An offering of shares in a company before its initial public offering (IPO) is called Pre-IPO shares.
The shares are in Demat Form, hence a demat account is required for buying such shares.
Yes, it is 100% legal. The shares are transferred through NSDL/CDSL.
No, Company is not involved in any case directly or indirectly.
The Company issues shares to promoters, employees or through private placement before IPO which may float in Pre-IPO market.
No, shares of only limited companies are available.
If you buy unlisted shares it will show in your DP Holdings of your Demat account
Different companies have different time horizon. It could 1-5 years or even more, depending upon script.
One important aspect is Lock-in Period of shares. All the Pre-IPO shares of companies have One year lock-in as per SEBI guidelines.
No. The shares get locked from the day of allotment of shares of IPO.
For example; You buy shares of X. Ltd. On 1st April, 2020, the lock-in period doesn’t start on 1st April. If the company brings IPO and declares allotment of shares in IPO on 15th September,2020, then the lock-in period starts, i.e, from 15th September,2020 to 15thSeptember,2021.
There are two ways of selling Pre-IPO shares.
Before IPO: You can sell the shares before the company brings IPO via off-market sale. In this case you have to find a buyer for your shares.
After IPO: When the company gets listed, the shares will get locked in your demat account for a period of one year. Post lock-in you can sell the shares normally like any other listed shares on stock exchanges.
No Process required. Your shares will automatically come out of lock-in after one year.
The shares are usually traded in specific lot sizes. (We normally try to keep lot size minimum so every retail/small investor can afford and also get benefits)
Firstly, there is no official source to know the rates of such shares. Although the market has evolved significantly and so there many dealers trading in such shares. You can contact such dealers and get the rates of such shares. The rates of Pre-IPO shares keep on changing depending on market conditions, results, news and developments, etc.
Yes, if a company declares such corporate proceedings the shareholder will be eligible for that. The shares must be in his/her account on record date.
Feel free to contact us for any queries and buying Pre-IPO shares.