Difference Between Listed and Unlisted Company: A Simple Guide for Everyday Investors
If one is planning to put money and invest in a company, the first thing they should know is whether the company is listed or unlisted. This makes a huge difference in the way the company functions, how effortlessly can one buy and sell shares of that company and what amount of information is available to an individual investor.
In this guide, we will be dissecting the main difference between listed and unlisted company in easy-to-understand layman terms. We’ll also cover how one can buy unlisted shares, what risks and benefits are involved in the process, and which option might be best tailored for one’s financial goals in the future.
What Is a Listed Company?
A listed company is one such company where its shares are allowed to be traded on major stock exchanges such as NSE (National Stock Exchange) or BSE (Bombay Stock Exchange) in India. If a company needs to get listed, it has to get listed first through a IPO that stands for Initial Public Offering) where the shares of the company are available for the company to trade for the first time.
Once the company has been listed, anyone can buy the company’s shares through a trading account.
Example:
Tata Motors, Infosys, and Reliance are well-known listed companies in India. One can effortlessly buy the shares of these companies using trading platforms such as Zerodha, Upstox, or Groww.
What Is an Unlisted Company?
An unlisted company, on the other hand, is not available for trading on any stock exchange. This means its shares are privately held and usually owned by the founders, private investors, or employees.
On the other side, a unlisted company is not allowed for trading on any well known stock exchanges because their shares are privately owned by stakeholders within the company and the company is mostly owned by founders of the company, private investors interested in the company or employees working there.
These companies may opt to remain private or can plan to get listed on a stock exchange in the future with the help of an IPO.
Example:
Companies such OYO, Swiggy, and Boat are currently unlisted. Their shares are owned privately, though these companies might go public one single day.
Key Difference Between Listed and Unlisted Company
Let’s look at the main differences between listed and unlisted company in a side-by-side comparison:
Criteria | Listed Company | Unlisted Company |
Where shares are traded | On public stock exchanges like NSE or BSE | Privately, not on any public exchange |
Who can invest | Anyone with a trading account | Usually HNIs, venture capitalists, or private deals |
Liquidity | High – easy to buy/sell | Low – selling shares can take time |
Regulations | Must follow SEBI rules and guidelines | Fewer regulations, less public reporting |
Price transparency | Prices change in real time on exchanges | Prices are set through private negotiation |
Information available | Full financial reports, regular updates | Limited details available to the public |
Risk level | Generally lower due to regulation | Higher risk due to low transparency |
Why This Difference Matters for Investors
Understanding the key difference between listed and unlisted company will help an individual make more solid investment choices. Listed are usually more safer and risk-averse for investors as they are more transparent and liquid.
Unlisted companies can yield massive returns if the company expands and grows in a quick manner, but they also seem to come with potentially high risk. One may not have much information to follow on, and it can become increasingly very hard to exit one’s investment since they may not get any buyers for the unlisted company because of its risk factor.
Listed Shares: Easy to Access and Trade
Pros:
You can buy or sell them instantly on a stock exchange
Financial reports are available to the public
More appropriate for long-term stability and short-term trading
Regulated by SEBI, in turn protecting the investors
Cons:
Price is driven by the market, sometimes affected by news or rumors
Established companies may grow slowly compared to startups
Unlisted Shares: High Growth Potential, But Risky
Pros:
Get in early before the company becomes public
Sometimes offered at a discount to estimated future value
Can bring high returns if the company does well or goes public
Cons:
No real-time price updates
Difficult to sell shares quickly
Less financial information available
Not regulated like listed shares
Example:
Investors who purchased unlisted shares of Nykaa or Zomato before their IPOs made massive gains after the companies went public. But this kind of scenario does not always take place—some unlisted firms never reach the IPO stage.
How to Buy Unlisted Shares in India
If one is eager about how to buy unlisted shares, it’s not as easy as buying listed ones. But it’s definitely possible to purchase them.
