blog/article-blog/Buy or Sell Unlisted Shares and Stocks Online in 2023

Aug 21, 2023

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Buy or Sell Unlisted Shares and Stocks Online in 2023

Unlisted shares, also known as over-the-counter (OTC) securities, are a lesser-known but potentially rewarding avenue for investors. Unlike publicly traded stocks, these securities are not listed on formal stock exchanges. They encompass a wide array of financial instruments, including common stocks, penny stocks, corporate bonds, government securities, and derivatives.

​What are Unlisted Shares ?

Unlisted shares, also known as private shares, belong to companies that haven't gone public and aren't listed on stock exchanges. These shares often offer unique investment opportunities, as they can provide access to promising startups, growing companies, or pre-IPO shares of well-established firms. Investing in unlisted shares provides investors with an opportunity to participate in the growth of private companies.
Unlisted shares, also known as over-the-counter (OTC) securities, are a lesser-known but potentially rewarding avenue for investors. Unlike publicly traded stocks, these securities are not listed on formal stock exchanges. They encompass a wide array of financial instruments, including common stocks, penny stocks, corporate bonds, government securities, and derivatives.

What are Unlisted Shares ?

Unlisted shares, also known as private shares, belong to companies that haven't gone public and aren't listed on stock exchanges. These shares often offer unique investment opportunities, as they can provide access to promising startups, growing companies, or pre-IPO shares of well-established firms. Investing in unlisted shares provides investors with an opportunity to participate in the growth of private companies.

    How to Invest in Unlisted Companies

Investing in unlisted companies can be an intriguing opportunity. Here are some ways to participate in this unique market:

Investing in Start-ups and Intermediaries: Consider investing in pre-IPO (Initial Public Offering) companies that are currently unlisted but have plans to go public in the future. These shares can be obtained through trusted intermediaries. It's crucial to choose a reliable intermediary to minimize counterparty risks.

Directly Buying ESOPs: Some brokers can connect you with employees who want to sell their Employee Stock Ownership Plan (ESOP) shares at a predetermined price after a specific period. This approach provides access to shares of top unlisted companies.

Buying Shares from Promoters: To secure a significant stake in a company, consult with investment banks, wealth managers, or brokers who can introduce you to unlisted companies and facilitate private placement transactions.

Investing in PMS and AIF Schemes: Portfolio Management Systems (PMS) and Alternative Investment Funds (AIF) often include unlisted shares in their portfolios. These professionally managed investment strategies provide diversification and active management to mitigate risks.


Benefits of Buying Unlisted Shares Online:

Diverse Investment Choices: Online platforms showcase a wide range of unlisted shares, giving investors access to sectors that might not be well-represented on traditional stock exchanges.

Lower Entry Barrier: Investing in unlisted shares can be more accessible, as the minimum investment amounts are often lower compared to traditional stock market investments.

Potential for High Returns: Unlisted shares can offer substantial returns if the invested company experiences growth or gets acquired.

Early-Stage Investment: Investing in startups and private companies at an early stage can lead to higher potential gains if the company becomes successful.

Convenience: The online nature of these platforms allows investors to browse, research, and invest without the need for physical presence.

Considerations and Risks:

While unlisted shares can offer substantial rewards, they also come with inherent risks, including:

  • Illiquidity: Unlisted shares can be challenging to sell quickly, which may limit your ability to access your investment capital when needed.
  • ​​Risk of Dilution: Companies may issue additional shares, diluting the ownership stake of existing shareholders.
  • Regulatory Factors: Regulations governing the trade of unlisted shares can vary, so understanding the legal framework is crucial.
  • Dividend Uncertainty: Unlisted companies may not always pay dividends, making them reliant on capital appreciation for returns.
  • Loss of Capital: Investments in unlisted shares carry the risk of losing your entire capital if the company encounters financial difficulties or fails.

Conclusion 

Investing in unlisted shares presents an enticing opportunity to explore hidden gems in the financial market. Whether you're considering start-ups, ESOPs, private placements, or managed investment schemes, it's vital to conduct thorough research and consult with experienced professionals to navigate the potential risks effectively. By understanding the nuances of this market, investors can make informed decisions and potentially reap the rewards offered by unlisted shares.


Category: Investments

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