On May 23, DiDi Global Inc. announced that he would push for the delisting of ADS from the New York Stock Exchange. DiDi Global Inc. plans to file form FORM 25 with the Securities and Exchange Commission on or after June 2 to remove his American depositary receipts from the New York Stock Exchange.

As of press time, DiDi Global Inc. pulled up in the short term before the session and is now up more than 11%, after falling more than 5% at one point.

Knock on the blackboard!Before understanding the delisting of US stocks, it is necessary to make it clear that delisting does not amount to corporate bankruptcy, nor does it mean that the stock is completely out of circulation.

So what does voluntary delisting mean for investors who hold DiDi Global Inc.?

What is voluntary delisting?

According to Zhonglun Law firm, according to the provisions of the US Securities Law, the board of directors of US listed companies may decide to approve voluntary delisting, then notify the exchange in writing and submit form 25 to SEC within 10 days to complete delisting. Shares of companies that voluntarily delist in accordance with the above procedures may continue to be traded over the counter.

As mentioned above, companies listed in the United States can achieve the purpose of delisting on the exchange through a relatively simple method of voluntary delisting, and since voluntary delisting itself does not constitute an acquisition transaction, the economic cost of this delisting method is more controllable. there is no need to pay a high acquisition consideration.

However, as a substantially different way of delisting from the privatization transactionVoluntary delisting has at least the following uncertainties and risks:

1. Although voluntary delisting does not need to be subject to the approval of SEC or the exchange, SEC has the right to postpone the effective date of delisting in order to measure whether delisting complies with the provisions of US securities law, and has the right to decide to impose additional conditions on delisting for the purpose of protecting investors.

2. After the completion of voluntary delisting, the listed company will retain a large number of minority shareholders with different interests (including depositary shares or depositary receipt holders) because it does not involve the acquisition of shares held by non-public shareholders. Although non-affiliated minority shareholders do not have the right to directly require listed companies or controlling shareholders to buy back / acquire their shares, they will continue to enjoy voting and dividend rights (if any) in respect of the corresponding shares.

3. If the minority shareholder believes that the director who approved the voluntary delisting has violated his fiduciary obligation (Fiduciary Duties), he may bring a lawsuit against that director-especially if the listed company decides to voluntarily delist by the board of directors, the controlling shareholder or other related party of the listed company proposes to acquire the shares held by the minority shareholder at a lower price within a short period of time; and

4. After voluntary delisting, although the shares held by shareholders of listed companies can continue to be traded over the counter, the liquidity and stock price will be significantly lower than those traded on exchanges such as the New York Stock Exchange.

Voluntary delisting shall comply with the applicable laws of the place where the listed company is registered and the securities law of the United States. However, in the case of voluntary delisting, listed companies do not need to be subject to many restrictions of the rule 13e-3 like privatization transactions, and generally do not need to be examined and approved by the general meeting of shareholders (unless otherwise provided for in the articles of association), and minority shareholders usually have no right to dissent.

Compared with privatization and delisting, voluntary delisting is much simpler in the process and takes less time. For listed companies that only want to delist and do not emphasize the clean-up of unrelated minority shareholders, voluntary delisting is undoubtedly attractive.

The situation of the capital market is rapidly changing, entry and exit are the market normal, and the delisting system is one of the basic systems for the healthy development of the capital market.For the follow-up progress of DiDi Global Inc. delisting, investors still need to follow the company announcement.