1. Buy from Online Platforms
Several platforms specialize in unlisted equity. These include:
UnlistedZone
SharesKart
TradeUnlisted
These websites list available unlisted shares, company details, and pricing.
2. Deal Directly with Existing Shareholders
Sometimes, employees or early investors sell their shares privately. If you know someone working at an unlisted company, you might be able to buy directly from them.
3. Through Brokers
Some stock brokers deal in pre-IPO shares. You’ll need to contact them directly and complete KYC formalities before the transaction.
4. Via Startup Investment Platforms
Platforms such as AngelList or LetsVenture allow high-net-worth individuals (HNIs) to invest money in startups before they go public through an IPO
Important Tip:
Make sure all transactions are done through your Demat account, and get everything documented. This protects one legally and ensures the shares are held safely and securely.
Are Listed Shares Safer Than Unlisted Shares?
Most of the time, yes. Listed shares are more secure for most investors because:
- They are regulated by SEBI
- You can track their performance online
- You can sell them quickly if needed
On the other side, unlisted shares are highly profitable but are better suited for experienced investors who understand the risks that come with it.
Tax Rules for Listed and Unlisted Shares
Type of Share | Holding Period for Long Term | LTCG Tax Rate | STCG Tax Rate |
Listed Shares | More than 1 year | 10% on gains over ₹1 lakh | 15% |
Unlisted Shares | More than 2 years | 20% with indexation | Taxed as per your slab |
Note: “LTCG” means Long Term Capital Gains and “STCG” means Short Term Capital Gains.
Which Is Better: Listed or Unlisted?
There is no one-size-fits-all answer. It depends on your financial goals and how much risk you’re willing to take.
Go for Listed Shares if:
You are new to investing
You want to invest small amounts
You want liquidity and transparency
You prefer low to medium risk
Go for Unlisted Shares if:
You are okay with holding shares for several years
You are willing to take higher risks for higher returns
You want to invest before a company goes public
You can do your own research
Summary: Listed vs Unlisted Companies in Simple Terms
Feature | Listed Companies | Unlisted Companies |
Where you buy | Stock exchanges like NSE, BSE | Private platforms or direct deals |
Who can buy | Anyone with a Demat account | Usually HNIs or through special platforms |
Rules and regulations | Strict SEBI rules | Basic regulations, fewer disclosures |
Transparency | High | Limited |
Investment risk | Lower | Higher |
Growth potential | Moderate to high | Very high (but uncertain) |
Selling the shares | Easy – instant through the market | Difficult – may take weeks/months |
Conclusion:
Understanding the difference between listed and unlisted company is vital to conduct clever investment decisions. Listed companies are usually more open, transparent and safe for common investors. Unlisted shares are more riskier but can give massive rewards if the company expands or ends up going public.
If one is just beginning, they need to focus more on listed shares until they can gain experience. Once one is confident and has done good research they can dive into how to buy unlisted shares through trusted platforms and brokers.
In the end, a good investment is one that aligns with one’s goals, risk appetite, and investment time frame.
Also Read : How to Become a Trader vs Doing a 9 to 5 Job
FAQ'S
What is the main difference between listed and unlisted company?
A listed company shares are available for purchasing on a public stock exchange and they abide by strict rules. An unlisted company does not trade its shares publicly and it is not required to share much financial information about itself.
How to buy unlisted shares as a retail investor?
One can purchase unlisted shares through platforms such as UnlistedZone or by connecting brokers who know more about pre-IPO deals. Always one must use a verified process through a Demat account to buy these shares.
Are unlisted companies legal?
Yes, unlisted companies are legal and often include startups or private businesses. They are just not traded on public stock exchanges.
Can I make money by investing in unlisted shares?
Yes, but it usually relies on the performance of the company. If the company grows quickly or becomes public, one can earn good returns. But one must be patient and wait, and must not be afraid to take risks.
