Equity shares of a company which are not yet listed on the Stock Exchanges like BSE, NSE, etc. are called 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.
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.
Yes. Most of the shares being sold are in the demat form. However, some shares can also be in physical form.
To know the process in detail. Please click here.
Investing in pre-IPO helps the investor:
- To participate in the growth of the company
- Get opportunities which otherwise would ONLY be available to big entities like PE Firms etc
- Get in at reasonable valuations
One should atleast 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.
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.
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.
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.
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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