When a public company seeks to go private or otherwise wants to be delisted from a U.S. stock exchange, it must go through a process of delisting and deregistering its securities. This process of “going dark” enables the company to terminate or suspend its obligations under the Securities Exchange Act of 1934 (Exchange Act) and the applicable stock exchange rules.

A public company’s securities are listed on a U.S. securities exchange, usually either NYSE or Nasdaq, pursuant to Section 12(b) of the Exchange Act. A public company’s securities are registered pursuant to Section 15(d) of the Exchange Act. The process of “going dark” thus requires both delisting from the applicable stock exchange and Exchange Act deregistration.

The delisting process involves filing a Form 25 with the Securities and Exchange Commission (SEC). A Form 25 provides the public with notice of the delisting event. The removal of the securities from listing on the exchange will be effective 10 days after the Form 25 filing. Once the company is delisted, it is also no longer under an obligation to file current or periodic reports with the SEC. In other words, the company no longer has to file Form 10-K annual reports, Form 10-Q quarterly reports, or Form 8-K current reports.

The deregistration process involves filing a Form 15 with the SEC. The Form 15 cannot be filed until the Form 25 is effective, so it can be filed a minimum of 10 days after the Form 25 filing. The company’s obligation to publicly file financial information or other reports with the SEC is immediately terminated upon filing of the Form 15. The decision to deregister a class of the company’s securities requires approval of the company’s board of directors. However, stockholder approval is usually not required.

The delisting and deregistering process is more complicated if the company has multiple classes of securities publicly listed. Each class of securities requires a separate delisting and deregistering process.

There are a number of circumstances that might lead a company to delist and deregister its publicly traded securities from a U.S. stock exchange. Some companies in poor financial health may voluntarily decide to go private. The reporting and compliance obligations of being a public company can be expensive and burdensome. In other situations, companies may involuntarily be delisted for failing to meet the listing standards of NYSE and Nasdaq. If a Nasdaq-listed company fails to maintain a minimum bid price of at least $1.00 for 30 consecutive trading days, it will be issued a notice of deficiency. If the company is unable to take corrective action within the allowed period for regaining compliance, it will be delisted from Nasdaq. NYSE has similar minimum bid price rules.

A company would also pursue a delisting and deregistration process in connection with a take private transaction. This is a type of merger transaction in which a publicly held target company is acquired by a private company. In connection with closing the transaction, the target company’s shares will be delisted and deregistered. Understanding the delisting and deregistration process is also essential for acquisitions by public companies, since the target company will merge with and into the publicly traded acquiror company.