About Studds Limited Unlisted Shares

Upon successful completion of a deal, the unlisted shares are credited electronically directly to your standard demat account that is usually created with CDSL or NSDL (Central Depository Services Limited or National Securities Depository Limited).
 

The lock-in period of Studds Limited varies depending on the category of the investor:

• Venture capital or foreign venture capital investors are subject to lock-in period of 6 months from the date of acquisition of shares

• For AIF investors of Category-II are not subject to any lock-in.

• Any other investor, including retail investors, HNI or corporate investors are subject to a lock-in period of 6 months from the date of listing.

Note – The above-mentioned lock-in is for mainboard, however for SME IPO the applicable lock-in period is 1 Year.

There is no regulatory minimum limit to invest in unlisted shares. However, minimum investment size varies with the per share price. Earlier, the typical investment size often ranges between 70K – 100K, but with the growing awareness and increased participation the investment size has been down sized to 50k.
 

Short-Term Capital Gain tax is applicable when you sell your unlisted shares within a year from date of acquisition. Realized gain is taxable at your slab rate after consolidating in total income for the year. Hence, the rate of tax depends on your overall income for the particular financial year.
 

Long-Term Capital Gain taxes are applicable when you sell your unlisted shares after two years from the date of acquisition. LTCG tax is calculated on profits realized on sale of unlisted shares at 12.5%. Investors particularly retail or HNI must understand the concept clearly as it impacts strategy and tax planning.

• You can download the NSDL or CDSL application and login into the account and check whether the shares have been credited or not.

• Credit of Unlisted Shares/Pre-IPO shares can be checked in brokers application as well but it takes T+2 days to show the shares.

• You would also get email confirmation of credit of shares via email

• The value of share in unlisted space is determined in the same way as it is done in the listed market. Demand and supply decide the price of any share. If the demand is more than the supply, then the price of the share increases and vice versa.

• When a new share is introduced in the unlisted space, the value of the company is decided upon the last funding raised by the company. If the company hasn’t raised any funding in the past, then the valuation is decided upon the fundamentals of the company.

Yes, investing in unlisted shares is legal in India, the activity is regulated and governed under the rules and guidelines laid by SEBI (Securities and Exchange Board of India). Related parties must comply with the regulations and guidelines to ensure legal and financial standards. 

Investing in unlisted shares in India carries a significant and distinctive risk profile such as limited liquidity, lack of transparent pricing and regulatory oversight because unlisted shares do not trade on listed stock exchange, they are bought or sold in OTC (over the counter) market that makes vulnerable to following risks:

• Liquidity risk, unlisted shares are difficult to buy and sell,

• Lack of transparent pricing, as share price of pre-IPO or unl;isted company is often determined by narrative not fundamentals 

• Lack of information disclosure, unlisted companies are not mandated for disclosures like listed companies 

• Tax ambiguity, because determination of fair market value and cost of acquisition of unlisted shares is often disputed

Hence, investors should carefully examine related facts before investing in Pre-IPO or unlisted shares.