Unlisted Shares: What They Are and How They Are Traded
Unlisted shares are shares in companies that are not listed on a regulated stock exchange. Trading them differs significantly from trading listed shares, and they carry additional risks that investors must understand before investing.
Investments involve risk.
Listed vs. Unlisted Shares
| Aspect | Listed Shares | Unlisted Shares |
|---|---|---|
| Trading venue | Regulated exchange (e.g. Nasdaq Stockholm) | No organized marketplace |
| Price transparency | Real-time pricing | Irregular, manual price updates |
| Liquidity | Generally high | Low, sometimes no daily turnover |
| Regulatory review | Extensive review before listing | No mandatory review process |
| Information disclosure | Standardized, frequent reporting required | Minimal requirements |
How to Trade Unlisted Shares
Because there is no centralized exchange for unlisted shares, trading is more complex:
- You can find buyers or sellers directly, without a platform intermediary.
- Some securities institutions offer brokerage services for unlisted shares.
- Prices are updated manually and infrequently by institutions, making it harder to track value changes.
- Some days there may be no transactions at all, making it difficult to exit a position.
At Quartal, unlisted shares can be held in a Securities Account Custody. They cannot be held in an Investment Savings Account (ISK) or in a capital insurance.
What the Review Process Covers for Listed Companies
When a company lists on a stock exchange, it undergoes a rigorous review of:
- Financial health and reporting standards
- Board composition and governance structure
- Ownership structure
- Capacity for timely and broad information disclosure
Unlisted companies are not subject to this process. As an investor in unlisted shares, you must conduct your own analysis of the company’s financial position, governance, and growth prospects.
Advantages of Unlisted Shares
- Opportunity to invest at an early stage, before a company is listed and attracts broader attention.
- Potentially greater influence as an investor, since ownership stakes in smaller companies carry more weight.
- Some unlisted companies offer shareholder discounts.
Disadvantages and Risks
- Low liquidity makes it difficult to sell your position when needed.
- No mandatory disclosure requirements mean less available financial information.
- Smaller companies that have not undergone listing review carry higher operational and financial risk.
- Price discovery is unreliable due to infrequent and manual price updates.
Important Notice
Past performance of any investment is not a guarantee of future results. The value of shares and securities can both increase and decrease. It is not certain that you will recover the full amount invested.
