How to Buy NSE Unlisted Shares in India?

Unlisted shares are increasingly drawing interest from investors seeking opportunities beyond the conventional stock market. 

Specifically, NSE (National Stock Exchange) unlisted shares those of companies yet to be listed on the exchange can seem appealing due to factors such as strong financial performance, market positioning, and the possibility of a future IPO.

However, investing in unlisted shares involves distinct challenges and risks, including lower liquidity, limited transparency, and valuation uncertainties compared to listed stocks.

This article aims to provide an overview of the process of buying NSE unlisted shares, highlighting where and how these shares can be acquired. 

How to Buy NSE Unlisted Shares in India?

1. Private Placement

Some companies raise funds by directly offering shares to HNIs or institutional investors. This can be done via investment bankers or wealth management firms.

2. Via Brokers or Intermediaries

Specialised brokers act as middlemen in buying and selling unlisted shares through OTC trades. Make sure the intermediary is SEBI-registered.

3. From Existing Shareholders

You can negotiate with early investors, employees with ESOPs, or promoters to buy unlisted shares.

How to Sell NSE Unlisted Shares?

Selling unlisted shares involves more complexity than buying. Here are the options:

1. OTC Deals: Sell through the same brokers or platforms where you bought them.
2. IPO Exit: If NSE gets listed, your unlisted shares will convert to listed ones, allowing you to sell them on the exchange.
3. Private Deals: Negotiate with interested buyers (HNIs, PE firms) directly or through an intermediary.

Key Risks of Investing in NSE Unlisted Shares

With the growing demand for unlisted NSE shares, it's important to be aware that unlisted shares carry certain inherent risks many of which are common across all unlisted securities. Below are some key risks to consider while investing in unlisted shares.

1. Liquidity

Unlike listed stocks that can be bought and sold almost instantly through exchanges, unlisted shares lack a formal market. You often need to rely on brokers or OTC (over-the-counter) deals to exit your position. This makes selling difficult, especially during uncertain market conditions or when the company isn’t in high demand.

Impact: Investors may be stuck with the shares for an extended period with limited exit options.

2. Valuation Transparency

There is no market-discovered price as in listed stocks. Valuation depends on private deals, investor sentiment, and negotiation making it less predictable. Often, investors may end up overpaying due to hype, especially when demand is driven by speculative interest before an IPO.

Impact: It’s harder to know if you’re buying at a fair value, which increases the risk of capital loss.

3. Regulation

Listed companies are subject to strict SEBI regulations, mandatory disclosures, and auditing requirements. In contrast, unlisted companies face far fewer compliance obligations. Financials may not be regularly updated or available publicly.

Impact: Limited transparency can lead to higher information asymmetry.

4. Holding Period

There’s no guarantee when, or if, a company will go public. While some firms plan an IPO within 2–3 years, others may delay indefinitely due to internal or market-related reasons. Investors need to be mentally and financially prepared to stay invested for long periods.

Impact: Your capital could be locked in for several years with no liquidity event.

5. Lock-in Period After IPO

If you hold unlisted shares of a company going public, you cannot sell them immediately after the IPO. A SEBI-mandated six-month lock-in period applies from the listing date, during which pre-IPO investors are restricted from selling their holdings.

Impact: Limits liquidity in the short term and delays profit booking, especially for investors looking to exit soon after listing.

What Are Unlisted Shares?

Unlisted shares are equity shares of companies not listed on public stock exchanges like NSE or BSE. They are typically held privately by promoters, venture capital firms, institutional investors, or employees. These shares are traded over-the-counter (OTC) and lack the liquidity, transparency, and regulations that come with listed shares.

Read More: NSE IPO: Check SEBI’s Condition Approving NSE Public Offering.

Conclusion

Investing in NSE unlisted shares come with significant challenges, including limited liquidity, less transparency, valuation difficulties, and regulatory uncertainties. Potential investors should carefully weigh these risks against the possible rewards and ensure they conduct thorough due diligence before entering this space. A cautious, well-informed approach is essential when dealing with unlisted shares.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.