While unlisted shares may be unfamiliar to certain investors, they are not to the market as a whole. On the other hand, an unlisted market is a trading platform for publicly traded businesses that prefer not to be recorded on a stock exchange.
As a form of remuneration, startups and other privately held businesses sometimes give their workers shares of stock owing to a lack of liquid assets. Employees with equity shares in a corporation are vested with rights as owners.
A corporation’s stock shares are purchased and sold simplified if traded on a stock exchange. This denotes a hasty entrance or departure from any teller window. Companies are not needed to stick to the standards and rules of the Securities and Exchange Board of India or SEBI regarding unlisted shares.
However, the Ministry of Corporate Affairs has official records of such corporations. If you don’t know the appropriate technique or process, breaking into these firms is difficult and much more difficult to leave. Hence, in this blog, we’ll discuss how to sell unlisted shares. But, let’s first understand the difference between teh two types of shares.
How To Sell IPO-bound Company Stocks
Companies of all shapes and sizes often engage in trading on the unlisted market before their first public offerings. Shares of these firms are liquid shortly after listing because investors will still own them. Pre-IPO shares, however, are subject to a required lock-in period.
A Pre-IPO private business stock exchange may seem like a venture capital market to the general public. Stocks held by companies or individuals may be traded here. Such shares have a huge potential audience; thus, many brokers operate in this sector.
How To Sell Non-IPO Company Stocks
Stocks of companies that aren’t planning an initial public offering (IPO) in the near future tend to be harder to move. Neither investors nor the general public knows much about these types of businesses. The open market float of equities is also quite low. This furthers the firm’s ability to remain under the radar.
Investors may learn about the firms’ financial health once a year when the companies announce their quarterly data and results. Such businesses are ideal for those with deep pockets and a long time horizon looking to get in on the ground floor of a rapidly expanding firm. We refer to this kind of strategy as a “growing investment.”
Investors who seek to avoid falling prey to internet scams or “phishy” operations leading to the transfer of shares and money not being delivered by the so-called dealers always need a reputable name for such duties.
Another difficulty for investors is making a fair agreement in the unlisted market, where some parties may attempt to take advantage of their need for cash.
The Selling Procedure
If you can locate a reputable dealer, like Unlisted Deal, selling your company’s unlisted shares is a breeze. Try contacting the organization or someone authorized to speak on its behalf. Evidence such as a DMAT account and a Client Master Report will be required before an investor may divulge any information about you (CMR).
The investor must send the unlisted shares they wish to sell, together with the corresponding amounts, to the DEMAT account of the purchasers or broker. Payment is made on the same day the dealer receives the unlisted shares in his DEMAT Account.
What Is A Client Master Report (CMR)?
To purchase unlisted and Pre IPO shares, a copy of the Client Master Report (CMR) is required. The CMR includes information such as the Depository Participant Identity (DP ID), Client ID, PAN number, Bank Account Details, and more.
Simply emailing the broker will get you this information, arriving within a couple of hours. The DIS Slip and PAN Card are needed to transfer shares into the account, and the Aadhar Card is required to verify identity.
How to Transfer Pre-IPO or Unlisted Shares
Shares held in a Demat account may be moved to another Demat account with a few clicks of the mouse. Using a Demat account for trading is similar to a checking account for financial operations. To clarify, a Demat account is similar to a bank account in every other way, except that it is used to move stock instead of cash.
Off-market transfers of shares held at the NSDL or CDSL depositories may be processed via the offline approach. One must complete a DIS form (Delivery Instruction Slip).
The form requires the ISIN number of the shares being transferred, the name of the firm (security), and the DP ID of the account to which the shares will be transferred. The paperwork must be returned to the former broker’s office.
CDSL provides an online platform called EASIEST to transfer shares if they are held there. The registration process for this platform can be found at https://web.cdslindia.com/myeasi/Home/Login.
Important: CDSL Easiest only allows share transactions to verified Demat accounts. For this cause, it is suggested that the verified Demat account be added before commencing the share transfer via CDSL simplest.
Sell Unlisted Shares With Easy With Unlisted Deal
Selling unlisted shares surely comes with many advantages, however, many components of unlisted shares are different from listed shares. If you don’t get a proper understanding of each component, you may make a mistake and faces losses. Hence, you should consider contacting Unlisted Deal to get an expert opinion on unlisted shares.