What are unlisted equity shares?
Unlisted shares are equity shares of companies that are not listed on any recognized stock exchange (like the NSE or BSE). These companies operate privately and their shares are not traded publicly.
How can I buy unlisted shares?
Unlisted Shares can be bought through:
- Brokers or intermediaries specializing in unlisted shares.
- Private placements directly from the company.
- Online platforms that facilitate buying and selling of unlisted shares.
Can foreign investors buy unlisted shares in India?
Yes, but they must comply with FEMA (Foreign Exchange Management Act) regulations, and there may be additional conditions or restrictions based on the sector.
What are the potential benefits of investing in unlisted shares?
- Potential for high returns: Unlisted companies, especially high-growth startups, can offer the potential for significant returns if they are successful.
- Early access to promising companies: Investing in unlisted shares allows you to invest in companies early on in their growth trajectory.
- Diversification: Unlisted shares can provide diversification benefits to your overall investment portfolio.
Are there risks associated with investing in unlisted shares?
Yes, investing in unlisted shares carries risks such as illiquidity, limited information, and potential loss if the company does not perform well.
Are Unlisted Shares regulated by SEBI?
While unlisted shares are not as tightly regulated as listed shares, SEBI does have guidelines to protect investors in unlisted public companies
What are the tax implications of investing in unlisted shares?
The unlisted shares holding period decides the capital gains tax rate.
- Short-Term Capital Gains (STCG): If sold within 24 months, gains are taxed as per the investor’s income tax slab.
- Long-Term Capital Gains (LTCG): If held for more than 24 months, gains are taxed at 20% with indexation benefits.
- Dividend Taxation: Dividends from unlisted shares are taxed at the individual’s applicable income tax rate.
What is the lock in period for Unlisted Shares?
If you purchase unlisted shares of a private company, you can sell the unlisted shares anytime you’d like before they are listed on the public markets. As per SEBI rules, once an unlisted share company is listed, purchased private/ unlisted shares have a lock-in for six months from the date of listing.
What is the kind of time horizon involved in investing in growth-stage or unlisted shares companies?
The journey from substantial growth in late-stage private/unlisted companies to listing typically spans 6 months to 3 years. This process entails securing shareholder approval, streamlining internal processes, engaging merchant bankers, filing DRHP, obtaining SEBI approvals, and more.
How can I find information about available unlisted shares?
You can explore unlisted share trading platforms like Altius Investech, Wealth Wisdom India Private Limited, Unlisted Zone and Planify to research the companies directly.
What is the difference between unlisted and delisted shares?
Unlisted Shares: These shares are typically privately held and never traded on a public stock exchange.
Delisted Shares: These were once traded on a stock exchange but have been removed from trading on that exchange for various reasons.