Lock-up period

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Lockup Period

A time during which a publicly-traded company forbids management and large stockholders to sell their shares, usually following an initial public offering. Depending on the company, the lockup period may be 90 to 180 days. It exists to ensure that the market is not flooded with shares in the company at any given time, which would increase supply and cause a drop in price. Large shareholders selling their shares may also be seen as an indication of a lack of confidence in the company, triggering a panic sell. After the lockup period ends, however, shareholders may sell without restriction.

Lock-up period.

A lock-up period is the time during which you cannot sell an investment that you own.

You are most likely to encounter a lock-up period if you acquire shares in an initial public offering (IPO) because you had a private equity investment in the company before it went public and receive shares in the IPO proportionate to your private equity ownership interest.

You may also have a lock-up period if you are an owner or an employee of the company and are granted shares.

The lock-up period may last as long as 180 days. In some cases, though, the lock-up period is graduated, meaning that after the initial 180 days you can sell an increasingly larger portion of your shares over the next two years.

After the lock-up period ends, you are free to sell all your shares if you wish.

References in periodicals archive ?

In a regulatory filing, Lyft said on Wednesday that pursuant to the lock-up agreements with the underwriters, if (i) at least 120 days have elapsed since March 28, 2019, (ii) the company has publicly released earnings results for the quarterly period during which the IPO occurred and (iii) such lock-up period is scheduled to end during or within five trading days prior to a broadly applicable and regularly scheduled period during which trading in the company's securities would not be permitted under its insider trading policy, such lock-up period will end ten trading days prior to the commencement of such blackout period.

Lyft says IPO lock-up period will end early

As part of the changes, which are yet to be officially announced, the lock-up period for funds under China's Qualified Foreign Institutional Investor (QFII) program will be removed, allowing international investors to withdraw their money on a daily basis.

China To Loosen Controls On Foreign Fund Outflows

The specific provision in the IPO lock-up agreements being waived is the lock-up extension provision that may extend, upon the occurrence of certain events, the 180-day IPO lock-up period for an additional period of up to 34 days.

-ServiceNow lock-up restriction on proposed offering shares being released

Starting in just a few months, they will be free to sell their shares as the so-called lock-up period expires.

Facebook set for flood of new shares with lock in period end looming

2005-48 (IRB 2005-32, 8/8/05) holds that an employee (E) who exercises a nonstatutory option before the end of a six-month "lock-up period" must recognize income from that exercise even if E's sale of the stock is restricted under the insider trading rules.

Recent developments: FLPs, option income and home office depreciation

A agreed not to sell, otherwise dispose of or hedge any S common shares, options, warrants or convertible securities from May 5-November 2 of year 2 (lock-up period), as required under the underwriting agreement (and other agreements).

Income from ISO exercise includible in AMTI on transfer of purchased shares

Technology companies showed greater volatility around the expiration of their lock-up periods than did life sciences companies.