Why India’s Unlisted Giants Rarely Reward Their Shareholders
Unlisted companies are known to be secretive, and very little authentic data is available about them in the public domain. My experience of dealing with three large unlisted companies tells me a contrasting story. On one side is a 90-year-old, family-owned publishing company, which has consistently made profits but declared a 10 per cent annual dividend only in the last 60 years that my father, and then my brothers and I, have been shareholders.No bonus shares have been issued for the last 30 years, and shareholders are being treated with disdain. AGMs are conducted by employees like the Company Secretary, and some proxy shareholders are present, ready to sign on the dotted line, as I observed and commented upon in the last two AGMs. Despite provisions in the Companies Act, there are no independent directors, although the turnover threshold of Rs 100 crore was crossed several years ago.
For the 2024-25 annual report, AGM held on 30 Sep 2025, showed a turnover of Rs 266 crore, net profit of Rs 140 crore, and reserves of Rs 5,146 crore on paid-up capital of about Rs 5 crore (reserves are 1,000 times equity capital!). How such companies escape the regulator’s notice is anybody’s guess.
Positive Exceptions: Leading AI Firm And Large Stock Exchange
On the other side is a pioneering AI company, where three years ago I received ESOPs by virtue of being their consultant for two years, and within three years got bonus shares of 1:4 this year. This unlisted company values its shareholders as much as its employees and is slated for a big IPO soon. Similarly, a major stock exchange issued a 4:1 bonus and a large dividend in 2025. My research indicates that both these unlisted companies are clear exceptions.
Corporate governance in many unlisted companies is less transparent, as there are thousands of them, ranging from small family firms on one side to large entities with 100,000 shareholders, like the major stock exchange. Because of their sheer numbers, stringent government norms have not been implemented, and a vast majority remain private with minimal disclosure.
As of 2025, data available reveals that nearly 20,000 unlisted companies are operating in India. Grouping them by size and taking the annual reported profits of Rs 100 crore or more throws up 1,300 companies with aggregate profits of Rs 7.5 lakh crore, equivalent to 50 per cent of the profit of all listed companies. This implies that unlisted companies are no small fry and now rub shoulders with the best of listed companies.
Some live examples are large financial institutions, multinational technology firms’ local arms, and consumer finance companies. Revenue growth rates range from 8–25 per cent, as they actively invest in new factories, machines, and equipment based on forecasted demand and growth projects. Such unlisted firms operate across technology, consumer goods, fintech, and pharma. The combined potential market value of these 1,300 high-growth invisible segments exceeds Rs 150 lakh crore. By no stretch of the imagination are they modest in their operations.
The Big Players Among Unlisted Firms
Focusing on turnover exceeding Rs 1,000 crore, 375 leading firms emerge across pharmaceuticals, retail, technology, FMCG, and infrastructure.
Prominent examples include a large software company (Rs 8,700 crore), a pharmaceutical manufacturer (Rs 28,000 crore), a major consumer products company (Rs 14,000 cr), a leading stock exchange (Rs 19,000 crore), an ecommerce platform (Rs 7,000 crore), and a hospitality chain (Rs 6,000 crore). My research finds that 300–350 firms report turnover above Rs 100 crore and profits above Rs 50 crore annually. Some leading names in this group include consumer health companies, semiconductor manufacturers, industrial equipment firms, and renewable energy producers.
Dividend-paying capacity of leading unlisted companies includes prominent firms paying Rs 440 per share, Rs 64 per share, or Rs 14 per share, while others provide significant steady dividends. Data on profitable private unlisted companies is sparse and requires extensive research.
Corporate Governance Deficiencies
Despite 1,300 companies showing profits of Rs 100 crore or more, board independence and disclosure are often missing. Key negatives include concentrated promoter ownership and decision-making, particularly regarding dividends. Building reserves seems a priority over issuing bonus shares, even though Section 63 of the Companies Act allows capitalisation of reserves for bonus issues, and denial may be oppressive to shareholders.
Board composition is limited, and most unlisted companies avoid appointing independent directors, even after crossing Rs 100 crore turnover, violating Section 149(4). Non-compliance can attract penalties under Section 172, including fines and liabilities for directors. AGMs are minimally communicated to shareholders, with Company Secretaries conducting meetings in the absence of CMD and functional directors, raising concerns under Section 96(2). Related-party transactions often lack regulatory oversight, heightening financial and operational risks. Recent unicorn collapses are traced to such governance gaps.
Regulatory Oversight And Limitations
A centralised public record of unlisted companies acted against by regulators is unavailable. Similarly, data on how many of the 1,300 unlisted companies have distributed dividends or bonus shares is not publicly aggregated.
Key regulators include:
[*]Ministry of Corporate Affairs (MCA) and Registrar of Companies (ROC): Responsible for registration, filings, governance, and penalties, but enforcement for unlisted firms is limited.
[*]Sebi: Focuses primarily on listed companies, rarely monitoring unlisted firms except for public fund violations.
[*]National Company Law Tribunal (NCLT): Handles disputes and mismanagement, though board replacements and penalties are rare.
[*]Major Stock Exchange: Expected to enforce compliance on Sebi's directions, but largely preoccupied with listed firms.
[*]Sectoral regulators: For example, the drugs regulator investigates unlisted pharma companies, though enforcement remains limited.
Need For Centralised Regulation
With 1,300 unlisted companies earning over Rs 100 crore, including 350 generating Rs 50 crore+ profits, government oversight is essential. A single regulator should ensure the appointment of independent directors, mandatory AGM communications, disclosure of related-party transactions, and enforcement of bonus share and dividend norms. A database of these unlisted companies should be maintained to ensure transparency and accountability.
Protecting Shareholders’ Rights
Public interest is paramount, and shareholder rights must be protected. Corporate governance should not be restricted to listed companies. Bringing unlisted giants under a robust regulatory framework ensures investor protection and strengthens the corporate ecosystem.
Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the publication.
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