UNLISTED SHARES - Frequently Asked Questions

Before investing in unlisted shares, read the Declaration of Risk in its entirety on our website: https://investolane.in/declaration-of-risk

Investolane is a marketplace that enables buying and selling of unlisted shares and pre-IPO shares in India. It connects buyers and sellers of the shares, allowing them to invest and trade in a transparent and secure manner. Investolane provides access to a wide range of unlisted companies, including startups, private equity firms, and companies preparing for an initial public offering (IPO).

Some key features of Investolane include:

- A user-friendly platform for buying and selling unlisted shares

- A wide range of unlisted companies to choose from

- Transparent pricing and transaction processes

- Minimal documentation and easy onboarding

- A dedicated team for support and assistance

Investolane is popular among investors looking to diversify their portfolios by investing in unlisted companies with growth potential. However, it's important to note that investing in unlisted shares carries higher risks and requires thorough research and due diligence.

Investolane is also an authorized stockbroker for Reliance Securities Limited in Dehradun, UK. It is registered on NSE as an authorized person (AP).

Unlisted Equity Shares are the common equity shares of the companies which are not "yet" listed on any stock exchange (NSE & BSE) or have been “delisted” from the stock exchange, hence they are NOT publicly traded. Shareholders of such companies are deprived of the privileges enjoyed by the shareholders of companies that are listed on stock exchanges.

However, "not listed" does not mean that the shares cannot be traded. Shares of Unlisted Companies are traded in off-market transactions by the shareholders. Shares may get listed in the future & hence there is a huge growth potential in these companies.

E.g., Tata Tech, Anand Rathi, Nazara Tech, Devyani, UTI, etc, were once traded in unlisted market before listing on Stock Exchanges (NSE & BSE). Swiggy, Polymatech, Incred, Tata Capital, NSE etc, are among companies which are currently being traded in unlisted market. 

Investing in shares/equity is one of the riskiest investments ever known, hence there is no point in investing in shares if returns are not multi-bagger because risk to reward ratio should needs to be low. If there is high risk, there should also be high reward. If we talk about 2-3 decades earlier, when IPOs like Infosys came to the Indian Equity markets, the primary purpose was to raise money and those companies were at very initial stages of their life cycle. This was one of the reasons why those companies were able to give multi-bagger returns.

However, in today’s era, the companies which are primarily going for IPOs does so to give exit to the initial investors as well, the same investors who invested when those companies were at very initial stages of their life cycle. These investors are the ones who make multi-bagger returns. Therein, for retail investors like you and others, it is important to invest in the companies when they are at very initial stages of their life cycle so that retail investors can also make multi-bagger returns. Hence, this opportunity is now open to retail investors via unlisted company shares.

Furthermore, investing via unlisted equity shares gives opportunity to invest in Start-up companies. Start-up companies have unique and high growth business models. Investment in unlisted equity shares of such companies offer huge potential of returns wherein substantial value unlocking usually happens when they go for IPOs, also there is no other way to invest in these companies as their shares are only available in the unlisted/private equity market. This also gives an opportunity to invest in new age and innovative business. When these companies further raise capital, they may raise it at higher valuation and hence increase in their share price.

Finally investing in unlisted equity shares is one of the diversifications methods to investment portfolio. This asset class offers a good diversification opportunity to investors for wealth creation. 

The procedure to invest in Unlisted Equity Shares is as given below:

• There is a list of around 100 unlisted equity shares, you need to select the company to invest in. The number of unlisted equity shares shall increase or decrease based on availability.
• Prices of unlisted equity shares changes every day, you need to provide your confirmation on the price finalised between you and Company (Investolane).
• You need to have an active Demat & Bank Account (preferably CDSL demat account). Client Master Report (CMR) is also required, you can ask your broker to provide the same, the request can be placed via email or ticket and CMR copy is free of cost.
• Copy of PAN Card, Cancel Cheque photo is required.
• Once you choose the unlisted company to invest in and confirm on the then-current price of that company, you need to then transfer the funds in the company (Investolane) bank account and once payment is confirmed in our account, shares will be transferred within T+2 working days.
• Share price will be of the day when Investolane will receive payment/shares in their company account.
• Please note, all payments to be made in advance at the time of buying sharing and all shares to be transferred in advance at the time of selling shares.
• Once payment/shares are received, deal cannot be cancelled via any side.
• Shares will be credited in your demat account only. CDSL demat account is preferred for unlisted shares and complete transfer buying and selling process is online.
• Selling of unlisted shares is also similar to buying, you need to transfer shared to our demat account and you will receive payment in your bank account withing T+2 working days.
• Please note, if due to any reason (holidays or other) exchange is closed, share transfer will take additional day(s). To check list of holidays, please refer exchange website: Market Timings & Holidays - NSE India 

A Client Master Report (CMR) is a digitally signed PDF certificate issued by a broker to a client with the details of their demat account such as demat ID, date of birth, bank details, nomination details etc.

CMR copy is used to transfer shares in a demat account from one broker to another. You can raise ticket or contact your broker to send you CMR copy. It is provided free of cost. 

