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What lock-in actually means if you hold pre-IPO shares

The rules that decide when you can sell after a listing, written out plainly, with the cases where the period is longer than people expect.

Meera Iyer

Editor — Investor Education

28 Aug 20266 min read

The basic rule

Reported

Shares acquired before a public issue are generally locked in for six months from the date of listing. Promoter holdings are locked in for longer, and the minimum promoter contribution is locked in longer still.

The lock-in attaches to the shares, not to the person. Buying from a seller shortly before a listing does not reset the clock in your favour, and it does not extend it either.

Where people get caught out

Reported

Two situations account for most of the surprises we see. The first is a holder who assumed the shares would be tradable on listing day and needed the money in that window. The second is a holder who bought after a draft prospectus was filed, and then the issue did not proceed at all — in which case there is no listing, no lock-in, and no exchange to sell on.

Before you transact

Reported

Confirm the applicable lock-in period in writing before you agree a price. Ask the counterparty when the shares were acquired and in what form. If the answer is unclear, that is itself information.

Sources

  • Securities regulationsIssue of capital and disclosure requirements, as amended.

This note is published for information only. It is not investment advice, not a recommendation, and not a solicitation to buy or sell any security. Figures were current at the date of publication and are not updated afterwards.