How to Buy Unlisted Shares in India

The Securities and Exchange Board of India (SEBI) constantly monitors and regulates listed shares, giving them a safety label. Unlisted shares, on the other hand, provide enormous potential for exposure and growth but come with their own set of risks.

Like you, countless people in India know the value and potential of unlisted shares but need help figuring out how to buy unlisted shares in India. Many early investors in unlisted companies lost money to con artists due to a lack of awareness and scams. Today’s environment, where fraud is widespread, makes it even more challenging to distinguish between real and bogus information.

This article is for you if you're wondering where to buy unlisted shares in India, how to invest in unlisted companies, and can we buy unlisted shares safely? Let's break it down.

What Are Unlisted Shares?

Unlisted shares are any securities or financial instruments that are not traded on a recognized stock exchange like NSE or BSE. They are often referred to as over-the-counter (OTC) securities. Companies issuing these shares are typically smaller, newer, or may not meet certain listing requirements like minimum market capitalization, profitability, or listing fees.

How to Buy Unlisted Shares in India?

If you're wondering how to buy unlisted shares, here are the most common ways you can invest safely:

1. Invest in Pre-IPO Companies Through Trusted Intermediaries

Companies in their pre-IPO stage issue shares that are not yet publicly traded. These can be bought through intermediaries who facilitate off-record transactions. The shares are directly credited to your Demat account even though the exchange is not involved.

When choosing an intermediary, ensure they are SEBI-registered to reduce counterparty risks.

2. Buy Directly from Employees (ESOP Sales)

Some start-up employees holding ESOPs (Employee Stock Option Plans) may be willing to sell their shares after the lock-in period. In India, certain brokers and platforms can help you connect with such employees. Always verify the legitimacy of the platform before purchasing.

3. Purchase Directly from Promoters via Private Placement

You can buy shares through private placement, which involves negotiating directly with the company’s promoters. This method is usually for high-ticket investments. It is advisable to involve a SEBI-registered wealth manager or investment banker for due diligence and smoother transactions.

4. Invest Through PMS and AIF Schemes Investing in Unlisted Shares

If you're looking for a more structured way to invest in unlisted companies, Portfolio Management Services (PMS) and Alternative Investment Funds (AIF) offer professional portfolios that include unlisted shares.

These are managed by SEBI-registered entities, ensuring better compliance, diversification, and risk management.

Key benefits include:

• Risk spread across multiple investments.
• Professional management and due diligence.
• Dynamic portfolio adjustments as per market conditions.

Where to Buy Unlisted Shares in India?

If you are still wondering where to buy unlisted shares in India, here are some legitimate options:

• SEBI-registered intermediaries and brokers.
• Equity crowdfunding platforms (SEBI-compliant).
• Angel networks like Indian Angel Network, LetsVenture, etc.
• SEBI-registered PMS or AIF funds.

Can We Buy Unlisted Shares? Is It Safe?

Yes, you can buy unlisted shares, but remember:

• Unlisted shares are high-risk investments.
• Transactions must always happen through legitimate and SEBI-compliant channels.
• Stay away from unsolicited offers on WhatsApp, Telegram, or SMS.
• Always verify the intermediary's SEBI registration number.

Risks of Investing in Unlisted Shares

While the potential returns are high, some risks you should be aware of include:

• liquidity: Hard to find buyers or sellers.
• Capital Loss: High risk of losing your principal amount.
• No Dividends: Many unlisted companies do not distribute profits early.
• Dilution Risk: Your ownership may get diluted in future funding rounds.

Key Considerations Before You Buy Unlisted Shares in India

• Always consult experienced investors or a SEBI-registered financial advisor.
• Do detailed research on the company or start-up you are investing in.
• Check for clean transaction history, no hidden charges, and direct Demat account transfers.
• Start small if you are a beginner and follow where institutional investors are investing.

Key Takeaways

Investing in unlisted shares is risky but rewarding if done carefully. Whether you choose to buy unlisted shares from employees, promoters, or invest via PMS/AIFs, always ensure transparency, regulatory compliance, and proper due diligence.

Stay informed and continue reading such articles on Piramal Finance to learn more about how to invest in unlisted companies and buy unlisted shares safely in India.