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Overview
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What are listed shares?
In summary
Listed shares generally offer easier trading and observable market prices. Unlisted shares typically involve private transactions and less frequent price discovery.
- Listing: Listed shares trade on recognised stock exchanges, while unlisted shares do not.
- Liquidity: Listed shares generally offer greater liquidity because investors can trade through exchange mechanisms.
- Price discovery: Listed securities have publicly displayed market prices through exchange trading systems.
- Disclosure: Listed companies follow applicable stock-exchange and SEBI disclosure requirements.
Risk: Unlisted shares can involve greater liquidity, valuation, and information risks.
The right choice depends on your investment horizon, liquidity requirements, risk appetite, and financial objectives.
What are listed shares?
Listed shares are equity securities admitted for trading on a recognised stock exchange. Investors can generally buy or sell them through registered market intermediaries. Exchange trading provides observable prices and established mechanisms for order matching and settlement. NSE provides market information, including current buy and sell orders and last traded prices.
Listed companies must comply with applicable securities-market and listing requirements. These requirements include specified disclosure and corporate-governance obligations under relevant regulations. Listed shares can therefore provide greater transparency and easier price discovery. However, their market prices can still fluctuate substantially.
What are the pros and cons of listed shares?
Listed shares offer strong liquidity and price visibility, but their main drawback is market volatility and exposure to changing prices.
| Advantage | Disadvantage |
| NSE/BSE liquidity: NSE reported average daily cash-market turnover of Rs. 81,721 crore in FY 2023-24. | Market volatility: Share prices can fluctuate significantly because of company, economic, and market developments. |
| Price transparency: Exchange-traded securities have observable prices based on active market transactions. | Investment risk: Listing does not guarantee returns, and investors can incur capital losses. |
| Regulatory oversight: Listed entities follow SEBI's disclosure and listing requirements. | Compliance costs: Listed companies must meet continuing disclosure and regulatory obligations. |
| Market access: Investors can generally trade listed shares through recognised exchange mechanisms. | Trading costs: Investors may incur brokerage, taxes, and other applicable transaction charges. |
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What are unlisted shares?
How to apply for Bajaj Finance loan against shares
Unlisted shares are shares that are not listed for trading on a recognised stock exchange. They may belong to private companies or public companies that remain unlisted. Transactions generally occur through private arrangements, subject to applicable laws and transfer conditions. Consequently, buyers may have fewer opportunities for immediate price discovery.
Unlisted securities can also involve limited transaction frequency. Investors may therefore need greater due diligence before purchasing or selling them. SEBI's framework specifically addresses securities issued by unlisted companies and their public offerings.
What are the pros and cons of unlisted shares?
Unlisted shares can offer higher growth potential than established listed securities, but they also involve greater liquidity, valuation, and investment risks.
| Advantage | Disadvantage |
|---|---|
| Growth potential: Successful private-market investments can potentially deliver 3–5x returns over comparable holding periods, although outcomes vary. | Limited liquidity: Unlisted shares liquidity India remains lower because shares are not traded through recognised stock exchanges. |
| Early-stage access: Investors may gain exposure to businesses before a potential public listing or broader market access. | Valuation uncertainty: Without continuous exchange trading, determining a fair market value can be more difficult. |
| Long-term focus: Private companies can pursue business strategies without continuous public-market price movements. | Higher risk: Limited information, liquidity constraints, and company-specific risks can increase potential losses. |
| Growing private market: CRISIL and IVCA research highlights strong growth opportunities across India's private-market ecosystem. | Higher entry threshold: Certain private-market opportunities may require substantial minimum investments, depending on the platform and issue. |
Unlisted shares require careful due diligence because potential returns can be accompanied by longer holding periods, restricted exits, and valuation uncertainty.
How unlisted shares differ from listed ones?
Features & Benefits for Bajaj Finance loan against shares
The key difference between listed and unlisted shares is their trading mechanism. Listed shares trade through recognised stock exchanges, where orders are matched electronically and prices are publicly available. Unlisted shares are generally transferred through private transactions rather than regular exchange trading. These transactions may involve direct buyers, sellers, brokers, or other intermediaries. Therefore, listed and unlisted shares differ significantly in how investors access, trade, and exit their holdings.
Key differences between listed and unlisted shares
Below is an overview of the differences between the listed and the unlisted shares.
| Basis of comparison | Listed shares | Unlisted shares |
| Listing status | Listed on a recognised stock exchange | Not listed on a recognised stock exchange |
| Trading | Generally traded through exchange mechanisms | Usually transferred through private transactions |
| Liquidity | Generally higher | Generally lower |
| Price discovery | Market prices are available through trading systems | Prices may require negotiation or valuation |
| Transparency | Subject to applicable listing and disclosure requirements | Disclosure requirements differ based on company and transaction |
| Accessibility | Generally accessible through market intermediaries | Access may be restricted or transaction-specific |
| Valuation | Primarily market-driven | May require independent or negotiated valuation |
| Risk factors | Market volatility and company-specific risks | Liquidity, valuation, information, and company-specific risks |
| Exit process | Can generally be executed through exchange trading | May require finding a suitable buyer |
NSE states that exchange trading provides price and order information that supports efficient price discovery.
