Table of Contents
- Why should I consider investing in unlisted shares?
- How to buy unlisted shares?
- What are documents required for buying unlisted shares?
- What risks are associated with investing in unlisted shares?
- Listed shares vs unlisted shares: What is the difference?
- How is the price of unlisted shares determined?
- How long does the purchase process take?
- What is the process after I confirm the purchase?
- How can I track my investment in unlisted shares?
- Can unlisted shares be sold?
- How soon will I receive the payment after selling my unlisted shares?
- Is investing in unlisted shares legal?
- Can unlisted shares be pledged?
- How are unlisted shares taxed?
- Can unlisted shares be transferred?
- What happens to unlisted shares after IPO?
- To wrap things up
A complete guide on Unlisted shares
Wed, 12 Feb 2025
3 mins

What are Unlisted Shares?
Unlisted shares are equity shares of a company that are not listed on any stock exchange such as the NSE or BSE. These shares are typically traded privately and are less liquid compared to listed shares. Unlisted shares often represent early-stage or privately held companies that are not publicly traded, such as start-ups, private equity-backed companies, or pre-IPO companies.
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Why should I consider investing in unlisted shares?
Investing in unlisted shares can offer the potential for significant capital gains, especially if the company eventually goes public (via an IPO) or is acquired at a premium. Unlisted shares allow investors to invest in growing companies at a potentially lower valuation than post-IPO prices. However, they come with higher risks due to the lack of liquidity, transparency, and the company's business risks.
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How to buy unlisted shares?
To purchase unlisted shares through InCred Premier:
- Browse through the available unlisted stocks on our platform.
- Once you identify the stock you wish to purchase, our sales team will confirm availability and provide the final price.
- After receiving the final price, you need to confirm the deal by submitting your KYC documents (PAN, Aadhar, Client Master Report) and the signed declaration.
- Payment will be processed, and shares will be transferred to your Demat account at the earliest.
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What are documents required for buying unlisted shares?
You'll need to provide the following documents for KYC compliance:
- PAN(Self-Attested)
- Address Proof (Self-Attested)
- NRI Customer Foreign Address Proof
- Latest CMR/CML (not older than 7 days) in soft copies.
- Cheque copy or Bank Statement
- Additional KYC Documents for NON-Individual. (Stamped and Signed by Authorised Signatory)
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What risks are associated with investing in unlisted shares?
Investing in unlisted shares is risky due to factors such as:
Illiquidity: Unlisted shares cannot be traded freely on the stock market, so selling them can take longer.
Lack of Information:These companies are not subject to the same disclosure requirements as listed companies, making it difficult to assess their financial health.
High Volatility: The price of unlisted shares can fluctuate widely, especially in the grey market.
Regulatory Risks: There may be regulatory or legal challenges related to unlisted investments. -
Listed shares vs unlisted shares: What is the difference?
Listed shares are traded on recognized stock exchanges, offering liquidity and transparency, while unlisted shares are privately traded and do not have the same regulatory oversight, making them more illiquid and riskier.
However, unlisted shares can offer higher potential returns if the company grows and decides to go public. -
How is the price of unlisted shares determined?
The price of unlisted shares is determined basis considering factors such as supply and demand, company performance, and market sentiment.
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How long does the purchase process take?
The standard process takes 1-2 business days, depending on the completion of KYC, payment processing, and the successful transfer of shares to your Demat account.
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What is the process after I confirm the purchase?
Once you confirm the price, you will need to:
- Submit your KYC documents.
- Confirm the payment.
- Our operations team will process the purchase initiating the transfer, and confirming the receipt of shares in your Demat account.
- You will be notified once the process is complete.
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How can I track my investment in unlisted shares?
You can track your unlisted shares through our dedicated FinTrack dashboard, which allows you to view your portfolio's current valuation, transaction history, and holding statements.
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Can unlisted shares be sold?
Yes, Unlisted shares can be sold. If you wish to sell your unlisted shares:
- Notify our sales team with the details of your holding.
- Our team will get back with the best available price.
- You will need to transfer your shares to our designated Demat account.
- Once the transfer is complete, the payment will be processed at the earliest.
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How soon will I receive the payment after selling my unlisted shares?
After the shares are successfully transferred to our Demat account, the payment will be processed and credited to your bank account within 1-2 days.
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Is investing in unlisted shares legal?
Yes, it is legal to invest in unlisted shares in India.
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Can unlisted shares be pledged?
While pledging unlisted shares for a loan is possible, it depends on the lender’s policies.
Some banks and financial institutions may accept unlisted shares as collateral, but it is subject to strict valuation and credit terms. -
How are unlisted shares taxed?
- Short-term capital gains: If unlisted shares are sold within 24 months, short-term capital gains are taxed as per the investor’s income tax slab.
- Long-term capital gains: If held for more than 24 months, long-term capital gains are taxed at 20% with indexation benefits.
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Can unlisted shares be transferred?
Yes, unlisted shares can be transferred to another person through an off-market transaction, subject to regulatory requirements and proper documentation. Both the buyer and seller will need to complete KYC and AML screening.
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What happens to unlisted shares after IPO?
If a company you invested in through unlisted shares goes public, your unlisted shares will automatically be converted into listed shares once the company is listed on a recognized stock exchange.
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To wrap things up
In conclusion, unlisted equity shares present an alternative investment avenue for individuals and institutions looking to diversify their portfolios and capitalize on early-stage opportunities.
While offering potential for high returns, these investments require careful consideration of risks, thorough due diligence, and strategic planning.
By understanding the nuances of the market and leveraging available resources, investors can explore and potentially benefit from this dynamic segment of the Indian financial landscape.
Start your investment journey with InCred Premier today