Unlisted Shares
Unlisted shares represent ownership in a company that does not have its securities listed for public trading. Transactions for such shares usually occur through private placements, over-the-counter (OTC) arrangements, or specific platforms that enable such transfers in accordance with regulatory norms. These shares can be part of start-ups, established private firms, or subsidiaries of listed companies that have not yet gone public.
Types of Unlisted Shares
Pre-IPO Shares
Shares of companies that are expected to come out with an Initial Public Offering (IPO) in the future. Investors purchase these before listing, based on availability.
Private Company Shares
Equity holdings in businesses that are privately owned and not planning an immediate public issue but are operational and profitable.
Employee Stock Ownership Plan (ESOP) Shares
Shares originally allotted to employees as part of their compensation plan, which may later be traded privately, subject to company rules.
Why Invest in Unlisted Shares
Early Access to Companies
Investors can participate in companies before they are listed, offering exposure at an early growth stage.
Limited Market Liquidity
These shares are not traded on public exchanges and are therefore less liquid compared to listed stocks.
Valuation Based on Private Transactions
Prices are generally determined by demand and supply between buyers and sellers rather than live market quotes.
Regulated Transfer Mechanisms
All transactions follow the applicable norms under regulatory authorities, ensuring compliance and transparency.
Potential Long-Term Holding
Investors typically hold unlisted shares for longer durations until a liquidity event like a public listing or buyback occurs.
