Table of Contents:
What are Unlisted Shares?
The shares which are not listed on formal stock exchanges, i.e., National Stock Exchange (NSE), Bombay Stock Exchange (BSE) or any other exchanges are called/referred as unlisted shares.
Trading of such shares is done in off-market/over-the-counter (otc) market. Unlisted Shares Market is also known as over-the-counter market, private market, off-market & pre-ipo shares market.
There is a lot of confusion amongst investors that how can a share come to existence if it is not listed?
It is not at all necessary that shares comes to an existence only when the company gets listed. Even if the company is unlisted (not listed on exchanges), the share capital of the company exists and so the shares exist. Like any listed shares, unlisted shares are also in demat form and unlisted shares can be stored in demat account. They can also be transferred from one demat account to another.
Just for an example: Reliance Retail Limited, a step-down subsidiary of Reliance Industries, Tata Technologies Limited, a subsidiary of Tata Motors are not listed on stock exchanges, but the unlisted shares of these companies (equity) floats in unlisted market.
What is the difference between Listed & Unlisted Shares?
Listed shares are the shares which are listed on recognized stock exchanges like NSE or BSE. Listing of shares needs several compliances with Stock Exchanges and SEBI. Listed stocks can be traded through stock exchanges.
On the other hand, unlisted shares are the shares which are not listed on exchanges but are traded in unlisted market (off market, otc market, private market). The shares have less liquidity compared to listed market.
|Points of Difference||Listed Shares||Unlisted Shares|
|Meaning||The shares which are listed on stock exchange(s) are called listed shares||The shares which are not listed on stock exchange(s) are called unlisted Shares|
|Ownership||Listed companies may have more number of owners/shareholders as it is openly traded in market||Compared to listed companies, unlisted companies may have less number of shareholders as it is privately traded|
|Role of Stock Exchanges||As this shares are listed on stock exchanges, exchange plays a key role over here. Exchange acts as a mediator between buyer and seller||Unlisted Shares are traded in over-the-counter market (otc) or say unlisted markets. Hence, there is no role of stock exchanges here|
|Volatility||Due to mass buyers and sellers involved in listed space, the price of listed shares changes continuously (tick-by-tick) and hence it is more volatile||As there are limited buyers and sellers involved in unlisted space, this are less volatile.
Share prices do change here but not frequently as compared to listed shares
|Class of Shareholders||Listed shares have both traders and investors. Trading is quiet easy.||Unlisted shares are mostly preferred by investors. Due to liquidity being low as compared to listed shares, trading in unlisted shares is less preferred|
|Liquidity||Listed shares are highly liquid as mass buyers and sellers are present in the market||Unlisted shares are less liquid compared to listed shares as buyers and sellers are limited|
|Risks||Investing in Listed Shares is prone to regular market risks as it is more volatile and sensitive to events in nature||Investing in Unlisted Shares majorly has types of risks
-Uncertain Listing Plans
|Growth||Mostly, companies list themselves after maturing in terms of growth. Hence, the rapid growth by the company before its IPO cannot be enjoyed by investors at large||Investors have a chance to participate in the initial growth stage of the company by investing in unlisted shares/pre ipo shares|
|Privilege||Investing in listed shares is usually done by every class of investors||Investment in unlisted shares can now be done by each class of investors (including retail). Now retail investors too have a privilege to diversify their investments like Fund Houses.|
What is the difference between Unlisted Shares & Grey Market?
There is a lot of misconception in investors that unlisted market and grey market – both are same. However, both are exclusively different from each other.
The main difference between both is when you buy Unlisted Shares/Pre IPO shares, you get actual delivery of shares in your demat account instantly while in grey market there is no actual delivery of shares.
As the name suggests, the grey market is “grey” in terms of legality. While, dealing in Unlisted Shares/Pre IPO Shares is completely legal as usually such transactions go through bank accounts and demat accounts.
Do read our article which we wrote for Money9 on difference between unlisted market and grey market
What is the difference between Unlisted Shares & Pre-IPO Shares?
