How to Know When a Company Is About to Be Delisted: Warning Signs Every Investor Must Know

A Short Story You’ll Understand

Tunde bought shares of a company because the price was cheap.

₦2 per share.

He felt smart.
“Even if it goes to ₦5, I’ll triple my money,” he told his friends.

Months later, something strange happened.

• The stock stopped moving

• News about the company disappeared

  
  

• His broker said, “Trading has been suspended.”

Then one day… the company was delisted.

Tunde didn’t just lose profit.
He lost access to his money.

This happens to many Nigerian investors — especially beginners — because they don’t know the warning signs.

Let’s fix that.

First: What Does “Delisting” Mean?

Delisting means a company is removed from the stock exchange (like the Nigerian Exchange – NGX).

When this happens:

• You may not be able to sell your shares

• Your investment can become illiquid

• In some cases, your money is stuck for years

Delisting doesn’t always mean fraud — but it is always risky.

Why Companies Get Delisted in Nigeria

A company may be delisted if it:

• ❌ Stops submitting financial reports

• ❌ Fails to meet NGX rules

• ❌ Has serious financial problems

• ❌ Is bankrupt or shutting down

• ❌ Chooses to leave the stock market (voluntary delisting)

8 Clear Signs a Company Is About to Be Delisted

1. The Company Stops Releasing Financial Statements

This is the biggest red flag 🚨

Public companies must publish:

• Quarterly reports

• Annual financial statements

If a company goes 1–2 years without reports, something is wrong.

📌 No transparency = danger

2. Trading Is Suspended for a Long Time

Short suspension is normal.

But if trading is suspended for:

• Several months

• Or “until further notice.”

That’s a warning sign.

Many delisted companies first go through a long suspension.

3. The Share Price Is Stuck or Dead

If a stock:

• Doesn’t move for weeks or months

• Has no buyers or sellers

• Trades at extremely low volume

It may be close to being removed from NGX.

Cheap stocks are not always opportunities.

4. Constant Losses and Growing Debt

Check the company’s:

• Profit or loss

• Debt level

• Cash flow

If losses continue year after year, the company may not survive.

📌 Companies that can’t survive won’t stay listed.

5. Negative News, Lawsuits, or Management Problems

Watch out for:

• Board resignations

• Legal cases

• Auditors quitting

• Regulatory sanctions

These usually come before delisting announcements.

6. NGX or SEC Warnings

The Nigerian Exchange sometimes issues:

• Compliance warnings

• Default notices

• Special monitoring labels

If you see phrases like:

“The Exchange is concerned…”
“The company has failed to comply…”

Pay attention.

7. The Company Announces “Restructuring” or “Going Private.”

Sometimes companies choose to leave the stock market.

This is called voluntary delisting.

They may say:

• “We are restructuring.”

• “We want to go privat.e”

• “We are no longer meeting listing need.s”

This is still risky for small investors.

8. What If Directors and Insiders Are Selling Their Shares?

Is it a Red Flag or Just Normal Behavior?

Heavy or coordinated insider selling is a red flag when many directors sell around the same time, especially in small or struggling companies, before bad news, and without any insider buying because insiders know problems early; one-off selling for personal reasons is normal, but widespread selling signals loss of confidence and possible trouble ahead.

How to Protect Yourself as a Beginner

You don’t need to be a professional to stay safe.

Simple Rules

✔ Focus on strong companies
✔ Read financial news regularly
✔ Avoid companies with no recent reports
✔ Diversify your investments
✔ Prefer ETFs if you’re new

📌 ETFs reduce delisting risk because they hold a diversified portfolio of many companies, not just one.

Where to Check Information in Nigeria

• Nigerian Exchange (NGX) announcements

• Company annual reports

• Financial news platforms

• Your stockbroker’s updates

Final Lesson

Delisting doesn’t happen suddenly.

It whispers before it shouts.

If you learn to listen early:

• You protect your money

• You avoid emotional investing

• You grow as a smart investor

The goal is not just to buy cheap stocks 
The goal is to buy companies that will still exist tomorrow.