Lock Up Company Contract For Free

In the lock-up agreement, the stockholder agrees that it will not sell its shares of the company for a specified period of time after the effective date of the registration statement or after the date of the underwriting agreement.

Generally, a lock-up period is a condition of exercising an employee stock option. Depending on the company, the IPO lock-up period typically lasts between 90 and 180 days before these shareholders are allowed the right, but not the obligation, to exercise the option.

Lockup agreements prohibit company insiders?including employees, their friends and family, and large shareholders?from selling their shares for a set period of time after an IPO.

Registration rights typically contain clauses that establish the terms of registration. Among these details is the "lock-up" period during which investors are prohibited from selling their shares in a company after it has gone public. Typically, this is limited to 180 days.

In the lock-up agreement, the stockholder agrees that it will not sell its shares of the company for a specified period of time after the effective date of the registration statement or after the date of the underwriting agreement.

What happens to the stock price when the IPO lockup period ends? The stock price may become more volatile when the IPO lockup period expires as insiders and significant owners are permitted to sell their shares. The stock price might decrease if a big number of shares are sold.

Key Takeaways An IPO lock-up is period of days, typically 90 to 180 days, after an IPO during which time shares cannot be sold by company insiders. Lock-up periods typically apply to insiders such as a company's founders, owners, managers, and employees but may also include early investors such as venture capitalists.