The stock market is a term that no one is unfamiliar with. However, its exact meaning and purpose are squandered by the general population, who hold vague ideas about the concept and envision the rest. A stock market essentially refers to a platform that facilitates the buyers and sellers in aggregate that deal with the transfer of stocks. Shares refer to ownership claims distributed among the general public to raise capital to undertake new projects, investments, or expansion plans of a company.
The stock market refers to the platform between the buyers and sellers of shares. There exist different types of shares, such as equity shares, preference shares, limited shares, ordinary shares, redeemable shares, irredeemable shares, etc. Each of these shares carries its own features, pros, and cons.
What are Unlisted Shares?
To buy shares of unlisted companies that are traded OTC, which refers to over-the-counter transactions. The instruments, meaning the shares, are traded directly using the help of intermediaries. The trading of unlisted shares is done in an unregulated market that is disorganized. This inevitably leads to the high amount of risk attributed to unlisted shares of unlisted companies.
The shares that are unlisted are typically bought from employees existing of a particular company that is known to offer shares to those new investors who are keen to invest. It is advised that any investors of the retail category must take caution in order to invest money that is solely taken from the surplus in unlisted companies. This is explained away by quoting that unlisted companies are generally considered to be illiquid and volatile investments.
Pre-Initial Public Offering or Pre-IPO trading refers to the shares of any particular company being bought and sold prior to it getting listed as a part of the stock exchange. Due to their lack of a marketplace platform, the shares in question are usually not traded in a public market.
These unlisted stock price are typically purchased via the help or involvement of intermediaries or special platforms that are specialized in the unlisted shares being sourced and placed. This process is used in facilitating the trade of unlisted shares from companies.
The pre-IPO market is predominantly monopolized by the existence of transactions among institutional players. This process is time-consuming, therefore, complicating the selling of shares.
The shares that are not officially listed or noted down on the formal stock exchanges are known or referred to as unlisted shares/ stocks.
A public corporation that is unlisted refers to one that is not found to not be listed on the official stock exchange. However, they are allowed to have an indefinite shareholder count. These shares are called unlisted shares.