If you follow the stock market in India, you might have heard people talking about unlisted shares. These are shares of companies that are not traded on the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE). But still, investors buy them and later make good profits when the company goes public or gets listed.
If you are curious about how this works, don’t worry — this blog will explain everything in simple words. By the end, you’ll understand what unlisted shares are, why people invest in them, and most importantly, how you can buy and sell them legally in India.
What Are Unlisted Shares?
In simple terms, unlisted shares are shares of companies that have not yet listed themselves on the stock market (NSE or BSE).
For example:
Big companies like Reliance or TCS are listed — you can buy their shares on NSE/BSE directly.
But companies like HDB Financial Services, Tata Technologies (before listing), or National Stock Exchange itself are unlisted — you won’t find their shares on your trading app like Zerodha or Groww.
Even though these shares are not available on the open market, they still exist and are owned by employees, early investors, or promoters of the company.
Weekly market review :Data setup & Trade plan
Why Do People Buy Unlisted Shares?
You might wonder, why should anyone buy something that is not even listed? Here are some reasons:
High Growth Potential
- Many unlisted companies are growing fast and may plan an IPO in the future.
- Buying before listing can give you a chance to make huge profits when the company goes public.
Diversification
- Investing in unlisted shares allows you to explore opportunities outside the regular stock market.
Early Investor Advantage
- If you invest early in strong companies, your cost price is low, and returns can be massive after listing.
Access to Big Names
- Companies like Reliance Retail, HDFC Securities, or Tata Capital have unlisted shares that investors love to own.
Who Sells Unlisted Shares?
Unlisted shares are usually sold by:
- Employees of the company who got ESOPs (Employee Stock Options) and want to cash out.
- Early investors or venture capitalists looking to book profits before IPO.
- Private dealers and brokers specializing in unlisted shares.
Is It Legal to Buy Unlisted Shares?
- Yes, it is 100% legal to buy and sell unlisted shares in India. But you must ensure:
- The transaction is done through official banking channels (no cash).
- The transfer is recorded in company registers through a Demat account.
- You pay the applicable taxes when selling the shares.
How to Buy Unlisted Shares?
There are several ways to buy unlisted shares in India. Here is a step-by-step guide in simple terms:
- Through Reliable Dealers or Brokers
This is the most common method. Many registered dealers specialize in buying and selling unlisted shares.
Steps:
- Find a trusted dealer who deals in unlisted shares. (Research well and check reviews to avoid fraud.)
- Choose the company shares you want to buy (example: NSE, Reliance Retail, etc.).
- Dealer will quote a price per share.
- Transfer the money via banking channels.
- The dealer will transfer shares to your Demat account.
- Buy Directly from Employees (ESOP Holders)
Employees of companies like startups or big corporates often sell their ESOP shares. You can directly negotiate with them or through platforms that connect buyers and sellers.
- Through Online Platforms
Some SEBI-registered platforms and fintech startups now allow investors to buy unlisted shares directly online. Examples include:
- UnlistedZone
- Planify
- Stockify
These platforms work like marketplaces where you can view available shares, prices, and complete the transaction securely.
- From Private Placements (For High Net-Worth Individuals)
Sometimes companies issue fresh shares to private investors (not public) before IPOs. But this route is mainly for HNIs or institutional investors.
How to Sell Unlisted Shares?
Selling unlisted shares is slightly different from selling listed ones but still straightforward:
- Sell to Dealers or Brokers
- Contact the same dealer you bought from or other brokers in the market.
- They will quote a buyback price (which might be higher or lower than what you paid).
- Transfer the shares to their Demat account after receiving payment.
- Sell After IPO Listing
- If the company goes public, your unlisted shares will be converted into listed shares automatically.
- You can sell them like any other stock on NSE/BSE after the lock-in period (if applicable).
- Sell to Another Investor
- You can transfer your unlisted shares to another buyer through an off-market transaction (via Demat).
- Ensure all compliance is met for smooth transfer.
Important Things to Keep in Mind
Liquidity is Low
Unlike listed shares, unlisted ones don’t have a daily market. Selling may take time.
Pricing Can Vary
There is no fixed price — it depends on demand, company valuation, and dealer margins.
Risk Factor
Unlisted companies may not always do well. Some may never list or grow slowly.
Minimum Investment
Usually, dealers have a minimum order size (e.g., ₹50,000 – ₹1,00,000).
Taxation
- If you hold for more than 24 months, it is considered long-term capital gain (LTCG) and taxed at 20% with indexation.
- If less than 24 months, it is short-term capital gain (STCG) and taxed as per your income slab.
Example: Buying NSE Unlisted Shares
Let’s say you want to buy National Stock Exchange (NSE) unlisted shares:
- Contact a trusted dealer who has NSE shares.
- Suppose the dealer quotes ₹3,200 per share.
- You agree to buy 50 shares → Total = ₹1,60,000.
- Pay via bank transfer.
- Dealer transfers 50 NSE shares into your Demat account.
- When NSE lists (IPO), your shares will automatically reflect in your account as listed shares.
Advantages of Investing in Unlisted Shares
- Early entry into promising companies.
- Potential for multi-bagger returns post-IPO.
- Access to companies not yet available to the general public.
- Good for long-term investors who can wait patiently.
Disadvantages or Risks
- Not regulated like listed shares (less transparency).
- No guarantee of IPO or liquidity.
- Pricing may be volatile and subjective.
Summary & Recommendations
Investing in unlisted shares can be a profitable opportunity if done carefully. Many investors have made huge returns by buying shares of companies like Tata Technologies, NSE, or HDB Financial before they got listed.
However, always remember:
- Do proper research about the company.
- Deal only through trusted brokers or SEBI-registered platforms.
- Be ready to hold your investment for the long term.
- If you’re new, start small and learn how the unlisted market works before investing big amounts.