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Risk of investing in unlisted Companies

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 Risk of  investing in unlisted companies An unlisted company is a company that is not listed on the stock exchange. Unlisted companies are privately owned that has not yet gone through the IPO. Unlisted stocks are a financial instrument that is available for trade on over-the-counter markets. The risk associated with unlisted investments are as follows: Risk of investing in unlisted companies Loss of capital invested Loss of capital is the biggest risk when investing in the equity of unlisted companies. So investors need to be financially able to absorb any losses. Illiquidity Unlisted shares are highly illiquid. They are not on the stock exchange where multiple buyers and sellers are trading them. No regulatory framework There is always a huge counterparty risk as no regulatory is involved. There is no fair market price that can be tracked. People who invest in unlisted stocks do not enjoy the safety and protection provided by SEBI. Lack of transparency  There is no transparency in t