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Difference between Listed and Unlisted Company
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As the name suggests, listed shares are the shares which might be listed (and traded) on any stock trade similar to NSE or BSE and so on. On the other hand, unlisted shares are the shares that aren't listed on any of the inventory exchanges.

Let us have a look at the journey of the corporate to know the difference even higher.

When an entrepreneur begins a company, he places in his personal funds or takes money from friends and family. He may also take bank mortgage to satisfy the working capital requirements but so as to develop additional, he has to take funding from outsider investors in exchange of equity. This funding can have different names such as venture capital or private fairness relying on the stage of funding. When such funding is taken, shares are issued to such buyers.

As the company is not listed till that point, such shares are known as unlisted shares. As the company remains to be private, these shares can't be traded on any stock trade however only privately on one on one basis. Unlisted shares are additionally known as (over the counter) OTC shares as they have been traded over-the-counter (bodily delivery). There are various market makers who enable shopping for and selling of unlisted shares. One can discover quotes from such market makers at Prastaav.

As these shares are not traded on any change, they tend to be much less liquid than listed shares.

Now, in order to develop further, the corporate may resolve to invite public participation and offer its fairness under preliminary public offering (generally generally known as IPO). It principally means that the company is now inviting general public to subscribe to its shares and it is going to be listed on the stock exchanges in order that the shares may be traded easily. Now, such shares are referred to as listed shares.

At the time of IPO, the corporate has to decide on the change on which it plans to list. It should meet the exchange's necessities and pay the requisite charges. This ensures that solely these firms which are in good standing (meet trade standards) are listed and traded by investors. The exchanges even have market making necessities which guarantee that there is truthful amount of liquidity available in the listed shares. The listed shares are transferred through demat accounts and STT is paid on the worth of the shares.

Let us also take a look at the key differences between listed and unlisted shares:

1. Type of Company

• Listed Shares: The firm has a track report, meets exchange requirements, IPO due diligence is finished. Investors can get entry to DHRP (prospectus), regulatory filings and buyers shows and so forth

Unlisted Shares: Such corporations could be in early to late stage of evolution. The investor ought to do his own due diligence earlier than investing. Limited paperwork could also be available as per the discretion of the corporate.

2. Investment Process

• Listed Shares: Simple and paperless. Can be purchased in any buying and selling account. No counterparty danger as it's taken care of, by the exchange.

• Unlisted Shares: The process has been recently simplified as such shares can now be transferred only via demat account. However, counterparty danger is current as there could be unhealthy delivery / no payment etc. Better to cope with trusted party.

3. Liquidity

• Listed shares: Fairly liquid, Large and midcap companies have decrease bid ask unfold and higher volumes as compared to small cap firms. The penny stocks may not be very liquid.

• Unlisted Shares: Less Liquid as the shares can be sold only privately.

4. Taxation (LTCG)

• Listed Shares: If listed shares are held for more than 1 year then features are categorized as LTCG and taxed at 10%

• Unlisted Shares: If unlisted shares are held for greater than 2 year then gains are categorised as LTCG and taxed at 20% and indexation benefit is provided.

5. Negotiation

• Listed Shares: Negotiation not required as priced are quoted on change.

• Unlisted Shares: Negotiation could be accomplished as price is a perform of demand and provide and is decided by one’s analysis of economic statements of the corporate.

6. Holding restrictions

• Listed shares: not many, most shares may be traded intra-day!

• Unlisted shares: Before IPO, depends on preparing purchaser / seller. After IPO, lock-in of 1 yr from date of IPO.

7. Risk

• Listed Shares: No Counterparty danger however risk of loss can't be averted.

• Unlisted Shares: Counterparty threat, Risk of IPO not happening. Plus risk of not getting exit before IPO.

