The market of the unlisted shares in India continues to rise and provides an opportunity to buy or sell shares conveniently. In India, where the majority of people have limited knowledge of the stock market, investing in a stock of any company brings financial security to their life. However, only a few people know the process of buying and selling unlisted shares in India. As per the Economic Times Report, there are over 10 lakh of unlisted companies whose shares are available for buying in the stock market. Whether its a sports franchise Chennai Super Kings or other companies like OYO or Tata Technologies, their unlisted shares are available for investors. So, if you don’t know how to buy or sell the unlisted share, this post will share the complete process.
What Does Unlisted Shares Mean?
In simple words, the unlisted shares are the equities or financial securities of the companies. These can be startups or businesses that are not listed on the stock market. It is also known as the pre-IPO equity that is available for trading, and investors can easily buy or sell it.
When the company is not listed on the stock market, it is not bound to the rules and regulations of Stock Exchange Bonds of India (SEBI). In this scenario, there is a higher risk for the investors as the entry and exit from the market are not smooth. However, all the companies that offer unlisted shares to the investors are registered with the Ministry of Corporate Affairs, which makes them follow the national stock trading policy.
The Process Of Buying And Selling Unlisted Shares In India?
When it comes to the stock market, people still have some sort of insecurity about the future returns. The risk of losing money increases when the company is unlisted. So, it is beneficial to buy unlisted shares. One of the biggest advantages of investing in unlisted shares is that it allows investors to buy stakes in startups and companies.
Process Of Buying Unlisted Shares
The process of buying unlisted shares is pretty straightforward. Investors can buy the shares directly from the pre-IPO listed marketplace. It is the place where the employers and private brokers make their stake available at a better price. However, to buy the unlisted shares you also need a trusted broker who has a good track record. Remember, you should have your DEMAT trading account ready with sufficient balance. The whole process of buying unlisted shares is a multi-step process are follows the pattern as follows:
- First of all, you need a reliable platform to begin with the research of the various unlisted shares. The best unlisted shares to invest in also need the assistance of a broker who shares the market performance of the particular share for the past few months to years.
- Now, you shortlist the unlisted shares based on their past performance and risk assessment. Here, you will need specific knowledge of the industry in which you want to buy the stock. Based on this data, you have to negotiate the valuation of the share.
- After that, the term sheet is signed, and the process of due diligence will be performed. In this stage, you can take the help of a dealer who will make you aware of the terms and conditions. When you are done with it, the process of due diligence starts.
- Apart from this, you can also buy unlisted shares of the companies during their pre-IPO stage. Most companies issue unlisted shares before bringing the Initial Public Offering(IPO).
Process of Selling Unlisted Shares
The process of selling the unlisted shares is quite simple when you have an experienced broker. Various online platforms provide a marketplace for buying and selling unlisted shares. Here, there are two scenarios: First, you have the shares of IPO bound companies, and second, you have shares of non-IPO-bound companies. In simple words, you can easily sell the shares of IPO bound companies as compared to the other ones.
Here is the process of selling unlisted shares in India:
- First of all, you have to get in touch with the entity holder or spokesperson to share the concern. Your dealer or broker can complete this process. All you have to share is your DEMAT account details and Client Master Report(CMR).
- After that, transfer the unlisted shares you want to sell to the broker’s DEMAT account along with its details. Here, your CMR comes into play, which contains the approved document along with shared details at the time when you buy it. You can email it along with account details and ID proof.
- Once the dealer receives the unlisted share, he/she can find the best buyer and sell the shares. The advantage of having a broker is that they can negotiate the unlisted share price and get you an excellent deal.
It is the whole process of buying and selling unlisted shares in India. You might find it difficult when you do it on your own. There are various things you need to keep in mind, like the performance of the company, liquidy, and the present market condition. You also have an option to buy directly from stock promoters, employers, and portfolio management systems. However, it will become cumbersome for you. So you can rely on a reliable unlisted stock broking platform for getting your trade executed.
