Unlisted shares offer everyday investors a chance to tap into high-growth private companies before they go public, but they come with unique risks and rewards. This guide breaks down the essentials in simple terms to help you decide if they’re right for your portfolio The Truth About Unlisted Shares: Myths and Real Risks Explained.

What Are Unlisted Shares?

Unlisted shares are equity stakes in private companies not traded on public stock exchanges like NSE or BSE in India. These belong to startups, pre-IPO firms, or businesses choosing to stay private for control or cost reasons, such as OYO or Zomato before their IPOs. Unlike listed stocks, they trade privately via over-the-counter deals or specialized platforms, limiting easy access.

Key Differences from Listed Shares

Unlisted shares lack the liquidity of listed ones, meaning selling can take time and effort through brokers or secondary markets. They often start at lower valuations with explosive growth potential—sometimes 100-150% annually—but face less regulation and no real-time pricing. Everyday investors get early entry opportunities, but must handle valuation challenges themselves.

Benefits for Everyday Investors

These shares shine for those seeking outsized returns from emerging companies before IPO hype drives up prices. Investors avoid public market premiums, buying at fairer early-stage values, and platforms like Unlisted Mitra simplify access. They diversify portfolios beyond volatile listed stocks, appealing to patient investors eyeing long-term wealth.

Risks to Watch Out for

Illiquidity tops the list—shares might lock up for months or years without buyers. Higher volatility, opaque valuations, and fraud risks demand thorough due diligence on company health and sellers. Taxation follows equity rules, but gains can trigger capital gains tax upon sale, varying by holding period.

How to Get Started

Open a demat account, then source shares via trusted platforms, brokers, or private placements from promoters. Research company fundamentals, growth plans, and past deals; start small to test waters. Consult financial advisors for valuation checks and legal transfers to minimize risks. 

The unlisted market in India operates differently than the regulated exchanges. It’s typically an over-the-counter (OTC) market, facilitated by brokers specializing in unlisted securities.