8. Example:

• Listed Shares: Reliance Industries, HDFC Bank, Infosys, ICICI Bank, L&T

• Unlisted Shares: Paytm share price, HDB Financial share price, Reliance Retail, Nazara Technologies
Thanks for the post. found Prastaav very useful

Anonymous:
As the name suggests, listed shares are the shares which might be listed (and traded) on any stock trade similar to NSE or BSE and so on. On the other hand, unlisted shares are the shares that aren't listed on any of the inventory exchanges.

Let us have a look at the journey of the corporate to know the difference even higher.

When an entrepreneur begins a company, he places in his personal funds or takes money from friends and family. He may also take bank mortgage to satisfy the working capital requirements but so as to develop additional, he has to take funding from outsider investors in exchange of equity. This funding can have different names such as venture capital or private fairness relying on the stage of funding. When such funding is taken, shares are issued to such buyers.

As the company is not listed till that point, such shares are known as unlisted shares. As the company remains to be private, these shares can't be traded on any stock trade however only privately on one on one basis. Unlisted shares are additionally known as (over the counter) OTC shares as they have been traded over-the-counter (bodily delivery). There are various market makers who enable shopping for and selling of unlisted shares. One can discover quotes from such market makers at Prastaav.

As these shares are not traded on any change, they tend to be much less liquid than listed shares.

Now, in order to develop further, the corporate may resolve to invite public participation and offer its fairness under preliminary public offering (generally generally known as IPO). It principally means that the company is now inviting general public to subscribe to its shares and it is going to be listed on the stock exchanges in order that the shares may be traded easily. Now, such shares are referred to as listed shares.

At the time of IPO, the corporate has to decide on the change on which it plans to list. It should meet the exchange's necessities and pay the requisite charges. This ensures that solely these firms which are in good standing (meet trade standards) are listed and traded by investors. The exchanges even have market making necessities which guarantee that there is truthful amount of liquidity available in the listed shares. The listed shares are transferred through demat accounts and STT is paid on the worth of the shares.

Let us also take a look at the key differences between listed and unlisted shares:

1. Type of Company

• Listed Shares: The firm has a track report, meets exchange requirements, IPO due diligence is finished. Investors can get entry to DHRP (prospectus), regulatory filings and buyers shows and so forth

Unlisted Shares: Such corporations could be in early to late stage of evolution. The investor ought to do his own due diligence earlier than investing. Limited paperwork could also be available as per the discretion of the corporate.

2. Investment Process

• Listed Shares: Simple and paperless. Can be purchased in any buying and selling account. No counterparty danger as it's taken care of, by the exchange.

• Unlisted Shares: The process has been recently simplified as such shares can now be transferred only via demat account. However, counterparty danger is current as there could be unhealthy delivery / no payment etc. Better to cope with trusted party.

3. Liquidity

• Listed shares: Fairly liquid, Large and midcap companies have decrease bid ask unfold and higher volumes as compared to small cap firms. The penny stocks may not be very liquid.

• Unlisted Shares: Less Liquid as the shares can be sold only privately.

4. Taxation (LTCG)

• Listed Shares: If listed shares are held for more than 1 year then features are categorized as LTCG and taxed at 10%

• Unlisted Shares: If unlisted shares are held for greater than 2 year then gains are categorised as LTCG and taxed at 20% and indexation benefit is provided.

5. Negotiation

• Listed Shares: Negotiation not required as priced are quoted on change.

• Unlisted Shares: Negotiation could be accomplished as price is a perform of demand and provide and is decided by one’s analysis of economic statements of the corporate.

6. Holding restrictions

• Listed shares: not many, most shares may be traded intra-day!

• Unlisted shares: Before IPO, depends on preparing purchaser / seller. After IPO, lock-in of 1 yr from date of IPO.

7. Risk

• Listed Shares: No Counterparty danger however risk of loss can't be averted.

• Unlisted Shares: Counterparty threat, Risk of IPO not happening. Plus risk of not getting exit before IPO.

8. Example:

• Listed Shares: Reliance Industries, HDFC Bank, Infosys, ICICI Bank, L&T

• Unlisted Shares: Paytm share price, HDB Financial share price, Reliance Retail, Nazara Technologies

Staging Enabled