Factors to consider when choosing between listed and unlisted shares
Eligibility criteria for Bajaj Finance loan against shares
Choosing between listed and unlisted shares depends on your financial situation and investment objectives.
- Risk tolerance: Consider whether you can manage market volatility and limited liquidity risks.
- Investment horizon: Unlisted shares may require a longer holding period before finding an exit opportunity.
- Liquidity requirements: Listed shares may suit investors requiring easier market access.
- Valuation: Consider how reliably you can establish the value of an unlisted security.
- Information availability: Review the financial, operational, and ownership information available before investing.
- Diversification: Avoid concentrating your portfolio excessively in one security or asset category.
How to invest in listed shares?
Investing in listed shares generally requires a suitable demat and trading arrangement.
Step 1: Open a demat and trading account
Choose a registered intermediary and complete the required account-opening process.
Step 2: Fund your trading account
Transfer the amount you intend to invest according to your financial plan.
Step 3: Research suitable securities
Review company financials, business performance, valuation, sector conditions, and your risk tolerance.
Step 4: Place an order
Use your trading platform to place a suitable buy order for the selected security.
Step 5: Monitor your holdings
Review your investments periodically and reassess them against your financial objectives.
NSE provides exchange-based trading, clearing, settlement, market information, and related equity-market infrastructure.
How to invest in unlisted shares?
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Investing in unlisted shares requires additional due diligence because exchange-based price discovery is unavailable.
Step 1: Identify the company
Research the company's business model, financial position, ownership structure, and growth prospects.
Step 2: Verify the transaction
Understand how the shares will be purchased and whether the transaction complies with applicable legal requirements.
Step 3: Assess the valuation
Review available financial information and determine whether the proposed price appears reasonable.
Step 4: Complete documentation
Ensure the transaction documents, ownership records, and transfer procedures are properly completed.
Step 5: Plan your exit
Consider how and when you could sell the investment before committing funds.
Conclusion
The difference between listed and unlisted shares mainly concerns listing status, trading access, liquidity, price discovery, and information availability. Listed shares generally provide easier trading and observable market prices. Unlisted shares can offer different opportunities but require careful valuation and liquidity assessment.
Investors should evaluate risk tolerance, investment horizon, liquidity requirements, and diversification before choosing either category. Ready to make your shares work harder? Turn your share portfolio into liquidity without selling. Apply for LAS
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Frequently asked questions
General
Which is better listed or unlisted company?
The choice between a listed and unlisted company depends on your investment goals. Listed companies offer liquidity and transparency, making them safer for most investors. Unlisted companies can offer higher returns but come with higher risks and lower liquidity.
Is it good to buy unlisted shares?
Buying unlisted shares can be rewarding if you have a high-risk appetite and a long-term investment horizon. They may offer significant returns, but they are less of liquidity and transparency makes them riskier compared to listed shares.
What happens when unlisted shares get listed?
When unlisted shares get listed on a stock exchange, they become publicly tradable, increasing their liquidity and marketability. This can potentially lead to an increase in the share price due to higher demand and greater investor interest.
How to know the share price of an unlisted company?
If you have a connection with the promoter or promoters of a company, you can inquire about the current share price of the unlisted company. Additionally, certain online platforms like UnlistedZone and UnlistedDeal may provide information on the share prices of some unlisted companies.
Can you sell unlisted shares?
Unlisted shares can be sold through over-the-counter transactions or with the assistance of intermediaries such as brokers or investment bankers.
Can I sell unlisted shares after listing?
Yes, you can sell unlisted shares after the company's IPO and the subsequent expiry of the lock-in period. Pre-IPO shares are typically subject to a six-month lock-in period post-listing. During this period, you cannot sell these shares, either through over-the-counter transactions or on the stock exchange.
How are listed shares different from unlisted shares?
Listed shares trade on recognised stock exchanges and follow SEBI listing requirements, while unlisted shares trade privately without exchange-based price discovery. NSE recorded average daily cash-market turnover of Rs. 81,721 crore in FY 2023-24.
What is the capital gains tax on listed vs unlisted shares?
For transfers after July 23, 2024, listed equity STCG is taxed at 20%, while LTCG is 12.5% above Rs. 1,25,000. Unlisted shares have a 24-month LTCG holding period, with LTCG generally taxed at 12.5%. Indexation is generally unavailable under the revised regime.
Can I use my listed shares as collateral for a loan?
Yes, you can pledge eligible listed shares with Bajaj Finance to obtain a Loan Against Shares without selling them. You retain ownership and eligible dividend benefits during the facility. Bajaj Finance offers up to 50% of eligible share value. Start the application using your mobile number and verify it through OTP.
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