Demat Process for Unlisted Shares
Reviewed by Kanishk Dev Bangia, NISM Series XV Certified Research Analyst
Last Updated: May 2026 | Reg. No: NISM-202300182946
You came across a non-listed stock that you wish to buy. The deal is done. You make an initial payment of ₹2 lakh to the stockbroker. What next? In a listed market, the answer is straightforward. The trade gets settled on T+1, and the stocks find themselves in your demat account. However, in the case of a non-listed market, the transaction happens through a manual process involving documents and NSDL/CDSL.
Here is a complete guide to the 2026 process of demat of unlisted shares — what you require before initiating the process, seven steps involved in an off-market transfer process, the documentation required, time involved in the process, costs incurred, and risks involved.
TL;DR
Pre-Requisites — What You Need to Do Before Proceeding
1. Demat account. Can be either an NSDL one or a CDSL one — either is good since the process is valid in both cases. You need to link the trading account to a demat account which is the operational entity – there are various brokers such as Zerodha, HDFC Securities, ICICI Direct, Angel One and many more that support unlisted stock holding.
2. PAN-linked + Aadhaar verification. Needed for all securities transactions in India. The PAN must appear clearly in your demat account.
3. Trading account (technically not needed since you do not necessarily need to trade, only hold the shares). Unlisted share transactions require only a demat account; trading needs a linked trading account.
4. KYC renewed within the past 12 months. Re-KYC is done at periodic intervals by brokers; ensure your KYC is up-to-date because a lapsed KYC prevents any transfer.
5. Details of the selling party. Details from the broker/dealer – DP ID, client ID, and the ISIN of the particular stock. ISIN stands for International Securities Identification Number, which is the 12-digit code of the stock. You NEED THE ISIN TO PROCEED OR ELSE YOU CANNOT!
Seven Steps in an Unlisted Share Demat Transfer Process
Step 1 – Arriving at a Price + Structuring the Transaction (Day 0)
Arrive at an agreed upon price per share + quantity to be sold. Put the terms in writing, at least on a single page stating the following: price per share, ISIN number, quantity to be purchased, settlement date, method of payment, and representations that the seller holds shares without restriction, etc.
When purchasing via platforms, they handle the contract layer for you. But when purchasing through direct dealers, make sure to have it in writing.
Step 2 – Confirm Seller Really Has the Shares (Day 0-1)
Request from the seller a demat statement confirming the ownership. Check three critical items on the statement: - The ISIN number matches - The quantity matches - Status of "free" shares (no right-of-first refusal clauses, board approval required, pledging restrictions)
Additionally, when dealing with unlisted shares, make sure to check from the company’s registrar whether there is any additional company-level restriction.
Step 3 – Start the transfer process through DIS or e-DIS (On day 1)
The selling party starts the transfer process through the use of a delivery instruction slip or DIS provided by their broker, or an e-DIS. The DIS contains the following information: - Source DP-ID and Client-ID (the selling party's DP ID and client ID) - Target DP-ID and Client-ID (your DP ID and client ID) - ISIN number - Volume of shares involved - Reason for transfer – usually “Off-market Transfer” with sub-reason “Gift/Sale/Transmit”
In the case of selling non-listed shares, the correct sub-reason should be “Sale”, not “Gift”. Using “Gift” as the sub-reason to avoid taxes is a major red flag.
Step 4 – Pay the transfer fee + STT-equivalent charges (Day 1)
Unlisted share transfers carry a fee structure that includes: - Depository Charges: usually ₹15-₹50 per ISIN per transfer (DP-specific) - Stamp Duty: 0.015% of the transfer amount for the Indian state you are registered in - Securities Transaction Tax (STT): Non-applicable on off-market transfers (a slight edge over on-market) - GST: 18% of the transfer fee portion charged by your broker
Cost for transferring ₹2 lakhs worth of unlisted shares: around ₹50-₹150 for transfer fees + ₹30 for stamp duty = ~₹80-₹180 per transfer.
Step 5 – Pay the Seller (Day 1–2)
Most contentious part of unlisted share deals. Recommended options ranked by their safety level:
Option A – Escrow payment via Platform (most secure). Pay through the platform; funds released only upon completion of demat transfer. Available on platforms like Stockify, Planify, UnlistedZone for almost all transactions.
Option B – Same-day payment (relatively safe, with an experienced intermediary). Conduct your bank transfer and demat transfer simultaneously; intermediary can be a chartered accountant/lawyer who validates both transactions on the same day.
Option C – Prepayment with written guarantee (high risk). Pay the seller first, and then seller will initiate transfer of the shares after receiving the money. Used in case of dealing directly with the seller where there exists some kind of trust between the parties involved. Risk associated – The seller may default. Only advisable if the seller has a good track record and a verified reputation.
Option D – Post transfer payment (on occasion). Shares are transferred to your demat first, and you make the payment after receiving them. Rarely used by sellers.
Step 6 – Confirmation of the receipt of shares in your demat (Days 2-5).
Within 1-3 days of initiating the transfer process, the shares are supposed to get reflected under the ‘holdings’ section in your demat. In case you have an account on the website of your brokerage firm, then you can see the same shares reflected here too.
