What are shares that aren't listed, and how can you buy them?

When people read stock market news today, they usually hear about big businesses like Reliance, Infosys, or HDFC that trade a lot on the NSE or BSE. Not every business is open to the public. Unlisted shares are shares of firms that choose to stay private or are in the process of going public.

You can’t purchase or sell these stocks on a regular exchange. People buy and sell them in private markets, through middlemen, or directly from the employees who own them. Investors who wish to spread their money around beyond the usual stock market can find new chances by learning about shares that aren’t published.

What do you mean by “unlisted shares”?

Unlisted shares are shares of companies that don’t trade on stock exchanges like the NSE or BSE. Because they aren’t listed, investors won’t see them in today’s daily stock market news today headlines. They do own shares in companies that are doing well, though.

There are a number of reasons why businesses might not be listed:

They are still in the early stages of growing.
They don’t want to have to obey the guidelines for listings.
They are private right now, but they want to go public through an IPO in the future.

For example, a lot of start-ups, companies that are about to go public, and even subsidiaries of big companies have shares that aren’t listed.

Why do individuals buy stocks that aren’t listed?

Shares that aren’t listed are riskier, but they do have certain unique advantages:

A lot of companies that aren’t on the stock market yet could be the best in the future. People that invest early have an edge.
Diversification: They give investors access to investments that aren’t generally available on the stock market.
Advantage of owning shares before an IPO: When the company goes public, the price usually goes up, so people who own shares before the IPO make money.
Ownership in private companies: Some investors decide to put money into small businesses that aren’t highly known yet.

Today, the headlines in the financial market will talk more about prospective IPOs. But investors who already possess shares that aren’t listed are ahead of the game.

How to Buy Shares That Aren’t on the Market

It is not as easy to buy unlisted shares as it is to buy equities that are listed on an exchange. Here are a few common ways:

By utilising traders or middlemen
Specialised dealers aid those who want to buy and sell shares that aren’t listed. They might ask you to pay, but that’s the most common way to go.
Employee Stock Ownership Plans (ESOPs)
Shares are often used to pay employees. When they sell, investors can buy these shares that aren’t listed.
Private Placements
Sometimes, before becoming public, corporations sell shares directly to some people.
The Market Before the IPO
As the IPO date creeps closer, more people want shares that aren’t listed. Those who want to buy them can do so before they go public.

The main risks of shares that aren’t listed

Every possibility has its risks. Unlisted shares don’t trade on an exchange, thus they aren’t as clear or easy to buy and sell. These shares don’t get daily price updates like the stocks you see in the stock market news today. Some of the main dangers are:

Issues with liquidity—selling shares that aren’t listed could take longer.
It’s hard to figure out how much items are worth because pricing aren’t defined and depend on talks.
Regulatory limits: People can’t put as much money as they want into businesses that aren’t listed.

This is why people who want to invest need to think carefully before they do.

Here are some things to consider about before you put money into something:

Before you buy unlisted shares, you should think about these things:

Find out a lot about the business. Finding information about companies that aren’t listed on the stock market is not as easy.
Check how much risk you can handle. There are big risks, but there are also big returns.
Know the lock-in period: SEBI says you have to keep your shares for a specific amount of time after they go public if you buy them before the IPO.
Because the market isn’t as regulated, work with brokers you can trust.

These steps can help investors make good decisions and avoid making the same mistakes over and over again.

What Will Happen to Unlisted Shares in India

More and more people are buying shares that aren’t listed. As India’s start-up sector grows and more companies are ready to go public, this area is becoming more interesting. Outside of the daily news regarding the financial market, there are some really interesting things going on today.

For instance, many tech-driven, e-commerce, and fintech startups acquire private funding before they go public. Investors that get in early on these companies might be able to make a lot of money when they go public.

Last Thoughts

Before shares go public on the stock exchange, investors can buy them. They don’t get as much attention in stock market news today as listed stocks do, but they are a good way to expand and diversify your portfolio.

That said, investors should be both watchful and delighted at the same time. If you think about the risks, work with honest middlemen, and keep your long-term goals in mind, investing in unlisted shares can be a good way to make money.