A plain-English reference for the terms that come up when researching, buying, or selling pre-IPO and unlisted equity in India.
Equity shares of a company that are not traded on a public stock exchange like the NSE or BSE. Ownership is transferred directly between demat accounts rather than through exchange order-matching.
Unlisted shares of a company that has announced, or is expected to file for, an Initial Public Offering. Investors buy pre-IPO shares hoping the company lists at a higher valuation later.
The draft document a company files with SEBI before an IPO, disclosing its financials, risk factors, and business details. A filed DRHP is often the first public signal that an IPO is approaching.
An independent bank account that holds a buyer’s payment until a condition is met — in unlisted share transactions, until the shares are confirmed credited to the buyer’s demat account. Protects both sides of the trade.
A dematerialized account that holds shares in electronic form, maintained through a Depository Participant (DP) linked to CDSL or NSDL. Required to hold both listed and unlisted shares in India.
India’s two securities depositories — Central Depository Services Limited and National Securities Depository Limited — which electronically record ownership of demat holdings, including unlisted shares.
A signed instruction (physical or electronic, as e-DIS) authorizing a Depository Participant to transfer shares out of a demat account to another account — the mechanism used to actually deliver unlisted shares to a buyer.
A document from a Depository Participant confirming a demat account’s holder details and current holdings — commonly required as proof of ownership before selling unlisted shares.
The minimum quantity of shares that can be bought or sold in a single transaction. Traditional unlisted-share dealers often enforce lot sizes of 500–1,000 shares; PreStocks supports buying from as little as 1 share on eligible inventory.
A settlement cycle where shares are credited to the buyer’s demat account within 1 working day of payment confirmation.
The estimated worth of a private company, typically set by its most recent funding round or secondary-market transactions — not a publicly quoted exchange price, since the company is not listed.
Mandatory identity verification — PAN, Aadhaar, and bank/demat proof — required before any Indian financial platform, including unlisted-share marketplaces, can onboard a buyer or seller.
Shares granted to employees as compensation, which vest over time. Once vested and converted to actual demat holdings, ESOP shares can be sold on the secondary unlisted-share market, subject to company restrictions.
Securities and Exchange Board of India — the regulator overseeing India’s stock exchanges, listed companies, and IPO process. SEBI does not regulate private unlisted-share transactions directly, but sets the rules a company must follow before it can list.