A publicly held company whose shares are listed on a stock exchange is required to have full annual audits, as well as quarterly reviews of its financial results. Now that the Sarbanes-Oxley Act also calls for certification of the adequacy of internal control systems, many smaller companies consider the cost of being public so excessive that they must find a way out. However, they cannot afford the cost of buying back shares to take themselves private.
Interestingly, the financial reporting requirements do not apply if a company delists from an exchange and deregisters with the Securities and Exchange Commission (SEC), thereby still allowing its stock to be traded via the Over-the-Counter Bulletin Board or the Pink Sheets. To do so, it generally takes no more than a letter to the exchange on which a company is registered in order to be delisted, as well as completion of the one-page Form 15 for the SEC (which suspends its periodic reporting obligations). No investor approval is required for delisting. However, a company must have less than 300 shareholders or have less than $10 million in assets for its last three fiscal years and less than 500 shareholders in order to take this approach. Also, if the number of shareholders subsequently exceeds these limits, the company is obligated to resume its reporting obligations.
Use the following link to access Form 15: www.sec.gov/about/forms/form15.pdf
International firms that are listed outside the United States are simply delisting from American stock exchanges in order to avoid the cost of Sarbanes-Oxley.