Listed Shares Vs. Unlisted Shares - Detailed Comparison

A stock market is a public market that allows people to buy and sell shares on the stock exchange. In the last few years, the share market has flourished to a great extent due to its digitalisation. Over the years, the share market has revolutionised with faster trade settlement, increased transparency, enhanced security, and a lot more. This transformation has led to an increased unlisted share price in India.

With the explosive growth of retail investors, listed and unlisted stocks have taken pace. Being the best place to buy unlisted shares in India, we have decided to unfold the myths about listed and unlisted shares. Though the differences are pretty clear, we will try to explain them one by one for a thorough understanding. Click to connect with the best unlisted share brokers in India?

Overview: What Are Listed and Unlisted Shares?

If you have just stepped into the stock market, you are likely to be already familiar with listed shares.

Listed Shares Explained

Simply put, listed shares refer to the stocks of companies that are available for trading on a recognised stock exchange, for instance, NSE and BSE in India. Listed shares represent a company's financial assets.

Unlisted Shares Explained

On the other hand, Unlisted stocks or pre-IPO shares refer to securities or financial assets that are not ready to trade on the stock/regulated market. Companies that are planning to list on the stock exchange often place unlisted shares for trading. Connect with the best unlisted share brokers in India for early access to the unlisted share market.

Listed shares are issued by officially listed companies wherein shares can be openly traded. On the other hand, Unlisted shares are sold over the counter and traded via off-market transactions. There are many other differences that we have discussed below but before going forward check out the best place to buy unlisted shares in India.

Highlighting Major Differences Between Unlisted Shares and Listed Shares

Besides the trading and tracking process, there are many differences between unlisted and listed shares. To better understand unlisted and listed shares, we will address each disparity individually. However, if you have doubts about how to buy unlisted shares in India, you can connect with the best unlisted share brokers in India.

Trading/Investment Process

There are different types of stocks that are available for official trading on various stock exchanges, mainly listed stocks. The trading process in listed stocks is quite straightforward, and investors can initiate the process without much paperwork; thus, the entire process goes super smoothly.

Whereas unlisted shares are traded over the counter, investors record them in pink sheets. If you want to buy or sell unlisted shares, you need to connect with unlisted share brokers who have access to unlisted shares of the company.

Usually, unlisted share investment is tiresome, but Stockify is the best unlisted share trading platform, simplifying unlisted share trading. Simply choose a company, book online, pay using the payment gateway, get an email confirmation, and that is all.

Ownership of Shares

One significant difference between listed and unlisted shares is their ownership. While the different shareholders usually own listed shares, ownership of unlisted shares is with private stakeholders, including founders, their employees and other associated people.

It helps eliminate the fluctuations and brings stability to the valuation of unlisted shares. This is the reason why investors prefer investing in unlisted shares.

Liquidity

Investors can openly trade listed shares on the stock exchange, so it is quite clear that they would have a higher liquidity rate than unlisted shares.

However, when it comes to unlisted shares, it is right to say that they have less liquidity, the reason behind this is their accessibility. However, Stockify is giving a buyback guarantee to all its customers to help its clients solve the liquidity issue if any.

Valuation of Shares

Listed stocks are readily available for exchange, so the demand and supply lead to a higher valuation of shares. However, the valuation of unlisted stocks depends on the cash flows, market cap and other aspects that have a direct connection with the company's growth.

Unavailability and accessibility to unlisted stocks are prime reasons for the low valuation of such shares. Unlisted shares are generally available at a discount rate than their listed peers.

Taxation

Though there are different regulations for listed and unlisted shares, both fall under tax regimes. However, the taxation regulations for both are different too.

Listed stocks are considered long-term investments if held for more than one year. The same goes with unlisted shares, but they need to be held for more than two years.

Long term capital gain applicable on both is 10% and 20% on listed and unlisted shares, respectively.

Regulatory Requirements

SEBI regulates the stock market, but unlisted stocks are not available here and thus are pretty less regulated. Talking about the regulatory requirements, listed companies have to follow stringent guidelines. On the other side, Unlisted stocks are available for trading without worrying about regulations.

So, if you are looking to invest with an assured return on investment, unlisted shares are perhaps the best choice.

Unlisted Or Listed Shares: Which Is A Thoughtful Investment?

Listed stocks have always been there in the market and thus have a high fluctuation rate. The increasing competition for trading stocks has left even some big companies like Reliance with unlisted stocks. When it comes to picking between listed and unlisted shares, you should always prefer unlisted shares. However, connecting with the best unlisted shares brokers in India will give more insights. Unlisted companies usually have private entities and are in process of releasing their IPOs.

There are many benefits of unlisted shares, as mentioned below.

High-value investment

Unlisted shares are not very liquid because investors can hold them for a more extended period. Thus, investors consider them high-value investments, and if an investor invests at the time of undervaluation, they can gain significant profit.

Diversified risk

If you are into an alternative investment, unlisted shares can significantly diversify your risk. Whether the market goes down or the gold price goes up, nothing will impact your investment in unlisted shares.

High-growth investment

Unlisted firms are often small and have yet to reach their utmost potential. They have enough time to go for public funding and capital gain. So, if you buy unlisted shares of such companies, you can yield high returns later when companies list on the public exchange.

Complete peace of mind

Unlike listed shares, unlisted companies are beyond the market fluctuation. Since they are not in the market for trading, unlisted stocks are stable, and the investors need not worry about anything.

Listed Shares Vs. Unlisted Shares – Detailed Comparison

Ways To Buy Listed And Unlisted Shares

The process of buying listed and unlisted shares is different as one of them can be bought from the open market. and below are the ways you can buy them.

Listed Shares

To buy listed shares, all you have to do is get yourself a Demant account and then visit any stock broking platform and buy your desired shares. There are many listed share trading platforms like Zerodha, Grow, and many more.

Unlisted Shares

The process of buying Unlisted shares is a bit different as they are not listed on any open market. There are mainly 3 ways you can buy unlisted shares of companies.

1- Buy ESOPs From Employees

You can buy unlisted shares from existing company employees. Many companies offer their employees ESOPs and the employees try to sell these unlisted shares to buyers to make a profit.

2- Buy Directly From Buyers

You can also buy unlisted shares directly from promoters in a process called private placement. Promoters hold a substantial amount of shares in a company and buying directly from them means that you don’t have to pay extra for anyone’s services.

3- Buy From Online Trading Platforms

Another way of buying unlisted shares is through online trading platforms. Here you can buy these unlisted shares safely and easily. Trusted and verified online trading platforms like Stockify will help you trade in these shares and will also provide you with financial details to make sure that you make an informed decision.

Want High Potential Unlisted Shares? Stockify Will Help!

So, now that you know everything about unlisted and listed shares, it's time that you decide where to invest. Wondering how to buy unlisted shares in India? Stockify is the best place to buy unlisted shares in India, providing early access to unlisted shares of the top companies in India. Want to learn more about unlisted shares in India? Get expert assistance from the best-unlisted share brokers in Mumbai? Check our portfolio now!.