Unlisted Equities Compare

Additional Useful Information

• An investor can buy “Shares” of these stocks. These shares can be purchased at a price which is called the “Share Price”. The price of these shares keeps changing daily.

• The investor can sell these shares anytime at the share price prevailing on the day of the sale.

• Total Purchase Amount	=	Number of Shares X Share Price as on the day of purchase
  Total Sale Amount	=	Number of Shares X Share Price as on the day of sale
  Total Gain	=	Total Sale Amount – Total Purchase Amount

• Unlisted shares refer to ownership in a company through equities or financial instruments that are not publicly traded on established stock exchanges.

• These shares can be traded through less regulated methods, often referred to as over-the-counter (OTC) trading or other private platforms.

• The shares purchased will be transferred to the investor’s existing demat account.

Returns *

• Unlisted Equities do not guarantee any returns. They are subject to market risks.

• Unlisted equities can generate returns for the investors in one form -
• Capital Gain/Loss – When investors sell their securities, the difference between the Sale Amount and Purchase Amount is typically called “Capital Gain” or “Capital Loss” (if sale amount is lesser than the purchase amount).

• Investing in unlisted shares of developing or early-stage companies can potentially yield greater returns compared to investing in shares of established listed companies.

• Profits are calculated based on the Fair Market Value (FMV) until the shares are listed on a formal stock exchange.

Risk Level

• Unlisted Equities are categorized as very high-risk investments since they are not listed on the equity market.

• Determining the true value of unlisted equity can be more subjective and uncertain due to the absence of a transparent market. This makes it harder to evaluate their financial health and future prospects.

Liquidity

• Unlisted Equities are relatively illiquid as compared to other equity investments.

• Investors can decide to sell their unlisted equities at any given time, but there is no guarantee of a sale, due to the unavailability of the buyers.

• After an IPO and listing, SEBI rules enforce a 6-month lock-in period for previously unlisted shares. Corporate action further restricts stock sales once the issue date and listing are announced.

Interesting Facts

• Many unlisted shares belong to startups and early-stage companies.

• Unlisted shares are issued before a company launches an IPO to be listed on Indian stock exchanges. Private companies must meet specific criteria, like market capitalization and listing fees, which growing companies often lack the resources to fulfill.

• Unlisted shares are less concerning because their prices don't fluctuate daily. With fewer long-term investors, the market price remains more stable compared to listed companies.

Tax Implications

• Earnings received from Unlisted Equities are taxable.

• When investors sell their Unlisted Equities, the difference between the Sale Amount and Purchase Amount is typically called “Capital Gain” or “Capital Loss” (if sale amount is lesser than the purchase amount).

• The tax that the investor must pay on Capital Gain is –
• Situation 1 – If the Unlisted Equities are sold within a period of 2 years from investment, the Capital Gains earned (called Short Term Capital Gains) are added to the taxable income of the investor and taxes are required to be paid based on the applicable income slab.
• Situation 2 - If the Unlisted Equities are sold after a period of 2 years from investment, the Capital Gains earned (called Long Term Capital Gains) are taxed at 12.5% of the gain.

• There is no tax in case of “Capital Loss”.

Where To Invest

• https://wwipl.com/services/unlisted-share

• https://unlistedzone.com/