Is it legal to buy unlisted shares in India?
Reviewed by GrowFast's desk. General information, not advice.
The short answer
A private sale of shares in an unlisted company between a buyer and a seller is a long-standing, lawful way to transfer ownership, and we know of no law that forbids a resident from doing it. It is not stock-exchange trading, so the protections of an exchange do not apply, and the transfer must follow company and depository rules.
What the law requires
- Demat form. Since 2 October 2018 the shares of unlisted public companies can be transferred only in demat form. Since 1 July 2025 the same applies to private companies other than small companies.
- The company's own rules. A private company's articles restrict the transfer of its shares, and its board may need to approve a transfer.
- PAN. It must be quoted for a purchase or sale of unlisted shares above Rs 1,00,000 in a transaction.
- Stamp duty and tax. Stamp duty is payable on the transfer and capital gains tax on a profit.
What SEBI has said
On 17 June 2026 SEBI issued a press release about transactions in the securities of unlisted public companies on online platforms. It said such platforms are neither authorised nor recognised by SEBI, that only recognised stock exchanges may provide a platform for raising funds and trading, and that people using such platforms do not have access to SEBI's or the exchanges' investor protection and grievance mechanisms. It issued similar cautions in December 2024 and August 2016.
The caution is about platforms that present themselves as markets. It does not say that a private sale of shares is unlawful. It does mean you should be clear about who you are buying from and on what terms.
What this means for you
- You are relying on the seller, not on an exchange. Deal with someone you can identify and reach.
- There is no settlement guarantee. Agree in writing how payment and the transfer of shares will happen.
- If something goes wrong, your remedy is against the seller, under the general law.
Non-residents
Different rules apply to people resident outside India. This guide does not cover them.
Questions people ask
Is GrowFast a stock exchange or a trading platform?
No. GrowFast is a dealer in unlisted shares. Its website shows indicative prices; any deal is agreed directly with its desk.
Does SEBI regulate unlisted shares?
SEBI regulates listed companies, stock exchanges and intermediaries. A private sale of unlisted shares is not conducted on an exchange and does not carry exchange protections.
Sources
- SEBI press release 32/2026 of 17 June 2026, on transactions in unlisted securities on platforms (as circulated by NSDL)
- Ministry of Corporate Affairs: Companies (Prospectus and Allotment of Securities) Rules, 2014, rules 9A and 9B
- Income-tax Rules, 2026, rule 159: transactions for which PAN must be quoted
This guide is general information as the rules stood on 9 Oct 2026. Rules and tax rates change. It is not investment, legal or tax advice; check the sources and take professional advice before you act. See the Terms and Conditions.