Get Started with Unlisted and Pre-IPO Shares,
but Know the Unknown First
Investing in unlisted shares can be a rewarding experience, but we understand that it comes with questions. To help you, we’ve compiled an extensive list of FAQs.
Frequently Asked Questions
What are unlisted shares?
Unlisted shares are shares of companies that are not listed on any public stock exchange. These can be shares of private companies or companies preparing for an IPO.
What are pre-IPO shares?
Pre-IPO shares are shares of a company that are issued before the company goes public through an IPO. These are usually sold to select investors or institutions.
How are unlisted shares different from listed shares?
Unlisted shares are not traded on public exchanges and have less liquidity, while listed shares are publicly traded and have more transparency and liquidity.
What is the lot size for unlisted shares?
The lot size refers to the minimum number of shares that must be bought in a single transaction. It varies by company and broker.
Can I buy less than the lot size?
Usually, no. The minimum investment for unlisted shares is often the lot size, but some platforms may allow smaller investments in certain cases.
What is the typical minimum investment required?
The minimum investment usually depends on the company and can range from ₹1 lakh to ₹10 lakh or more, depending on the lot size.
Are pre-IPO shares more secure than other unlisted shares?
Pre-IPO shares can be less risky because the company is preparing to go public and undergoes more regulatory scrutiny, but they still carry investment risks.
How liquid are unlisted shares?
Unlisted shares are typically illiquid, meaning finding a buyer may take time, unlike listed shares, which can be sold on public exchanges immediately.
What happens if a company never goes public?
If a company does not go public, you may have to hold onto the shares long-term or sell them on secondary markets if a buyer is available.
What kind of returns can I expect from unlisted shares?
Returns vary significantly and depend on the company’s performance. Early investors in successful companies can see high returns, but the risk of loss is also high.
Are unlisted shares riskier than listed shares?
Yes, unlisted shares are generally riskier due to the lack of regulatory oversight, lower liquidity, and less publicly available information about the company.
How do pre-IPO shares perform after the IPO?
If the IPO is successful, pre-IPO shares might provide substantial returns. However, this is not guaranteed, and market conditions can affect performance.
Do I need to pay taxes on profits from unlisted shares?
Yes, profits from the sale of unlisted shares are subject to capital gains tax. The rate depends on the holding period and tax laws of India.
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