Investors looking for alternative investment opportunities often come across unlisted shares. These shares belong to companies that are not publicly listed on stock exchanges like NSE or BSE but are still available for private trading. Understanding the concept of unlisted shares is crucial for making informed investment decisions.
Definition of Unlisted Shares
Unlisted shares refer to the equity shares of companies that are not traded on stock exchanges. These shares are bought and sold through private transactions, investor networks, or dedicated platforms dealing in unlisted shares.
Why Are Some Companies Unlisted?
Companies may remain unlisted for various reasons:
- They prefer private ownership and do not wish to go public.
- They are in the growth stage and not yet ready for an IPO.
- They are subsidiaries of listed companies but operate independently.
- They have been delisted due to regulatory or strategic reasons.
Characteristics of Unlisted Shares
- Not publicly traded: Unlike listed shares, unlisted shares do not trade on stock exchanges.
- Limited liquidity: Selling unlisted shares may take longer due to a smaller market.
- Higher growth potential: Investors can enter early before a company scales up or goes public.
- Privately negotiated pricing: Prices are determined through private deals rather than market forces.
How to Buy Unlisted Shares?
Investors can buy unlisted shares through:
- Private Equity or Venture Capital Investments
- Employee Stock Option Plans (ESOPs)
- Direct Purchase from Existing Shareholders
- Specialized Platforms like InCred Money
How to Sell Unlisted Shares?
Selling unlisted shares involves:
- Finding a Buyer: This could be another investor, institution, or a company itself.
- Using an Intermediary: Platforms like InCred Money facilitate secure transactions.
- Waiting for an IPO: If the company goes public, investors may sell shares on the stock exchange.
Taxation on Unlisted Shares
- Short-Term Capital Gains (STCG): If sold within 24 months, taxed as per the investor’s income slab (up to 30%).
- Long-Term Capital Gains (LTCG): If held for more than 24 months, taxed at 12.5% without indexation.
Should You Invest in Unlisted Shares?
Investing in unlisted shares can be lucrative but comes with risks like lower liquidity and price volatility. However, for those looking to diversify and invest in high-growth companies early, unlisted shares offer a compelling opportunity.
Invest in Unlisted Shares with InCred Money
Looking to explore unlisted shares? InCred Money provides expert insights, secure transactions, and access to promising investment opportunities in the unlisted space!
