Key Takeaways
- Unlisted shares are equity shares of companies not listed on NSE or BSE.
- They trade privately between buyers and sellers through intermediaries.
- Investing in unlisted shares offers early access to high-growth companies before their IPO.
- Arms Securities has been dealing in unlisted, delisted, and unquoted shares since 1990 — over 35 years of expertise.
- Returns in the unlisted space can be significant, but risks like illiquidity and valuation uncertainty exist.
Unlisted shares are equity shares of companies that have not been listed on a recognised stock exchange such as the NSE (National Stock Exchange) or the BSE (Bombay Stock Exchange). They trade privately, directly between buyers and sellers, through intermediaries like Arms Securities — one of India's oldest and most trusted unlisted share dealers, operating since 1990.
If you have ever wondered how some investors managed to buy Nazara Technologies, D-Mart, or DLF shares before they went public and made extraordinary returns, they were investing in unlisted shares. This guide explains everything you need to know about unlisted shares in India — what they are, how they work, who should invest, and how to get started.
What Exactly Are Unlisted Shares?
Unlisted shares, also referred to as unlisted stocks or private company shares, are equity instruments issued by companies that have not yet completed an Initial Public Offering (IPO) or whose shares have been removed from exchange listing. These shares are not available for purchase or sale through stockbrokers on NSE or BSE.
Instead, they are traded in what is known as the over-the-counter (OTC) market — an informal marketplace where transactions happen between parties directly, usually facilitated by specialist intermediaries.
In India, the unlisted share market is entirely legal. The Securities and Exchange Board of India (SEBI) does not regulate the unlisted market in the same way it regulates listed exchanges, but SEBI rules still apply to aspects such as demat transfers, stamp duty, and lock-in periods post-IPO.
Types of Unlisted Shares in India
Not all unlisted shares are the same. Arms Securities deals in several distinct types, each serving a different investor need.
1. Pre-IPO Shares
These are shares of companies that are planning to go public in the near future. Investors buy them before the IPO at a private market price, often lower than the eventual listing price. Companies like NSE (National Stock Exchange), NSDL, and Tata Capital are examples of companies whose pre-IPO shares are actively traded in India.
Why they matter: If a company lists at a significant premium over your purchase price, the returns can be substantial. Arms Securities identified pre-IPO opportunities in DLF, LUX Industries, Nazara Technologies, and D-Mart for its clients — all of which delivered multibagger returns.
2. Unlisted Shares of Private Companies
These are shares of privately held companies that are not planning an immediate IPO but have a real business, revenues, and growth. Investors who want exposure to a sector or company can buy these shares for medium-to-long-term wealth creation.
3. Delisted Shares
Delisted shares are shares of companies that were once listed on NSE or BSE but have since been removed from the exchange, either voluntarily (when a company wants to go private) or involuntarily (due to regulatory issues or failure to meet listing requirements). These shares continue to have real value and can be bought and sold in the OTC market.
Arms Securities is one of India's very few dealers that specialises in delisted shares — a niche almost no competitor touches.
4. Unquoted Shares
Unquoted shares are shares of companies that have never been listed on any exchange and are traded only in the informal, unquoted stock market. Arms Securities has been a founder member of the unquoted stock market and has decades of experience in this niche.
How Do Unlisted Shares Work?
The process of buying and selling unlisted shares in India is different from buying listed shares through a demat account on a broker platform.
Step 1: Find a Trusted Dealer
You contact a specialist like Arms Securities who maintains an inventory of unlisted shares or has access to sellers. Unlike stock exchanges, pricing is determined by the OTC market — driven by demand, company fundamentals, and upcoming events like an IPO.
Step 2: Agree on Price and Quantity
Arms Securities provides live buy and sell prices for all the unlisted shares it deals in. You can browse the full list here. Once you agree on a price, the transaction is confirmed.
Step 3: Payment and Transfer
The buyer transfers payment to the seller's bank account. The seller then initiates an off-market transfer through their depository participant (DP) to credit the shares directly into the buyer's demat account. This process typically completes within 24 hours.
Step 4: Holding the Shares
Once the shares are in your demat account, you hold them like any other shares. You can sell them at any time through the OTC market, or wait for an IPO event that will allow you to sell on the exchange after the mandatory 6-month lock-in period ends.
