Delisting is the permanent cessation of a joint-stock company listing. In contrast, ‘down-listing’ refers to moving to a stock exchange segment with less stringent requirements – for example, from the regulated market to the curb market. Delisting is an administrative process that permanently removes the share from active trading. Possible reasons for such an approach can be going private after a corporate takeover or avoiding the comprehensive disclosure obligations of publicly traded companies. Delisting can be caused also by the admissions board of the respective stock exchange supervisory committee and/or the financial services authority if orderly trading of the security can no longer be guaranteed (e.g. after a squeeze-out, in which all of the shares are merged under single ownership).
The BörsG (§39, paragraph 2, sentence 2 of the BörsG) prescribes that the investor protection measures must be observed in case of delisting. The legal requirements for delisting were not regulated until now. Various groundbreaking decisions by the Federal Court of Justice exist on handling delisting, most recently through the Frosta decision of the BGH in October 2013, according to which a shareholder resolution and a compensation were declared to be not required under company law.
The German Bundestag then supplemented §39 BörsG to include a provision on delisting on 2 October 2015. It applies to all such transactions following 7 September 2015. As a requirement for revoking the admission of shares, a purchase offer Wertpapierübernahmegesetz (WpÜG) (Securities transfer act) must be submitted. The consideration must consist of monetary payment only. It is calculated on the basis of the average share price in the last six months. As an exception, the value of the company can be used as the basis. This is the case if insider information has been concealed, market manipulation has occurred or the share price was not meaningful. Debate on the details is certain to continue.
BDO has the qualifications and experience that you need to be sure of competent advice in all legal questions regarding delisting.