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A demat account allows you to keep securities in electronic form. It is not required that the securities you own be traded on stock exchanges.
As long as your shares, debentures, or other securities are available on the CDSL repository, you can keep them in your demat account.
You can transfer unlisted debentures or shares of unlisted companies using CDSL's Easiest facility (pre-IPO). You should act with caution when evaluating unlisted assets because the market for such assets can be illiquid, meaning it can be difficult to find buyers or sellers.
Behind the scenes of the major stock exchanges, a vast stock market runs every day. This is the stock market that is not publicly traded. The Over-the-Counter (OTC) market is where unlisted shares are exchanged, and you can learn all about them in this article.
Do You Have any Form of Depository Account?
A DEMAT ACCOUNT is a sort of account in which shares are kept in a dematerialized or soft copy format.
When we acquire stocks, the funds are deposited to our trading account and subsequently to our demat account within T+2 days. When we sell a stock, the proceeds are deposited to our demat account in T+2 working days, and the stock is withdrawn from our account.
Who is Responsible For Opening and Maintaining a Demat Account?
There are two firms in our country: NSDL and CDSL.
National Securities Depository Limited is the full name of the company.
Central Depository Services Limited (CDSL) is the full name of the company.
Because we can't link directly to NSDL and CDSL, our broker offers the option of opening a demat account and connecting to any of them.
If you open an account with UPSTOX, for example, the account is managed by CDSL.
THE KEY DIFFERENCE BETWEEN A DEMAT ACCOUNT AND A TRADING ACCOUNT.
DEMAT is necessary to hold the stock, and a trading account offers the interface for dealing with the stock.
Shares that are not traded on a stock market are known as unlisted shares.
Unlisted stocks and shares are those that are not traded on traditional stock exchanges. Reliance Retail, for example, and OYO both have unlisted shares. Similarly, many companies have yet to go public because they do not meet the requirements for a formal stock exchange listing.
Because they are not traded on a stock market, unlisted shares are riskier than listed shares because their liquidity is limited. Their appraisals are more solid, but they are less clear. Your returns will be considerably improved if you can identify an unlisted share with all of the potential to be listed, as well as a company with growth potential.
Valuation of Unlisted Stocks
The Fair Market Value (FMV) approach is used to determine the value of unlisted shares. FMV is estimated by underwriters or investment bankers because unlisted shares are not traded on a stock exchange and hence have no actual market price.
Subtract the book value of all the company's liabilities (L) from the book value of all the company's assets (A) to arrive at the fair market value (A). The whole amount of paid-up equity share capital (PE) as shown on the company's balance sheet is then divided by the outcome.
Frequently Asked Questions
1-What Tax Consequences will I Face if I Transfer Shares From One Demat Account to Another?
If both accounts are in your name and are linked to the same PAN, it is not taxable.
When you gift something to someone else, it's considered a transfer, and capital gain or loss rules may apply.
2- How do I Get My Stock Certificates Dematerialized?
You'll need to complete a "Demat Request Form," which stockbrokers can provide. After you've filled out your physical certificates, send them to your stockbroker. Inquire because form filling must be done appropriately.
Open a demat account in your name and collect your brother's signatures on the "Demat Request Form" if necessary, as you are the account's first holder. In your case, there may be an additional form called "Transportation Cum Demat." This is usually the case if the first and second holders' names are misplaced, for example.