For a detailed explanation of the procedure, visit our Procedure page.
Who Sells Unlisted Shares?
Sellers in the unlisted share market include:
- Company promoters and founders — early stakeholders who want partial liquidity before an IPO
- Employees with ESOPs — employees who received stock options and want to monetise before a listing
- Early investors and angel investors — looking to exit or realise returns
- Existing shareholders — including family members of promoters who wish to sell inherited shares
- Private equity and venture capital firms — seeking partial exits from portfolio companies
Benefits of Investing in Unlisted Shares
1. Early-Bird Access to High-Growth Companies
You get to invest in companies before they become household names. The earlier you enter, the lower the valuation and the greater the potential upside.
2. Portfolio Diversification
Unlisted shares are uncorrelated with daily stock market movements, providing genuine diversification beyond listed equities and mutual funds.
3. High Return Potential
The unlisted share market has delivered an impressive track record. NSE's shares, for example, moved from around ₹371 in 2021 to over ₹2,000 in 2026. Early investors in D-Mart and Nazara Technologies made 5x–10x returns.
4. Lower Market Noise
Unlisted shares are not subject to daily market volatility. Their valuation is driven by business fundamentals, not sentiment, which suits patient investors.
5. Unique Asset Class
Most retail investors do not have access to private equity as an asset class. Unlisted shares offer a democratised gateway to private market investing.
Risks of Investing in Unlisted Shares
Investing in unlisted shares comes with risks that you must understand before committing capital.
1. Illiquidity
You cannot sell unlisted shares at the click of a button like listed stocks. Finding a buyer at your desired price may take time.
2. Valuation Uncertainty
Pricing in the OTC market is driven by supply and demand, not a transparent exchange mechanism. This makes it harder to determine fair value.
3. Limited Public Disclosure
Unlisted companies are not required to publish quarterly results like listed companies. Financial information is less readily available.
4. Lock-In After IPO
When an unlisted company lists, shares purchased pre-IPO are subject to a 6-month lock-in period under SEBI regulations. You cannot sell immediately upon listing.
5. No Guarantee of IPO
A company you invest in may delay or cancel its IPO plans, affecting your exit timeline.
Who Should Invest in Unlisted Shares?
Unlisted shares are best suited for:
- High-net-worth individuals (HNIs) looking for alternative investment opportunities
- Long-term investors with a time horizon of 2–5 years
- Experienced investors who understand equity risk
- Employees with ESO Pshares who want to understand the secondary market for their holdings
- Investors who want early exposure to sectors like fintech, defence, renewables, and healthcare before they reach public markets
Taxes on Unlisted Shares
Understanding tax is critical before you invest. In India, unlisted shares are taxed as follows:
- Short-Term Capital Gain (STCG): If sold within 24 months of purchase, the gain is added to your income and taxed at your applicable income tax slab rate.
- Long-Term Capital Gain (LTCG): If held for more than 24 months, the gain is taxed at 20% with indexation benefit.
For a detailed breakdown, read our dedicated guide: Tax on Unlisted Shares in India — Complete FY2025-26 Guide.
Why Choose Arms Securities for Unlisted Shares?
Arms Securities has been one of India's most trusted unlisted share dealers since 1990. Here is what sets us apart:
- 35+ Years of Experience: We are among the founder members of the unquoted stock market in India.
- Multibagger Track Record: We have helped investors identify pre-IPO opportunities in DLF, ISGEC, LUX Industries, Nazara Technologies, D-Mart, and L&T Infotech — all of which delivered extraordinary returns.
- Transparent Pricing: We maintain live buy and sell prices for 100+ unlisted companies.
- Physical and Demat: We deal in both physical share certificates and demat-format unlisted shares — a unique capability very few dealers offer.
- Full Service: From unlisted to delisted, pre-IPO to unquoted — we cover the entire spectrum of private securities in India.
View our full list of unlisted shares →
How to Get Started with Unlisted Shares
Ready to invest? Getting started with Arms Securities is simple:
- Browse our share listings at https://www.armssecurities.com/shares
- Call or WhatsApp us to discuss your investment goals and get a live price
- Complete the transaction — we guide you through the full process
- Shares are credited to your demat account within 24 hours
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