Why would a company choose to deregister their Common Stock?

Question

Why would a company choose to deregister their Common Stock?

Answer 1

De-registering its stock means a company does not have to make quarterly and annual filings and other SEC requirements. Especially since the enactment of Sarbanes Oxley, it has become very expensive to maintain SEC reporting and the accompanying accounting, audit, and legal costs required of public companies.

Most of the companies that voluntarily deregister their shares also have few shareholders, a small number of shares outstanding and relatively thin trading volume, so the deregistration would have little impact. Many of them will continue to be quoted on the pink sheets, but that is not guaranteed.