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Invest in Unlisted Shares

Invest in Unlisted Shares

A lot of Indian startups issue their shares to private investors during early and growth stages. These companies can be very promising and provide a high return on investment. You can buy these shares through a share broker or directly from the promoters. But before you invest, ensure that you have done your research.

Investing in Unlisted Shares

There are a number of reasons why investors choose to invest in unlisted shares. One is that they offer higher returns compared to the returns from listed shares.

Another reason is that they provide tax reliefs to investors. Unlike stocks that are listed on stock exchanges, there is no Securities Transactions Tax (STT) levied on unlisted shares.

Moreover, unlisted shares are also less volatile than the prices of their listed counterparts. This makes them a better option for investors who do not want to worry about price fluctuations on a daily basis.

Investing in unlisted shares is a great way to diversify your portfolio and increase your income from investments. However, it is important to consider the risk involved before making a decision.

Buying Unlisted Shares

Buying unlisted shares is a new investment option among Indian equity investors. It is a market where companies that are not listed on the bourses or are still in the pre-IPO stage trade over the counter.

Some of these companies are owned by private investors, angel investors or venture capitalists and have not yet fulfilled all the requirements to get listed on a stock exchange. These companies can be a good source of income as they have the potential to grow at a rapid pace.

However, before investing in these shares, you should have a thorough understanding of how these companies operate and their future prospects. You also need to choose a reliable intermediary that you can trust.

Buying unlisted shares is a relatively risky decision. It is best to only invest in companies that are in their growth stages and are not experiencing financial problems.

Selling Unlisted Shares

Unlisted shares are stocks of companies that are not listed on any exchange. These shares can be bought and sold freely by both retail and institutional investors.

There are several types of unlisted shares. Some of them include independent businesses, startups and homegrown conglomerates that are backed by strong parentage.

These companies often issue shares to private investors and their peers in order to raise funds for their operations. They can also offer shares to their employees as a reward for working hard.

In addition, some of these companies sell their shares to intermediaries and investors who can help them with their business. These unlisted shares can be traded online through a dealer or broker.

Selling unlisted shares is a process that requires careful planning and research. Investors must be well-versed with the business model of the company to make informed decisions. Besides, they must be able to trust the dealer or brokerage firm with their money.

Trading in Unlisted Shares

Trading in unlisted shares has traditionally been a complicated and time-consuming process. Unlike trading in listed shares, which takes place on exchanges, trade in unlisted shares occurs directly between buyers and sellers.

However, this has changed with the development of an online platform that allows investors to buy and sell unlisted shares in private companies. This has solved many of the challenges that are associated with trading in unlisted shares.

While investing in unlisted shares, you need to be aware of the risks involved. These risks include illiquidity, low liquidity, lack of price transparency, and limited financial information.

Another risk is that unlisted securities are prone to manipulation. This is because market makers can artificially raise the price by trading among themselves, thereby creating false volume. Additionally, there is a possibility of brokers dumping their shares to unsuspecting investors in the classic “pump and dump” scam.

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