Bought pre-IPO shares? The listing day is not the day you can sell
Pre-IPO shares come with three rules most buyers learn late. The platforms that sell them are outside SEBI's protection. After the IPO, the shares stay locked for six months.
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Pre-IPO shares reach buyers through websites, brokers' unlisted desks and wealth teams. They land in your demat account like any other share.
Three SEBI rules come with them. One decides whom you can complain to. Two decide when you can sell.
1. The platforms are not exchanges
On 17 June 2026, SEBI issued press release 32/2026. It is SEBI's third warning on this, after August 2016 and December 2024.
It says websites that trade unlisted shares "are neither authorized nor recognized by SEBI". Only recognised stock exchanges may run trading in securities.
So a buyer on these platforms does not get:
- SEBI's or an exchange's investor protection
- the exchange's complaint process
- SMART ODR, the online dispute system run by exchanges and depositories
If a seller delivers late, sends the wrong shares, or the platform shuts, the dispute is between you and them. NSDL sent the warning to every depository participant on 24 June.
2. Locked for six months after the IPO
Listing does not mean you can sell. Regulation 17 of SEBI's IPO rules (the ICDR Regulations) locks all pre-IPO shares held by anyone other than the promoters. The lock runs for six months from the date of allotment.
A few holders are exempt:
- employees' shares from stock option and purchase schemes
- employee stock option trusts
- venture capital funds and Category I and II AIFs that have held for six months
A buyer on the unlisted market is none of these.
Illustration. Say you bought ₹20 lakh of a company's unlisted shares in 2025. Its IPO allots on 15 March 2027. Your shares stay locked until 15 September 2027.
For those six months you can watch the price move but cannot sell. If the shares pass to someone else, the lock passes with them.
3. Selling in the IPO has its own test
In some IPOs, existing shareholders sell part of their holding to the public. This is the offer for sale.
Regulation 8 allows only shares held for at least one year before the draft prospectus was filed. If you bought in the year before the filing, you cannot sell in the offer for sale.
| When | What the rule says | Rule |
|---|---|---|
| You buy on a platform | No SEBI or exchange protection | SEBI PR 32/2026 |
| Draft prospectus filed | Only shares held a year before can join the offer for sale | ICDR reg. 8 |
| IPO allotment | Pre-IPO shares locked for six months | ICDR reg. 17 |
| Six months later | Lock ends; you can sell on the exchange | ICDR reg. 17 |
Tax
Long-term gains on shares are taxed at 12.5%, plus surcharge and cess, under section 197 of the Income-tax Act, 2025.
What counts as long-term depends on how long you held the shares. The test differs for unlisted and listed shares. Your purchase date, the listing date and your sale date all matter, so work this out with your CA.
What is still open
The press release is a warning. It does not ban the platforms or undo trades already made. As of 22 October 2026, SEBI has no regulated market for pre-IPO shares.
Questions
- Are unlisted share platforms regulated by SEBI?
- No. SEBI's press release of 17 June 2026 says they are neither authorised nor recognised by SEBI.
- Can I complain to an exchange about an unlisted share trade?
- No. SEBI says users of these platforms do not get exchange grievance redressal or online dispute resolution through SMART ODR.
- How long are pre-IPO shares locked in after listing?
- Six months from the IPO allotment date, for everyone except the promoters and a few exempt holders. This is regulation 17 of SEBI's ICDR Regulations.
- Are employees' pre-IPO shares locked in too?
- Shares from employee stock option or purchase schemes are exempt from this lock-in. They follow SEBI's share-based benefits rules instead.
- Can I sell my pre-IPO shares in the company's offer for sale?
- Only shares held for at least a year before the draft offer document was filed, under regulation 8 of the ICDR Regulations.
Sources
- SEBI press release 32/2026, Transaction in securities of unlisted public limited companies on various platforms (17 Jun 2026), as circulated by NSDL (24 Jun 2026)
- SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, as last amended 21 Mar 2026, regulations 8 and 17
- Income-tax Act, 2025, section 197, tax on long-term capital gains
Compound is analysis, not investment advice. Reva Money is not a SEBI-registered investment adviser.
