How to Invest in Unlisted Shares?

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If you’ve ever heard someone talk about unlisted shares and wondered whether they’re worth exploring, you’re not alone. Many investors in India are now looking beyond the stock market for early opportunities. 


What Is Unlisted Shares

Unlisted shares refers to shares that aren't listed on stock exchanges like the NSE or BSE, such as startups, private businesses that are growing quickly or even established brands that haven't made the leap public yet. 

In simple terms:
 You are investing in a company before its IPO.

People invest in unlisted shares because:

  • They may be available at lower valuations

  • There is potential for high returns after IPO

  • You get early access to promising businesses

However, they are also less liquid and require more understanding.


Documents Needed to Open a Demat Account to Invest in Unlisted Shares

To invest in unlisted shares, you must have a Demat account. The good news is—there’s no special Demat needed. A regular Demat account works fine.

Here are the documents you’ll need:

  • PAN Card

  • Aadhaar Card

  • Address proof (Aadhaar, Passport, Voter ID, etc.)

  • Bank account details (cancelled cheque or bank statement)

  • Passport-size photograph

Once your Demat is active, you’re eligible to hold unlisted shares digitally.


Process to Invest in Unlisted Shares

Let’s break the process to invest in unlisted shares step by step, without jargon.

Step 1: Choose a trusted intermediary or unlisted share company

Unlisted shares are usually bought through unlisted share company:

  • Registered intermediaries

  • Wealth managers

  • Investment advisors

Always verify their credibility before proceeding.

Step 2: Select the company

You’ll be shown a list of available unlisted shares along with:

  • Price per share

  • Financials

  • Business background

Take time to understand what you’re buying.

Step 3: Make the payment

Once you confirm the deal:

  • You transfer funds via bank

  • The intermediary initiates the share transfer

Step 4: Shares credited to your Demat

The shares are credited to your Demat account, usually within 7–15 working days.

That’s it—you now own unlisted shares.


Can I Trust on Unlisted Share Investment

This is a very genuine question—and honestly, a smart one.

Yes, you can trust unlisted share investment, but only if you do it right.

Here’s how to stay safe:

  • Deal only with reputed and transparent intermediaries

  • Avoid offers that promise “guaranteed returns”

  • Ask for proper documentation and transaction proof

  • Understand that prices can fluctuate and liquidity is limited

Unlisted shares are not scams by default, but they are not meant for blind investing either.


What Is the Taxation on Unlisted Shares in India

Understanding unlisted shares income tax rules is very important.

Capital Gains Tax

  • Short-Term Capital Gains (STCG):
     If you sell within 24 months, gains are taxed as per your income tax slab.

  • Long-Term Capital Gains (LTCG):
     If you hold for more than 24 months, gains are taxed at 20% with indexation benefits.

After IPO

If your unlisted shares later get listed via IPO, the holding period is still counted from your original purchase date, not the IPO date.

Always consult a tax advisor for accurate filing.

Can Unlisted Shares Be Held in Demat Account

Yes, absolutely.

Unlisted shares can be held in a Demat account, just like listed shares.
 This makes tracking, transferring, and selling much easier and safer.

Earlier, unlisted shares were held in physical form, but today:

  • Most transactions happen in Demat

  • It reduces risk and paperwork

  • It ensures transparency

Conclusion

To sum it up, investing in unlisted shares can be rewarding if you:

  • Understand the business

  • Follow the right steps to buy unlisted shares

  • Stay patient and realistic about risks

It’s not a get-rich-quick option.
 But for investors who think long-term and do their homework, unlisted shares can be a valuable part of a diversified portfolio.



Location: Delhi, India

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