How to Buy Shares of Unlisted Companies in India: A Step-by-Step Guide (2026)
Reviewed by Kanishk Dev Bangia, NISM Series XV Certified Research Analyst
Last Updated: June 2026 | Reg. No: NISM-202300182946
If you've ever thought about investing in a company before it hits the stock market, you might have wondered how to get shares of unlisted firms. These are pre-IPO startups and private companies that haven't gone public yet. In India, buying these shares is legal, but it's way different from just placing an order on a trading app. There's no middleman exchange, no live screens, and no instant matching of orders.
This guide runs you through the whole process — from getting the right account set up to completing the trade and wrapping your head around the risks. Now, keep in mind, this info is for education only and isn't meant to push you towards buying any specific shares.
What unlisted shares are — and why people buy them
Unlisted shares are equity shares of companies that aren’t traded on a recognized stock exchange like the NSE or BSE. Instead, these shares move through private, off-market negotiations.
Most people interested in unlisted shares want pre-IPO exposure — basically, they want to get in early on a company’s growth before it goes public. Employees with ESOPs, early investors looking for an exit, and folks wanting to diversify their portfolios also jump in. But there’s a catch: early access means you deal with much lower liquidity, way less info, and a huge risk that the company might never list publicly.
Step-by-step: how to buy shares of unlisted companies in India
Here is the practical sequence most retail buyers follow.
1. Open and verify a demat account. Unlisted shares are held in dematerialised form, exactly like listed shares. You need an active demat account with any depository participant (your DP), linked to your PAN and bank account. If you already trade listed stocks, the same account usually works. Keep your Client Master Report (CMR) handy — the seller needs your DP ID and Client ID to transfer shares.
2. Identify the company and confirm it is genuinely unlisted. Decide which company’s shares you are interested in and verify its status, registered name, and ISIN. Avoid confusing a well-known brand with an unrelated entity of a similar name.
3. Find a credible source for the shares. Because there is no exchange, you must source shares privately. Common channels are described in the next section.
4. Discover and agree on a price. With no live order book, price is negotiated. Compare recent transaction levels, the company’s financials, and any independent valuation before agreeing on a per-share rate.
5. Do your due diligence. Review financials, shareholding, any lock-in, and the seller’s credibility before you commit funds. More on this below.
6. Agree on terms in writing. Confirm quantity, price, settlement timeline, and who bears charges. For larger deals, a simple share purchase or transfer agreement adds protection.
7. Settle the trade. Funds move (typically via banking channels) and shares are transferred into your demat account through an off-market transfer. This is the operational heart of the deal — covered in its own section.
8. Confirm receipt and keep records. Verify the shares reflect in your demat holdings and retain the contract note, transfer confirmation, and bank records for tax and audit purposes.
The channels: where to buy unlisted shares
Since you cannot place an exchange order, sourcing is the part most people find unfamiliar. The main avenues:
• SEBI-registered brokers and intermediaries who deal in unlisted stock. Some brokers and dealers maintain inventory or a network of sellers in pre-IPO and unlisted names. Always confirm the intermediary’s registration and reputation before transacting.
• Pre-IPO marketplaces and dealer networks. Specialised platforms and dealers aggregate buyers and sellers of unlisted shares and help coordinate price, paperwork, and transfer. They act as facilitators, not exchanges.
• ESOP sellers. Employees of private companies who hold vested stock options sometimes sell to generate liquidity. These transactions are negotiated directly or through an intermediary.
• Private placements and direct deals. Occasionally shares are available directly from existing shareholders, promoters, or through a private placement. These tend to involve larger ticket sizes and more documentation.
Across every channel, the constant is counterparty risk — you are relying on the seller and the facilitator to deliver genuine, transferable shares. Treat the credibility of whoever you deal with as part of the investment decision, not an afterthought.
Price discovery: there is no live order book
On a stock exchange, the last traded price tells you what the market thinks. In the unlisted space, no such continuous price exists. Indicative levels float around based on recent deals, demand, and sentiment, and they can differ meaningfully from one source to another.
That means you negotiate. Use the company’s latest available financials, any third-party valuation, and recent transaction ranges as anchors, then agree a per-share price with the seller. Because spreads between what buyers offer and sellers want can be wide, the price you pay — and the price you might later exit at — are both uncertain. Our guide on how to value unlisted shares explains common valuation approaches in more detail.
