There is one alternative investment that has gained a lot of investors’ interest. Categorized as riskier and more rewarding- Unlisted shares have now become an asset for investors. The shares are used to balance the overall portfolio and in turn, generate long-term profit for the investors.
Unlisted shares are offered by Indian startups or companies that have recently registered and are yet to be listed on the National Stock Exchange/ Bombay Stock Exchange/ Metropolitan Stock Exchange.
These companies unlike the listed ones are not regulated by any regulatory body in India and are operated by promoters and founders entirely.
No unlisted company is allowed to offer a public issuance of shares. Investors have to hence approach private investment platforms or brokerage firms to start trading in unlisted shares. WWIPL is one of those firms which provides you with a transparent and safe trading experience.
You can easily invest in unlisted, listed, delisted, and other forms of investments and consult our experts for guidance.
Keep reading, to know How to sell unlisted shares? And what is the procedure to sell it online?
How to sell unlisted shares in India?
While buying unlisted shares can be easy, selling them is a bit tougher. Due to numerous technicalities involved with delivery instruction slips, off-market annexures, sale consideration, and stamp duty payment, you need to know the taxation rules for unlisted shares before you sell them.
To solve the intricacies and make the selling process easy and transparent, we have listed the step-by-step process and the important things you should know before filing for the sale of unlisted shares in India.
Step 1: Deal Processing and Documentation
In this step, you need to find the dealer or the spokesperson of the company. A deal is put forward by both parties. Private documentation of the deal takes place after which the seller needs to provide the CMR copy, Demat A/c details, Bank A/c details, Delivery Instruction Slip(DIS), etc.
The documentation part is similar to the common trading of listed shares that you might have experienced. But the deal processing can take a certain time as it is difficult to find the buyer for the shares and sometimes you even need to take the consent of the company board to go ahead.
Step 2: Transfer of shares and Payment receipt generation
After the deal finalization and the document verification, the seller needs to transfer the shares to the Demat A/c details provided by the broker or the buyer. Once the shares are transferred to the buyer or broker’s Demat A/c, the payment is processed in 24-48 hours via offline or online mode of transfer.
Step 3: Taxation on unlisted shares
Unlisted shares are taxed based on the holding period of the investment. For instance, if you sell the unlisted shares after two years or before that, then the holding period is short-term and is widely called Short-term capital gain. Whereas, a holding period that is more than two years is a long-term capital gain.
Taxation for short-term capital gains is done based on a slab rate that applies to the individual’s income.
For long-term capital gain, the tax is 20% with the benefit of indexation. Long-term capital gains have the indexation benefit but are also influenced due to inflation as the period of the investment is longer.
Also, check – The Unlisted Shares Price List.
How to sell unlisted shares after the IPO stage?
A company’s shares can be sold directly on exchanges after a six-month lock-in period from the date of listing. When a company goes public, its tax implications differ from those of an unlisted company. For listed companies, taxation is determined by the Income Tax Act.
Selling via CSDL:
If you are a CSDL user, you can easily transfer the shares to a safe and trusted Demat account. Enter the Demat ID of the account of the buyer. Once the 16-digit Id is submitted, the broker or buyer gets the notification and authenticates the deal after which shares can be transferred.
Things required to transfer shares through CSDL:
- Execution Date
- Counter-BOID
- ISIN Number
- Quantity
- Consideration Amount
- Reason for Trade
- Bank Details
- And Transfer Date
After the above details are submitted, the authority checks the details and sends you an email which is the final step of authentication. Once you authenticate, the shares get transferred from your Demat account.
Check out the Difference Between CDSL & NSDL.
Selling via NSDL:
With an NSDL Demat and trading account, you can buy, sell, and store your shares easily. Online Demat accounts make trading very easy. The first step you need to take is to set up a Demat account.
By doing this, you will be able to store your shares dematerialized in a Demat account. Banks usually have a Demat section, so you can open a Demat account there if you have an account with them. Your bank account will be linked to this so that buying shares is efficient.
Create a Demat account at your bank branch or online at the financial institution’s website. Form 16 must be filled out and your PAN and AADHAR details uploaded. Shares can be stored in your account once you link your bank account and verify your details.
Conclusion
When selling unlisted shares you need to be careful otherwise you might face losses and lose the deal offerings. It is best to consult an expert to minimize the chances of risks or mistakes. Research well about all the consulting services out there and study the commission rates and company prospects before finalization. Getting in touch with the right brokerage or advisory services can help you plan and build long-term plans for unlisted investments.
Frequently Asked Questions(FAQS)
- How to sell shares that are unlisted?
Public listed stocks can easily sell shares but unlisted stocks need to go through the broker and might also need to get approval from the company before selling the shares.
- How to sell unlisted shares?
As these stocks are not listed on the stock exchange, you need to approach the broker or buyer privately to sell unlisted shares in India. You need to provide Demat A/c details, CMR copy, and bank details to the buyer after which the shares need to be transferred.
- How to sell unlisted shares online in India?
Send an email to the brokerage firm or the buyer to initiate the deal. Once the details are shared, the unlisted shares are sent to the buyer’s Demat A/c after which the money is transferred to the seller’s account.
- What is the step-by-step process to sell Unlisted shares?
Here’s, the step-by-step process to sell unlisted securities:
1)Deal processing
2)Documentation
3)Shares transfer
4)Payment from the buyer
5)Receipt generation