How to Buy and Sell Unlisted Shares?

Investing in the share market comes with a lot of analysis. You need to evaluate the options and the industry to ensure that you earn well. At the same time, you also need to find the best time to buy and sell stocks so that losses can be avoided. 

While this is true, there is one question that you need to address here. It is about the unlisted shares. Well, you can find the listed shares on the stock exchanges easily, but what if you are looking to trade in the unlisted ones? 

Well, if you are a trader looking to find the answers to the same, read this guide. Know everything about how to buy and sell unlisted shares in India.

What are Unlisted Shares?

Many people think that the unlisted shares are the ones that are being traded in the grey market. They believe that these are the ones traded at the grey market premium. While this is true to a certain extent, knowing their actual meaning is important. 

In the simplest terms, ther are yet not listed on stock exchanges like NSE or BSE. You can't trade them using the trading apps or platforms. In fact, these are the shares of the private companies, startups, or pre-IPO firms that are yet to go public. 

In order to purchase these shares, there are certain routes like private transactions, intermediaries, or dedicated unlisted share platforms. Most of these shares are generally held by promoters, venture capitalists, or employees. 

These stocks may become listed after a while when the company decides to go public or launch the IPO.

How to Buy Unlisted Shares in India

Investing in unlisted shares requires using specific legal routes since they are not available on public exchanges like NSE or BSE. Below are the main ways to buy them.

1. Buy Through Online Unlisted Share Platforms

There are platforms that deal in unlisted stocks only. You would need to register on these platforms and complete KYC. Then you will be able to get the shares through your Demat account. Also, you will find all the details you need. 

2. Buy Via SEBI-registered brokers

There are certain intermediaries and brokers approved by SEBI. You can connect with the existing shareholders with their help and see if they are planning to sell their holdings. If yes, you can buy the shares using an off-market deal. These will be settled in the Demat account.

3. Buy from Company Employees (ESOPs)

Employees who receive shares under Employee Stock Ownership Plans (ESOPs) can sell them once they are vested. These shares are often sold to investors before the company gets listed. This allows you to get an opportunity to get an early entry into growing startups.

4. Invest Through Private Placements

Accredited investors usually invest in unlisted stocks to help them grow. It is through private placement rounds or pre-IPO funding managed. It is usually done by investment bankers or wealth managers. This is a common route for IPO investment by high-net-worth individuals (HNIs).

5. Buy from Promoters or Early Investors

This is where the founders or the promoters sell their shares. They usually do this for private buyers. Such deals happen through off-market transfers verified by both parties’ Depository Participants (DPs).

How to Sell Unlisted Shares in India

Selling unlisted shares requires planning since they are not traded on the stock exchanges from the list. So, here are the common ways to sell these shares.

1. Sell Through the Same Platform or Broker

You have bought the unlisted shares through some channel. It is usually with the help of intermediaries or brokers. Now, you can sell the unlisted shares directly to them and ensure that you get the proceeds to your account. 

2. Sell During or After IPO Listing

When the company files for an IPO, these get converted to listed shares. Now, based on the lock-in period or the associated conditions, you can sell these shares on the stock exchanges. Just ensure to evaluate the company's performance well before you decide to sell. 

3. Private Off-Market Transfers

You can sell your holdings to another investor privately through an off-market transfer. Both parties must fill out a delivery instruction slip (DIS) through their Depository Participants to complete the sale.

4. Participate in Company Buybacks

Certain companies conduct buyback offers. The idea here is to purchase unlisted shares from investors at agreed valuations. This is often done to restructure ownership. It also helps the company with its liquidity before going public.

Difference Between Unlisted Shares and Grey Market Shares

Many investors confuse unlisted shares with grey market shares. They think that these two are the same thing, but this is not true. So, let us now explore the key differences between these two so that you can make the right call. 

Conclusion

Understanding how to buy and sell unlisted shares in India is quite important. This will allow the investors not just to make the right investment call but also ensure that they do proper analysis before investing. 

But while you plan on investment, you must look for detailed research and deep technical analysis as well. This will allow you to ensure that you make the most of your investments. 

Ready to invest better? Start your journey with Rupeezy today. Make smarter and data-backed investment decisions. This will help you earn better returns.

FAQs

What is the difference between listed and unlisted shares?

The main difference between the listed and unlisted shares is in the trading. The listed are traded on stock exchanges, and the unlisted are not publicly traded. 

Where can I buy unlisted shares in India?

You can buy them through SEBI-registered brokers, trusted unlisted share platforms, or private placements facilitated by wealth managers.

When can I sell my unlisted shares?

You can sell them privately via off-market transfers, company buybacks, or after the IPO when they get listed.

Do unlisted shares offer good returns?

Yes. If the company works well and offers you good returns, then when the company goes public, investors can earn better returns.

What are the key risks in unlisted shares?

The primary risk associated with the unlisted shares is price and transparency. Then there are problems finding the right valuation and at times the buyer as well. Liquidity can be low as well.