How to Buy Unlisted Shares in India?

Unlisted shares, as the name suggests, are shares of companies that are not yet listed on any recognised stock exchange like the NSE or the BSE.

In this article, we will explore the process of buying unlisted shares, the associated risks, the benefits, and understand the difference between pre-ipo shares and unlisted shares. We will also list the platforms that allow the purchase of unlisted shares. So, let’s dive in.

Pre‑IPO vs. Unlisted Shares: What’s the Difference?

Pre-IPO Shares: These are the shares issued by a private company planning to go public soon. The shares are sold to private investors, also known as anchor investors, such as institutional investors, venture capitalists, or high-net individuals. The presence of these anchor investors before the IPO facilitates price discovery, enhances investor confidence, and signals trust in the company’s prospectus.

Unlisted Shares: These include all shares that are not traded (listed) on the exchanges, encompassing shares of private companies, delisted firms, ESOPs, and pre-IPO shares.

As seen in the difference, pre-ipo shares are part of unlisted shares, a subset. Thus, all pre-ipo shares are unlisted shares, but all unlisted shares are not pre-ipo shares.

SEBI’s Role: Limited Oversight

What does SEBI regulate?

SEBI regulates only the IPO process and thereafter until the stock trades on the exchanges. SEBI has also mandated a 6-month lock-in period for all pre-ipo shareholders post listing.
Although the buying and selling of unlisted shares does not fall within the ambit of the regulator, SEBI has warned against unauthorized trading platforms for unlisted shares.

What does SEBI not regulate?

Pre‑IPO trades that happen off-exchange are over-the-counter (OTC) and outside formal regulation.
Brokers or platforms facilitating these trades are not SEBI-registered as stock brokers.

How to buy unlisted shares?

Platforms like UnlistedZone, Planify, Sharescart, Stockify, and InCred Money offer access to unlisted and pre‑IPO shares.

Typical process:

Sign up, do KYC.
Browse the different investment options.
Choose and invest (₹10k+).
Shares credited to your Demat account, usually within a day.

Risks & Considerations

Low Liquidity: You may struggle to sell your unlisted shares
Price mark-ups: Platforms often add 4–5% or more to the base price.
Taxation: Short-term capital gain ( > 1 year) taxed at 20%
Long-term capital gain (< 2 years) taxed at 12.5%
Limited transparency: There are no audited financials or mandatory disclosures by the company with unlisted shares
Lock-in: Cannot sell the shares for 6 months post-listing
Price-Volatility: Prices may fluctuate highly due to low liquidity and a lack of transparency.
Lack of Regulatory Oversight: Unlike listed shares, unlisted shares are not tightly regulated, which increases the possibility of fraud and manipulation.
No or Delayed Listing: There is a real possibility of the company not going public or delaying the process.

Why Take the Risk of Investing in Unlisted Shares?

Here are the following reasons, investors might be interested in unlisted shares.

Buy at a discount: A Chance to buy at a lower price than the eventual IPO price.

Potential for high returns: Unlisted shares offer the potential for high growth if the company does well post-listing.

Portfolio diversification: Add private companies to your investment portfolio.

List of platforms providing Unlisted Shares