Usually, the terms “Unlisted Shares” & “Pre IPO Shares” are used as synonyms to each other. However, there is a minor difference between them with regards to their expected listing status.
Unlisted Shares means those shares whose IPO Plans and/or Listing Plans are not known in short-term. They may plan for IPO and/or Listing in future. Whereas Pre IPO Shares means those shares which are very likely to bring IPO and/or get listed in short term. Such Pre IPO Companies may have initiated the required processes for the same.
What is the difference between Unlisted Shares & Delisted Shares?
Both “Unlisted Shares” and “Delisted Shares” are not traded on stock exchanges. But, the difference between them is that Unlisted Shares are those shares which were never listed/traded on stock exchanges and they may get listed on stock exchanges in future. While, delisted shares are those shares which were earlier traded on stock exchanges and got delisted and now are not traded anymore on stock exchanges.
The reasons for delisting may be different for different companies. Some companies voluntarily get delisted while some have to delist due to regulations.
This is the reason, why UnlistedArena.com does not deal in all delisted shares. We only deal in selected delisted companies who have mostly opted for voluntary delisting and have quality fundamentals.
The delisting of shares does not affect the business. On the contrary, some quality businesses, where promoters are confident of growth, go for voluntary delisting so that they can enjoy the growth of their companies to maximum possible extent by buying the shares back from public investors.
How to buy Unlisted Shares?
When comes to buying Unlisted Shares, some big questions strike in investors mind
- How to Buy/Source Unlisted Shares?
- How to contact such seller?
- Even if I find a seller, will I get unlisted shares after paying the amount?
- How trust-worthy will be the the counter party?
- Which is the best and reliable place to buy unlisted shares?
The answer is – UnlistedArena.com
Unlisted Arena is answer to all your queries. Unlisted Arena eases your Investment in unlisted shares. Unlisted Arena sources unlisted shares and facilitates investors which are otherwise very difficult for the investors to source. We keep flexible and affordable lot sizes so that every investor can take benefits of such unlisted shares offering. Unlisted Arena is known for its competitive pricing and top notch services in unlisted shares.
Unlisted Arena is featured in India’s top most financial media, you can check out our media coverage here.
You can just contact us here and drop your queries on unlisted shares and we shall facilitate you unlisted shares.
Process of Buying Unlisted Shares?
The process of buying Unlisted Shares from Unlisted Arena is quiet simple.
- Connect with us and inquire rates and availability of the unlisted/pre ipo shares
- Confirm the deal with us
- Transfer funds in our bank account. (We accept payments only through bank. Payment modes accepted: NEFT, IMPS, RTGS, UPI)
- Share documents for transfer of shares to your demat (Documents required: Client Master List (CML/CMR Copy), Cancelled Cheque Copy)
- Sit back and relax! You will have unlisted shares in your demat account in just few hours.
One can go through detailed process on how to buy unlisted shares here
FAQ regarding Unlisted Shares
Can I buy Unlisted Shares? How to buy Unlisted Shares?
Yes, any investor having a demat account can buy unlisted shares. You can check our offerings of unlisted shares here. The process of buying unlisted shares is quite simple.
Step 1: Connect with us and check the latest rates of unlisted shares
Step 2: Confirm the deal with us and share your demat and bank details
Step 3: Make payment of unlisted shares from your bank account
Step 4: The shares will get transferred to your demat account by usually the same day or next working day.
Check out the detailed process of buying unlisted shares here.
How safe are Unlisted Shares?
It is safe to invest in unlisted shares if you have a proper understanding about the risks, company and its business model. One should have basic knowledge of investing in stock market.
Is trading in unlisted shares legal?
Yes, buying unlisted shares is absolutely legal. The shares are transferred to the demat account of buyer.
Will I get dividend/bonus on unlisted shares?
Yes, if the company declares dividend and/or bonus & you are a shareholder as on the record date, you are eligible for dividend/bonus or any other corporate action undertaken by the company.
We hope that this article helped you clear your doubts regarding investing in Unlisted Shares, Pre IPO Shares, Delisted Shares. You may also like to have a look at our offerings of Unlisted Shares & Pre IPO Shares.
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