Listed vs Unlisted Shares: What Investors Should Know

People often start their investing journey by buying shares of well-known companies on the stock market. Then, somewhere along the way, they hear about unlisted shares and wonder if they’re missing out on something big. We have seen this happen often. Someone reads about a company planning to go public or hears a friend talk about “pre-IPO” opportunities, and suddenly the difference between listed and unlisted shares becomes an important topic.

Now, both types represent ownership in a company, but the experience of holding them is very different. Think of listed shares as the main market where everyone buys vegetables. Prices change every few minutes, and you can walk in or out whenever you want. Unlisted shares are more like buying directly from a farmer somewhere outside the city. You might get something unique or valuable, but you need to know who you're dealing with, and you cannot sell it as quickly.

Let’s break this down in a practical way.

What Listed Shares Really Are (In Simple Terms)

Listed shares are the ones you see on your trading app every day. These are companies that have cleared all the requirements to appear on exchanges like NSE or BSE. Once they are listed, anyone with a demat and trading account can buy or sell their shares.

This system works well because everything is organised. Prices move as per demand and supply, companies are required to publish results, and you can check everything within a few seconds. You don’t have to call anyone or negotiate. The stock market does the work for you.

Why do many investors feel comfortable with listed shares

From our experience, beginners prefer listed shares because:

• You can buy or sell whenever you like

 • Information about the company is easily available

 • You can track price movements daily

 • Regulators ensure companies follow rules

If a company releases its results today, the entire market reacts within minutes. Good numbers and the price jumps. Poor results, and the opposite happens. Everything is out there in the open.

How pricing works for listed shares

The price of a listed share is basically the market’s opinion at any given moment. Tens of thousands of people are buying and selling based on their expectations, which is why the price never stays still. It reflects a collective judgment about the company.

Now, What About Unlisted Shares?

This is where things feel different. Unlisted shares belong to companies that haven’t been listed on an exchange. You won’t find their prices on your app. You won’t see daily charts. These shares usually move through private deals, employee stock plans, or specialised platforms.

Some of these companies are quite familiar. You might have heard of people trying to buy shares of big names before they go public. But unlisted shares are not limited to famous brands. Many smaller companies operate quietly in this space.

Why investors consider unlisted shares

There is a simple reason: early entry.

 If the company grows or gets listed later at a premium, early investors can benefit.

We remember speaking to an investor who had purchased shares of a tech company years before its IPO. It took patience, and there were moments when information was scarce. But once the company went public, his returns were better than anything he had earned in the listed market. Not every story turns out this way, but this is the appeal.

The not-so-easy part of unlisted shares

Here’s what people often underestimate:

• You won’t get regular updates

 • Valuation is not straightforward

 • It may take months or years to exit

 • Sometimes you may not find a buyer when you want to sell

If you like checking your portfolio every day, unlisted shares may feel uncomfortable. They require a different kind of mindset.

Listed vs Unlisted Shares: The Real-World Differences

Instead of giving a perfect textbook comparison, here is how I explain it to clients.

1. How do you buy and sell them

Listed shares:

Open your trading app, tap buy or sell. That’s all.

Unlisted shares:

You usually need a seller, a platform, or a private arrangement. It feels more like a negotiation.

2. How pricing works

Listed shares:

Price changes every second. You can see it instantly.

Unlisted shares:

Pricing depends on discussions, last known deals, or what the company has achieved recently. Nothing is updated daily.

3. Liquidity

Listed shares:

Very easy to exit. Sometimes within seconds.

Unlisted shares:

You may have to wait for a big event like an IPO or acquisition. Liquidity is not guaranteed.

4. Information available

Listed shares:

Quarterly numbers, news, announcements, and everything else are public.

Unlisted shares:

Much less information. You might get summaries or basic financials, but not the same level of detail.

5. Risk and potential returns

Listed shares:

Lower risk because everything is structured. Returns may be stable but not dramatic.

Unlisted shares:

Higher risk due to uncertainty, but potential returns may be better if the company grows strongly.

Which One Should You Choose?

Honestly, there isn’t a universal answer. It depends on your personality as an investor.

Choose listed shares if:

• You want something simple to track

 • You prefer liquidity

 • You want to rely on publicly available information

 • You don’t want long waiting periods

Choose unlisted shares if:

• You are comfortable waiting for years

 • You want early exposure

 • You are fine with limited liquidity

 • You enjoy studying companies in depth

Some investors hold both. Listed shares help with stability, while unlisted shares add long-term opportunity.

A Few Practical Tips if You’re Thinking About Unlisted Shares

These points come from experience:

1. Treat unlisted shares as long-term bets

 They are not meant for quick exits.

2. Understand how the price was decided

 Check previous deals if available. Understand if the price reflects potential or only hype.

3. Study the company, not just the valuation

 Look at how the business earns money. Look at its products, customers, and management.

4. Know your exit routes

 Usually through an IPO, buyback, or private sale.

5. Use them as part of diversification, not the core of your portfolio

 Spread your risks.

And if You Prefer Listed Shares

Listed shares are still the backbone for most investors.

Here’s why they work well:

• You can check prices anytime

 • You can adjust your portfolio easily

 • You get steady updates

 • They work for both short and long-term plans

Think of listed shares as the base of your investment house. Unlisted shares can be additions, but they should not replace the foundation.

FAQs

Q1. What is the key difference between listed and unlisted shares?

 Listed shares trade on stock exchanges. Unlisted shares move through private arrangements.

Q2. Are unlisted shares riskier?

 Yes. The risk is mostly due to limited information and lower liquidity.

Q3. How do people buy unlisted shares?

 Through private deals, ESOPs, or platforms that specialise in unlisted equity.

Q4. Do unlisted shares always give better returns?

 No. They can, but it depends on the company’s performance and future events.

Q5. How do we know the value of an unlisted share?

 Check earlier private deals, funding rounds, revenue growth, and sector performance.

Q6. When are unlisted shares easier to sell?

 When the company goes public or announces a buyback.

Q7. What should investors check before choosing between the two?

 Your time horizon, risk comfort, and ability to study companies carefully.

Disclaimer

This article is meant to help investors understand the topic better. It should not be considered investment advice. Prices and information may change. Always do your own research or speak with a financial advisor before making investment decisions.