Unlisted shares have become increasingly popular among Indian investors who diversify their portfolios beyond standard stock market activities.
Unlisted shares pertain to companies that do not have stock market listings on the NSE or BSE stock exchanges. Because of this state of affairs there shares cannot be purchased on trading applications. Instead, those sorts of shares are bought and sold in the course of private transactions, specialized exchange platforms or negotiated deals.
The idea can feel unfamiliar at first. There is no live ticker, no daily chart and no instant buy or sell button. Yet, this is exactly what attracts many investors. Unlisted shares can give you early access to strong companies that may list in the future.
This detailed guide explains what unlisted shares are, how to buy them, how taxation works and what benefits and risks you should keep in mind.
What Exactly Are Unlisted Shares
Unlisted shares are equity shares of a company that has not been listed on any recognised stock exchange. Because they are not traded publicly, their liquidity, price discovery and access process are very different from listed stocks.
Key Characteristics of Unlisted Shares
- No Exchange Listing: You cannot buy or sell them directly on NSE or BSE.
- Private Transfers: Trades usually happen through brokers, platforms or direct agreements.
- Negotiated Pricing: Prices are based on demand, supply, company performance and recent deals, not on live market quotes.
- Companies preparing for an initial public offering (IPO)
- Longstanding private businesses that elect to remain unlisted
- Subordinate units of public companies
Why Investors Consider Unlisted Shares
Investors do not choose unlisted shares just for higher profits. Many want to be part of a company’s journey before it becomes public.
- Early entry into growth stories: You can invest in companies while they are still growing or preparing to list.
- Potential gain before IPO: If the company lists at a higher price, early investors may earn good returns.
- Portfolio balance: Unlisted shares do not change with daily market ups and downs, so they can make a stock portfolio more stable.
- Access to unique sectors: Many new and creative businesses stay private longer, so investing in unlisted shares is the only way to join them.
How to Buy Unlisted Shares
Buying unlisted shares is a structured process when done through reliable intermediaries.
1. Select a reputable Platform or Intermediary
Consider working with Unlisted Shares India type specialists who take on exclusively verified deals.
2. Assess the Opportunities Posted
Analyze the names of the companies, their business models, latest financial data, and current pricing of the deals. Authenticate the seller and the particulars.
3. Verify the Holdings
Confirm the ownership, ISIN, number of shares, and the process used to transfer the shares.
4. Complete KYC and Payment
Use proper banking channels for payment, and keep all receipts and contract notes safely for future reference.
5 Shares will appear in your Demat Account
Once the transfer is complete and processed, the shares will show in your demat account just like listed shares, ready for you to hold or sell.
Key Checks Before you Invest
- Financial Health: Look at how the company’s revenue is growing, whether it makes a profit, and if its cash flow is steady.
- Promoter and Management Quality: Check the experience of the owners and managers, their past record, and how well the company is run.
- Shareholding Pattern: See how much of the company is owned by the promoters, institutions, and employees.
- Valuation and Exit plan: Understand the price you are paying and the ways you can sell your investment later.
- Compliance History: Make sure the company has no legal or regulatory problems.
When chosen carefully, unlisted shares can add meaningful value to your portfolio.
- Early Mover Advantage: You enter before public markets, discover and reprice the company.
- Possibility of Attractive Valuations: In many cases, pre IPO prices are lower than listed valuations if the company performs well.
- Lower Daily Noise: Since there is no live trading screen, you are less tempted to react to short term moves.
- Access to strong Brands and Subsidiaries: Many well known names first appear in the unlisted space before listing.
Taxation on Unlisted Shares
Tax rules for unlisted equity are slightly different from listed shares, so it is important to plan.
1. Short Term Capital Gains
If you sell unlisted shares within 24 months, the profit is treated as short term capital gains. These gains are usually taxed as per your individual income tax slab.
2. Short Term Capital Gains
If you hold unlisted shares for more than 24 months, the profit is treated as long term capital gains. Long term gains are taxed at 20 percent with indexation, which adjusts your purchase cost for inflation and can lower the taxable amount.
Who Should Consider Investing
Unlisted shares work best for investors who think beyond quick trades and are comfortable with a patient approach.
Ideal investor profiles:
- Individuals with a medium to high risk appetite.
- Investors who already have a stable base of listed equity, debt and emergency funds.
- Those who are willing to hold investments for three to five years or more.
- Investors who enjoy researching businesses, not just tracking stock prices.
Points To Remember
- Keep contract notes, bank proofs and transfer forms safely.
- Maintain a simple record of purchase date, quantity, price and charges.
- Use your demat statement as final proof of holding and transfer.
- Consulting a tax advisor is always wise when you plan large transactions or multiple exits.
Unlisted shares make up a small part of the stock market, but this part is unregulated and can be very profitable. You get a chance to invest in companies while they are growing, scaling, and preparing for their next big stage. These investments need patience, careful research, and comfort with lower liquidity in the market.
If you know what are unlisted shares, how taxes work on them, what benefits they offer, and what risks they carry, you can approach this opportunity with confidence instead of guessing. With proper guidance from experts like Unlisted Shares India, unlisted shares can become a clear and valuable part of your long-term investment plan.
FAQ’s
Are unlisted shares safe to invest?
They can be reasonably safe when you evaluate the company properly and work only with trusted, regulated intermediaries.
Can I sell unlisted shares anytime?
You can look for a buyer whenever you wish, but the actual sale may take longer because trades are negotiated and not exchange based.
How does Unlisted Shares India help to invest in unlisted shares?
Unlisted Shares India curates verified opportunities, connects you with reliable sellers and guides you through pricing, documentation and demat transfer.
