Key Takeaways
- Unquoted shares are shares of companies that have never been listed on any recognised stock exchange.
- They differ from unlisted shares in that unlisted companies may be planning to list; unquoted companies have no such stated intention.
- Arms Securities is one of India's original founders of the unquoted stock market, active since 1990.
- Unquoted shares are traded entirely in the OTC market through specialist dealers.
- They carry higher risk but can offer exceptional returns when the company eventually lists or is acquired.
Unquoted shares are equity shares of companies that have never been listed — or quoted — on any recognised stock exchange in India, including the NSE (National Stock Exchange), BSE (Bombay Stock Exchange), or MSEI (Metropolitan Stock Exchange of India). Unlike pre-IPO shares of companies actively planning a public listing, unquoted companies typically have no immediate plans to go public, making these investments longer-term and more speculative — but potentially very rewarding.
Arms Securities is among the founder members of India's unquoted stock market and has been trading in unquoted, illiquid, and physical-form shares since 1990. This guide explains everything you need to know about this little-known but important corner of India's private securities market.
Unquoted Shares vs Unlisted Shares: What's the Difference?
Many investors use the terms interchangeably, but there are important distinctions:
| Feature | Unlisted Shares | Unquoted Shares |
|---|---|---|
| Exchange History | Never listed, or once listed (delisted) | Never been listed |
| IPO Plans | Often planning an IPO | Usually no known IPO plans |
| Information Availability | More readily available | Very limited |
| Liquidity | Low | Very low |
| Investor Familiarity | Growing awareness | Niche / specialist market |
| Pricing Mechanism | OTC market with more active pricing | Highly illiquid, determined by specialist dealers |
In practice, the line between "unlisted" and "unquoted" often blurs. Arms Securities uses the term "unquoted" specifically for shares of private companies that have no exchange-trading history and no publicly disclosed IPO plans.
Types of Companies Whose Shares Are Unquoted
Unquoted companies span every sector of the Indian economy. Common categories include:
1. Old Family-Owned Companies
Many traditional Indian businesses — family-run textile mills, trading houses, commodity firms, and manufacturing companies — have been operating for decades without ever seeking a stock exchange listing. Their shares pass between family members, employees, and occasionally external investors.
2. Closely-Held Private Limited Companies
Private limited companies in India by definition cannot list their shares on a public exchange. However, if they have converted to a public limited company without listing (or vice versa), their shares may be transferable in the OTC market.
3. Dormant or Legacy Companies
Some companies that were once active have become dormant over time. Their shares may hold value due to assets — land, cash reserves, brand names — even if the business is no longer operational.
4. Subsidiary Companies
Large conglomerates often have fully owned or partially owned subsidiaries that are not publicly listed. Minority shareholders in these subsidiaries hold unquoted shares.
Why Do Investors Buy Unquoted Shares?
1. Extreme Undervaluation
Because they are outside the public market and very few investors look at them, unquoted shares are sometimes priced far below their intrinsic value. A patient investor can buy a company's shares at a fraction of book value.
2. Asset Value Plays
Some unquoted companies own significant assets — land in now-prime locations, machinery, intellectual property, or cash — that give the shares residual value far exceeding their OTC trading price.
3. Eventual IPO or Acquisition Upside
Some unquoted companies eventually decide to list, or are acquired by larger businesses. Early investors who bought shares when the company was unquoted can benefit tremendously from these liquidity events.
4. Niche Diversification
Unquoted shares provide genuine diversification into a completely uncorrelated asset class — their price is driven entirely by private-market negotiations, not stock market sentiment.
Risks of Unquoted Shares — Be Aware Before You Invest
Unquoted shares carry risks that are higher than even regular unlisted shares:
- Extreme illiquidity: There may be very few — or zero — buyers for certain unquoted shares at any given time
- Opacity: Financial data, management quality, and business health are very difficult to assess
- No regulatory oversight on the transaction itself (though depository rules apply for demat transfers)
- Longer investment horizon required: Exits can take years or may never materialise in the traditional sense
- Legal complexity: Physical certificates of old companies may have documentation issues, disputed ownership, or require legal resolution
This is exactly why expertise matters. Arms Securities brings 35+ years of market knowledge to every unquoted share transaction, ensuring due diligence and fair valuation.
How to Trade Unquoted Shares in India
Trading unquoted shares is not a process you can complete on a mobile app or through your regular stockbroker. It requires a specialist intermediary with an established OTC network.