Settlement: funds plus off-market demat transfer
Settlement of unlisted shares happens off-market, outside the exchange clearing system, and runs on the same depository infrastructure (CDSL and NSDL) used for listed shares.
The typical mechanics:
• The buyer shares their demat details (DP ID, Client ID, and ISIN) with the seller.
• The seller initiates an off-market transfer by submitting a Delivery Instruction Slip (DIS) — or its online equivalent — to their DP, instructing the depository to move the specified shares to the buyer’s demat account.
• Funds are exchanged through banking channels per the agreed terms. Buyers should be cautious about sequencing — releasing full payment before shares are credited carries risk, and many deals use intermediaries or staged payments to manage this.
• Once processed, the shares appear in the buyer’s demat holdings, and both parties retain transfer confirmations.
Because there is no exchange guarantee or central counterparty backstop here, the integrity of the paperwork and the parties matters more than in a normal market trade.
Due diligence: what to check before you commit
Treat an unlisted purchase like buying into a private business, because that is what it is. At a minimum, review:
• Company financials — revenue, profitability, debt, and the most recent audited statements you can obtain.
• Valuation reasonableness — does the asking price make sense versus financials and recent deal levels?
• Lock-in and transfer restrictions — some shares (including certain pre-IPO holdings) carry holding or lock-in periods that limit when you can sell, especially around an eventual listing.
• Shareholding and ISIN — confirm the shares are genuine, properly dematerialised, and free to transfer.
• Seller and intermediary credibility — verify identity, ownership of the shares, and registration where applicable.
The risks you are taking on
Unlisted investing carries risks that listed investing largely shields you from:
• Illiquidity. You may not be able to sell quickly — or at all — when you want to. Exits depend on finding a buyer.
• No listing guarantee. A company may delay its IPO indefinitely, or never list. Pre-IPO is not a guaranteed path to a listing.
• Wide bid-ask spreads. The gap between buying and selling prices can be large, eroding returns.
• Information gaps. Private companies disclose far less than listed ones, making valuation harder.
• Fraud and counterparty risk. Off-market deals attract bad actors. Misrepresented shares, fake sellers, and payment scams are real hazards — which is why source credibility is non-negotiable.
There are no guaranteed returns in unlisted shares. Size any position to a loss you can genuinely absorb.
Taxation: the general picture
Taxation of unlisted shares differs from listed shares and depends on your holding period and personal situation. As a broad rule, gains on unlisted shares are treated as long-term when the shares are held for more than 24 months; shorter holdings are typically treated as short-term. The applicable rates, surcharge, and treatment can change, and rules around the holding period and tax rates are revised from time to time.
Because tax outcomes are specific to each investor and subject to change, confirm the current position with official sources such as the Income Tax Department and consult a qualified tax professional before relying on any figure. For the regulatory backdrop on securities and market intermediaries, the SEBI and NSE websites are the authoritative references.
FAQ
Q: Do I need a special account to buy unlisted shares?
Ans : No special account type is required. A standard, active demat account linked to your PAN works, because unlisted shares are held in the same dematerialised form as listed shares. You will share your demat details with the seller for the transfer.
Q: How is the price of an unlisted share decided?
Ans : There is no live exchange price, so the price is negotiated. Buyers and sellers anchor to recent transaction levels, company financials, and independent valuations, then agree a per-share rate. Indicative prices can vary across sources.
Q: How are the shares actually transferred to me?
Ans : Through an off-market transfer on the depository system (CDSL/NSDL). The seller submits a Delivery Instruction Slip (or online equivalent) to their DP, and the shares move into your demat account once processed.
Q: Can I sell unlisted shares whenever I want?
Ans : Not necessarily. Liquidity is limited, some shares carry lock-in or transfer restrictions, and you generally need to find a willing buyer. Plan for the possibility of holding longer than expected.
Disclaimer:
This is written for educational and informational purposes only. Nothing here constitutes investment advice or a recommendation to buy or sell securities. All data is sourced from publicly available information. Investments in securities markets are subject to market risks — please read all offer documents carefully before investing.
