Key Differences Between Listed And Unlisted Shares

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Key Differences Between Listed And Unlisted Shares

Before exploring the difference between listed and unlisted shares, it becomes very important to explore the topic at its very root. Shares are parts of a company that are up for sale to different groups of people, both inside and outside of the company.

These investments allow shareholders to buy and sell shares at their leisure as per market value and when they decide to allow the said stock to mature. 

What Are Listed Shares?

Listed equities are those shares which are available to public traders and are formally listed on the stock exchanges, NSE(National Stock Exchange) and BSE(Bombay Stock Exchange). Traders can use a brokerage account or a Demat account to buy or sell shares on the stock market.

Listed stocks are only publicly traded by corporations. It must abide by the listing requirements set forth by the broker, which may include the number of shares offered and an adequate earnings ratio. These exchanges list shares with a good reputation and high quality.

Such exchanges often only permit the trading of high-quality equities because their reputation is also at stake. To be listed on a stock exchange, a company must qualify the set standards, share price, lot size, including the number of shares to be issued, equity, and more.

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What Are Unlisted Shares?

Unlisted shares are equities that are not listed on any kind of stock exchange or in any initial public offerings(IPOs). These businesses may be privately held or traded.

There are no stock exchanges involved in their trading; they are solely bought and sold over the counter. Even the name, OTC (over-the-counter) securities, refer to them.

Access to cutting-edge businesses with a high level of innovation is the main advantage of investing in this unregistered area.

Compared to listed stocks, these equities are less volatile and offer less liquidity.

Key Distinctions Between Listed And Unlisted Shares

Now that we have covered the basics, we’ll discuss the key distinctions between listed companies and unlisted companies:

 When a firm has sold publicly traded securities that are quoted on one or more reputable stock exchanges, it is said to be listed. A corporation that does not have its securities listed on the stock exchange is said to be unlisted.

Listed shares have better liquidity since they are traded more frequently on stock exchanges. Unlisted shares, on the other hand, are not publicly traded and are often used for long-term wealth development activities; as a result, they are less liquid.

The stock prices of listed companies are readily available as they are traded and quoted on a daily basis on the stock exchange. This makes figuring out the market value simple.  Unlisted shares are valued under various methods, the most popular of which is the FMV method. This stands for the Fair Market Value Method. Since they are not listed on the stock exchange, FMV is calculated for these by underwriters or investment bankers.

There are some additional restrictions on the stocks of unlisted companies, in addition to the general distinctions between listed and unlisted stocks. If you buy shares of an unlisted company, they will be locked in for 6 months following the date of listing. This means that you can only sell your shares on the stock market one year after the stock’s initial public offering (IPO).

These are the main key differences between listed and unlisted shares.


What are the TDS rates for listed and unlisted shares?

Short-term gains from listed securities are taxable at a flat rate of 15%. It is not determinable for unlisted shares as easily.

This is because, for listed securities, the purchase and sale prices are easily accessible In contrast, the fair market value of unlisted shares must be established.

How to sell unlisted shares?

Unlisted shares can be sold under the following circumstances:

  1. In the case of a merger and acquisition of a listed company acquiring an unlisted one, its shares can be sold
  2. The company can buy back its unlisted shares from you
  3. Private network transfer can happen over special circumstances
  4. After 6 months after the date of IPO, the shares can be sold on the stock market
  5. In addition to the above, you can place a request for selling your shares on the Unlistedkart App.
Can I sell unlisted shares after listing?

Yes you can. One can’t sell unlisted shares until 6 months after listing..