Frequently Asked Questions - Unlisted Investments
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Frequently Asked Questions

What is the meaning of unlisted equity share?

Equity shares of a company which are not yet listed on the Stock Exchanges like BSE, NSE, etc. are called unlisted equity shares.

Who sells unlisted equity shares?

Existing shareholders of the unlisted company can sell unlisted equity shares. These can include Employees, Ex-employees, CEO, Promoters, Private Equity investors and more.

Is the Company involved in selling unlisted shares?

The company may or may not be involved. If the company is looking to raise funds and issuing further paid up capital, it can be involved, otherwise, the company is not involved.

Are the shares being sold in the demat form?

Yes. Most of the shares being sold are in the demat form. However, some shares can also be in physical form.

What is the process to sell/buy unlisted shares?

To know the process in detail. Please click here.

Why do investors buy unlisted shares?

Investing in unlisted shares helps the investors in participating in the growth of the company, avail opportunities which otherwise would be available to big investors like private equity firms and many-a-times, get these shares at reasonable valuations.

What is the kind of time horizon to see the gains in unlisted shares?aa

One should at least hold for 3 years to see meaningful returns. To get the ideal returns, one will have to be invested in the company till it comes with IPO and keeps growing until it has reached its saturation point. This duration cannot be accurately predicted by almost anyone.

Do the unlisted shares have any lock-in?

Depends on certain factors. As such, there are no restrictions on the sale of unlisted shares. However, if the company comes up with an IPO and gets itself listed, then as per SEBI rules, all unlisted shares have a lock-in period of 1 year from the date of listing.

What is the kind of return on investment one can expect by investing in unlisted shares?

Depends on the Company, period of investment, its management’s execution capabilities & the price at which the investor procures the shares. In Equities, nobody can guarantee any kind of returns. However, we aim to provide a return of over 25% p.a. but there is no guarantee.

What are the kinds of risks involved in investing in unlisted shares?

To know more about the risks, please go through our article on the mistakes to avoid while investing in unlisted shares. Please click here to view the same.

What are the tax implications of investing in unlisted shares?

To know more about the tax implications and regulatory hurdles, please go through our article on regulations for unlisted shares by clicking here.

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