Buying Unquoted Shares
- Identify the company: You may have a specific company in mind, or you can rely on Arms Securities' expertise to identify opportunities
- Price discovery: Arms Securities provides a price based on OTC demand, company fundamentals, and comparable transactions
- Due diligence: Review available financial information, promoter background, and any corporate actions
- Execute the transaction: Payment is made, and shares are transferred via off-market demat transfer or physical form
Selling Unquoted Shares
Many people come to Arms Securities with unquoted shares they inherited or received through employment — and have been unable to sell for years because no mainstream broker would touch them.
- Share your holding details: Company name, number of shares, certificate or demat details
- Arms Securities assesses demand: We check our buyer network and provide you a fair price
- Transaction is executed: Off-market transfer (demat) or physical transfer deed is completed
- Payment received: Funds credited to your bank within 24–48 hours of share transfer
Contact us to sell your unquoted shares →
Physical Share Certificates of Unquoted Companies
A large proportion of unquoted share transactions involve old physical share certificates. These are paper certificates issued by companies before the demat era (pre-2000s). Managing them requires special expertise.
Arms Securities' experience includes:
- Authenticating physical certificates for genuineness
- Identifying the current status of the issuing company
- Facilitating off-market physical transfers using Share Transfer Forms (Form 7B/SH-4)
- Assisting with dematerialisation where possible
- Tracing corporate actions (splits, consolidations, rights issues) that affect the certificate's current value
If you have a stack of old physical share certificates gathering dust, contact our team. Some of them may be worth significantly more than you think.
Arms Securities: India's Pioneer in Unquoted Shares
Arms Securities was founded in 1990 and is among the original members of India's informal unquoted stock market. Over 35 years, we have:
- Facilitated thousands of transactions in unquoted, illiquid, and physical-form shares
- Helped investors discover hidden value in companies that mainstream brokers ignore
- Assisted inheritors of old share certificates in converting forgotten assets into cash
- Identified early-stage opportunities that later became multi-baggers for our clients
Our expertise in unquoted shares is unmatched in India. We combine deep market knowledge, an extensive buyer-seller network, and transparent pricing to deliver the best outcome for every client.
Learn more about us →
View our services →
Get in Touch with Arms Securities
Whether you want to buy, sell, or simply understand the value of your unquoted shares, we are here to help.
Call/WhatsApp: +91-8882245112 | +91-9899131155
Email: contact@armssecurities.com
www.armssecurities.com
Frequently Asked Questions (FAQs) — Unquoted Shares India
Q1. What is the difference between unquoted shares and unlisted shares in India?
Unlisted shares generally refer to shares of companies that are privately held but may plan to list (pre-IPO). Unquoted shares specifically refer to companies that have no stock exchange quote — either never listed, or so dormant that no trading price exists anywhere. In practice, both terms are often used interchangeably in the Indian market, but Arms Securities deals in both.
Q2. Can I sell unquoted shares that I inherited?
Yes, in most cases. If the shares are in demat form, an off-market transfer can be executed. If they are in physical certificate form, additional steps including verification and physical transfer deed execution are required. Arms Securities handles both scenarios and has extensive experience with inherited share certificates.
Q3. How is the price of unquoted shares determined?
There is no exchange-set price for unquoted shares. Pricing is determined by OTC demand and supply, comparable transactions, the company's last known financials, book value, asset base, and any recent corporate actions. Arms Securities provides price discovery based on 35 years of market expertise.
Q4. Are unquoted shares taxed differently from unlisted shares?
For income tax purposes, they are treated identically — as unlisted shares. STCG (≤ 24 months) is taxed at slab rate; LTCG (> 24 months) is taxed at 20% with indexation. Refer to our detailed guide: Tax on Unlisted Shares in India.
Q5. Is it safe to buy unquoted shares through Arms Securities?
Yes. Every transaction is executed through the official depository system (NSDL/CDSL) for demat shares, or through proper transfer deeds for physical shares. Payments are made through bank transfers with full documentation. Arms Securities has a 35-year track record with zero reported fraud cases and testimonials from thousands of satisfied clients.
Conclusion
Unquoted shares represent one of the most obscure yet potentially rewarding corners of India's investment universe. For those willing to do the research — or partner with experts who already have — the opportunities are real.
Arms Securities has been operating in this space since 1990 and brings unmatched depth of expertise. Whether you are a buyer looking for value plays or a holder looking to exit, we are your trusted partner.
+91-8882245112 | contact@armssecurities.com | www.armssecurities.com
Also Read:
