing to pay listing fees.
* Violating other exchange regulations.
* Trading Suspension for a Prolonged Period: If a company’s shares are suspended from trading for a significant period and the company fails to rectify the issues leading to the suspension or provide a satisfactory reinstatement plan, the TSX may proceed with delisting.
* Bankruptcy or Insolvency: Filing for bankruptcy or other insolvency proceedings can lead to delisting.
The general process for an involuntary delisting typically involves:
* Notice of Non-Compliance: The TSX will issue a notice to the company if it is not meeting the continued listing requirements, giving the company an opportunity to remedy the situation.
* Suspension of Trading: If the company fails to rectify the non-compliance within a specified timeframe or if the situation is severe, the TSX may suspend trading of the company’s securities.
* Delisting Review: The TSX may conduct a review to determine if the company should be delisted. The company may be given an opportunity to present its case and propose a plan to regain compliance.
* Delisting Decision and Announcement: If the TSX determines that the company should be delisted, it will issue a bulletin announcing the delisting and the effective date.
Consequences of Delisting:
* Reduced Liquidity: It becomes significantly harder for shareholders to buy or sell their shares as they are no longer listed on a major exchange.
* Lower Valuation: Delisted stocks often trade at a lower valuation, if they trade at all, on over-the-counter (OTC) markets.
* Limited Access to Capital: It becomes more difficult for the company to raise capital in the future.
* Loss of Investor Confidence: Delisting can negatively impact the company’s reputation and investor confidence.
Important Considerations:
* The specific rules and procedures for delisting are detailed in the TMX Company Manual.
* The process can vary depending on the specific circumstances and the exchange (TSX or TSXV).
* Regulatory authorities may also have a role in the delisting process, particularly concerning a company ceasing to be a reporting issuer.
It’s always recommended to consult the official TMX Group website and the TSX Company Manual for the most up-to-date and detailed information on the delisting process.

Video courtesy of Interactive Brokers

Video courtesy of Interactive Brokers