Difference Between Unlisted Shares and Listed Shares Explained

Table of Contents

• Introduction
• What are listed shares?
• What are unlisted shares?
• Key differences between listed and unlisted shares
• Advantages and disadvantages of listed shares
• Advantages and disadvantages of unlisted shares
• How to buy shares in India from unlisted Companies?
• Understanding the unlisted shares purchasing platform
• Conclusion
• FAQs

Introduction

Investing in stocks is one popular method of growing your money. Everyone knows about listed shares, which are listed on the stock market. But unlisted shares are not as well known but can be equally beneficial. Both have their advantages and disadvantages. It is essential to know the difference before investing anything. Listed shares can be easily bought and sold, whereas unlisted shares are typically exchanged privately. Therefore, unlisted shares have the potential to give high returns but are riskier. Here, in this blog, we will clarify these two clearly. You will also know how to purchase shares of unlisted firms and where you can do it. Let’s begin with the fundamentals.

What are listed shares?

Equity shares, or listed shares, are shares in a company traded on stock exchanges such as NSE or BSE. When the shares of a company are listed, it has to abide by certain guidelines and disclose financial details. These shares can be bought or sold by anyone during trading time. Share price, news about the company, and trade information are readily available.

Listed shares are readily tradable since they have high liquidity. What this implies is that you can easily sell or buy them when you need to. However, the price is transparent and open for everyone to view. This promotes confidence and openness. The majority of large corporations float their shares to obtain money from the public and expand their business further.

What are unlisted shares?

Unlisted shares are shares that are not listed on any stock exchange. These shares are of companies that are not listed or do not qualify to be listed. Unlisted shares can be bought or sold through private transactions or specialized online platforms.

Unlisted shares are more difficult to sell, as they are illiquid. It can take days, weeks, or even months to find a seller or buyer. Furthermore, their price is not determined by the market. It is negotiated between the two parties. These shares usually stem from small companies or developing startups. Investing in them can result in high returns but involves more risk due to limited information and lower regulation.

Key differences between listed and unlisted shares

Here is a clear comparison between listed shares and unlisted shares:

This table helps understand the fundamental differences easily.

Advantages and disadvantages of listed shares

Advantages:

• Simple to purchase and sell at any time during market hours.
• Prices are clear and publicly available.
• High liquidity guarantees prompt transactions.
• Strict rules need to be followed by companies, raising trust.

Disadvantages:

• Prices may be volatile because of market trends.
• Listing and compliance fees may be high for companies.
• Investors pay brokerage charges for trading.

Advantages and disadvantages of unlisted shares

Advantages:

• Unlisted shares provide investment in startups.
• Scope to gain high returns if the company flourishes.
• Less regulation lowers compliance expenses for companies.

Disadvantages:

• Hard to sell promptly because of lack of liquidity.
• Not transparent pricing, resulting in valuation difficulties.
• Greater risk since fewer regulations shield investors.

How to buy shares in India from unlisted Companies?

Buy shares of unlisted companies can be profitable but requires caution. Here are easy steps to lead you:

• Investigate the company properly: See what business they do, how they perform financially, and their growth strategy.
• Use a trustworthy unlisted shares buying platform: These platforms assist in locating sellers and making transactions.
• Ensure legal documents: Verify share certificates and firm registration details.
• Price should be negotiated in a reasonable manner: As prices are not market-based, negotiate with the seller.
• Finalize the transfer procedure: Complete the legal process to transfer shares to your name.

Moreover, acquiring shares of unlisted firms is a time-consuming process. Yet, with the correct methodology, growing businesses may be accessed prior to them.

Understanding the unlisted shares purchasing platform

Unlisted shares buying platform is gaining popularity in India. They provide a secure and convenient method of purchasing unlisted shares. They screen both buyers and sellers to minimize the risk of fraud. Additionally, they ensure fair prices depending on demand and supply.

With these platforms, it is easy to purchase unlisted shares in India with not too much hassle. The procedure is straightforward and well-organized. Even the paperwork is handled by most of them. Some even have tools to verify the value of shares and also give expert tips. These platforms make the entire process easy and effortless. For investors, they are a useful means to venture into unlisted shares with greater confidence and lesser confusion.

Conclusion

Both listed and unlisted shares present special investment prospects. Listed shares are liquid and transparent but may promise lower growth. Unlisted shares, in turn, can yield greater returns but involve greater risks. Hence, investors need to define their objectives and risk tolerance before investment.

Moreover, if you wish to purchase shares in unlisted companies, utilize reputable portals. These enable you to buy unlisted shares in India hassle-free and securely. By research and caution, investing in unlisted shares is profitable. Keep in mind, caution and knowledge are vital in every investment.

FAQs