The price of unlisted equity shares is based on demand and supply of the shares. Demand and Supply changes based on company news, results and hence do the price. 

The price may be different and is not the same in the market for unlisted shares. Buyers and sellers need to do their own research before finalizing any deal.

Investment in unlisted equity shares is completely market-based and so are the returns. There is no fixed time horizon for get gain/returns in the unlisted shares.

Existing shareholders of the unlisted company sell unlisted equity shares. These can include Employees, Ex-employees, CEO, Promoters, Private Equity investors, and more. Current and  ex-employees are given ESOPs by the company which they further sell in the unlisted market. 

ESOPs are contracts that allow employees to buy a set number of the company’s shares at an agreed-upon price. ESOPs have a vesting period, during which they cannot be “exercised”, or turned into shares. This means employees need to work at a company for a certain number of years before they can benefit from ESOPs. Companies mainly offer ESOPs to attract and retain their top talent. Gone are the days of conventional salary packages. Employees, especially those at tech companies & start-ups, are increasingly demanding stock options (ESOPs), through which they can own stakes in the companies they work at and (hopefully) benefit from their growth. They are also used as a tool to instill more ownership among employees for improving performance.

Before IPO: There is no restriction on transfer of shares held in Demat form until IPO cut-off date of allotment of shares in the IPO which is generally a week before allotment of shares in the IPO.

After Listing: As per SEBI rules, all Pre-IPO shares have a locking for 6 months from the date of listing. You will see the shares in your Demat holding as shares under lock in.

STCG (Short Term Capital Gains): Unlisted shares held for less than 24 months are  considered as short term and gains are taxed as per the investor's tax slab for the  year.  

LTCG (Long Term Capital Gains): Unlisted shares held for more than 24 months are  considered as long term in nature and gains are taxed at 12.5% (no indexation  available).

Securities Transaction Tax or STT are not applicable to transactions involving  unlisted shares. It is only levied on transactions that are executed on recognized  stock exchanges in India.  If you sell the shares once they are listed through an exchange, then STT will be  applicable. Shares held over 1 year would be classified as long term and would be  taxed at 12.5% without indexation.

Yes, completely 100%. Buying unlisted equity shares is legal in India. This is a Private Equity investment and HNIs, FII and DII like Rakesh Jhunjhunwala, LIC of India already have invested in many unlisted companies shares like CSK, Nazara, Star Health, and many others. Also, TV shows like Shark Tank India where aspiring entrepreneurs from India pitch their business models to a panel of investors and persuade them to invest money in their idea are from Private Equity sector only. Also, the payment of the buy unlisted equity shares is made through bank account only and shares are transferred in demat account. Third party transactions are illegal in unlisted equity shares market

All unlisted equity shares have different minimum investments. However, we at Investolane strive to keep the minimum investment limit as low as possible. On an average minimum investment can be in range of INR 35,000 - INR 40,000.

All unlisted equity shares are kept in NSDL (National Securities Depository Limited) or CDSL (Central Depository Securities Limited) Demat account which are the actual depository to store all listed and unlisted shares. No seperate account is needed to buy/sell unlisted shares. However, CDSL demat account is preffered to buy unlisted shares as complete buying and selling process in online and much easy than NSDL.

As these are shares of unlisted companies, their price won't be reflected in your demat account. Instead, only the face value will be displayed. Once the company lists on the NSE or BSE, the actual price will appear automatically. For more details, please contact us.

We at Investolane acts as an intermediary between buyers and sellers and help them make a deal. As we help one party to buy shares, we are helping other party to sell the shares. If one has already invested in unlisted shares, they can contact us to sell shares and we will help them find a buyer and to do the share transfer process as well.

To know more about share transfer process, please check here: HOW TO TRANSFER UNLISTED SHARES

Easiest facility by CDSL allows everyone to view their holdings, transactions, and transfer stocks online. This will enable them transfer stocks without submitting physical DIS at branches.

To know and understand complete process on registering and transferring unlisted equity shares online, please check here: HOW TO TRANSFER UNLISTED SHARES

Third party transactions are not allowed when buying unlisted shares. It means, the shares will be transferred to the same person demat account from where payment has been received. If any third-party transaction is found for any of the clients, the payment/share transfer will be kept on hold until written explanation is received from the client.

Yes, of course. If there is any corporate action pertaining to Unlisted/Pre-IPO shares and if you are holding the shares on respected record date, you will be eligible for such corporate actions (just like listed shares). 

No, currently shares of around 100 companies are available in the unlisted market. Companies like LIC of India, went public but their shares were not available in the unlisted market. Hence not all unlisted company shares are available in the unlisted market.

Download complete list here: List of unlisted shares available

Compulsorily Convertible Preference Shares (CCPS) are a type of preference shares issued by a company with a mandatory conversion feature. These shares are a hybrid financial instrument that combines elements of both preference shares and convertible debentures.

In comparison to common equity holders, who get to vote on all resolutions, CCPS holders are generally limited to voting on matters affecting their rights as shareholders or matters affecting the rights of the class of shares that they hold, all of which are detailed in the shareholder agreements.

If you have any other questions, please contact us. Thank you.