In case the transfer does not occur successfully within 5 days, one of these issues might be causing the problem:
Incorrect target DP ID/Client ID; Mismatch in KYC details; Encumbrance against ISIN number of which the seller was unaware and/or which caused a system error within the depository.
Step 7 — Record keeping (Day 5+)
Documents to be preserved forever (required for filing tax return & subsequent transfer): - Purchase agreement document (Step 1) - Demat statement from seller indicating holdings prior to transfer (Step 2) - Copy of DIS/e-DIS instruction form (Step 3) - Receipt for transfer via bank transfer (Step 5) - Demat statement after transfer indicating new holdings (Step 6) - Transfer charges invoices (from broker)
Required for calculation of capital gains at the time of transfer, details about the cost of acquisition (price paid) and the date of acquisition (date of transfer) will be required. These documents are essential for tax purposes; otherwise, tax filing rules assume the minimum cost of acquisition.
Typical Failures, and Their Prevention
Failure 1 — Typo in the DP-ID/Client-ID number. Only one wrong digit in the Client-ID will lead to the shares being sent to a different demat account. Not all failed transactions can be reversed; some cannot. Verify three times before the sell transaction begins.
Failure 2 — No such shares in the seller’s demat account. He or she shows you a demat statement, but the shares were already withdrawn or pledged elsewhere. The DIS transaction gets refused by the depository. How to avoid: demand from the seller a CURRENT demat statement (not older than 24 hours).
Failure 3 — The shares are encumbered. Unlisted stocks are sometimes pledged with banks or even under board restriction; thus, they cannot be withdrawn. How to avoid: the seller must assure you in writing the shares are not encumbered; and better yet if you can check up with the company registrar.
Failure 4 – Violation of lock-in period. In case you have applied for DRHP for an initial public offering (IPO), the SEBI’s 6-month lock-in period starts after allotment of shares. Any transfer during lock-in period will not be accepted. Defense: Ensure that the company you buy the shares from is not under lock-in period.
Failure 5 – KYC mismatch. Your KYC expiry or mismatch with the seller’s KYC will result in rejection of the transaction by the depository system. Defense: Ensure KYC validity prior to making any transaction in unlisted shares.
Failure 6 – Asymmetry between payment and transfer. You have made the payment but the seller does not initiate the transfer or vice versa. Defense: Choose either Platform Escrow Model or Simultaneous handover model as mentioned in Option A or B in Step 5.
Cost Breakdown — What You’ll Pay End-to-End
For a hypothetical ₹2,00,000 unlisted share transaction:
Unlisted share transactions cost slightly more than listed-market transactions (0.001% - 0.1% combined fee).
Frequently Asked Questions
Question: Do I require a separate demat account for unlisted shares?
Answer- Not necessarily. Existing NSDL/CDSL accounts suffice for holding both listed/unlisted shares. Unlisted shares too are tracked on the basis of their ISINs. It might be helpful to make your broker aware that you wish to hold unlisted shares; they may have a one-off flag system.
Question: How soon can an off-market transaction be completed?
Answer- An off-market transaction takes about T+2 to T+5 depending on when the seller initiates the DIS/e-DIS process. While not common, sometimes these transactions can be completed in a single day if there is an existing direct-dealer relationship between the buyer and seller in the same DP circle.
Question: Is it possible to transfer unlisted shares to a relative?
Answer- Yes – Off-market transfer under sub-reason Gift, if it's indeed a gift (no consideration). Use Transmission for any death-related transactions. Sale is used if consideration is involved. Stamp duty is applicable for gifts above ₹50,000 between non-relatives (family members are exempt under Income-tax Act Section 56).
Question: What will happen if my DIS is rejected?
Answer- The DP will inform you about the reasons for rejection. Commonly, these include incorrect target Client-ID, insufficient holding in the seller's demat account, encumbrance against the share(s), KYC issues. Correct the reason for rejection and resubmit the DIS.
Question: Can I sell unlisted shares to anyone, or just specific buyers?
Answer- Anybody having a demat account, but subject to: (a) the company's Articles of Association (which may contain rights-of-first-refusal clauses); (b) terms and conditions of your original purchase (some IPOs have transfer restrictions), and (c) SEBI lock-in, if the company has filed the DRHP. Check all these before listing.
Question: Is there a maximum number of off-market transfers?
Answer- Not by regulator, but by your DP in practice – especially if it involves block transfers (where you'll need additional documents). Transfers beyond ₹2 cr involve additional KYC & source-of-funds verification due to AML regulations.
Question:Dividends on unlisted shares will I get in my demat account?
Answer-Yes, provided the company declares the dividend, and it gets credited to your linked bank account. 10% TDS will be deducted by the issuing company if the annual dividend income exceeds ₹5,000.
Question:Can NRIs hold Indian unlisted shares in demat form?
Answer-Yes, NRIs can hold unlisted shares in their demat accounts which are of type NRO. NRE demat accounts come with certain conditions, and it is usually limited to holding only listed shares in recognized stock exchanges. As per RBI regulations, it is mandatory to report unlisted shares through the LRS scheme every year.
Disclaimer
The above article has been written for informative purposes only. It does not constitute any kind of financial advice. All the data mentioned in this article is sourced from reliable online sources. The stock market has various risks associated with it.
