What are the risks of investing in unlisted companies?

1. Loss of capital is the biggest potential list when it comes to investing in equity of unlisted companies.

2. Since these companies are not listed on any exchange, there is no fair market price that you can track daily, instead a fair value must be arrived at.

3. Also, since these companies are not listed, the investment is not very liquid and diffi cult to convert to cash easily and the price will depend on the buyer’s or seller’s need.


4. Unlike, listed companies, the information on these companies is not freely available.

5. Investments in unlisted companies attract higher rates of tax.

(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)