Lock Up Period Document For Free

What Is a Lock-Up Agreement? A lock-up agreement is a contractual provision preventing insiders of a company from selling their shares for a specified period of time. They are commonly used as part of the initial public offering (IPO) process.

up agreement is a legally binding contractual provision that prohibits company insiders from selling their shares in a company for a specific period of time. These contracts are usually used during the initial public offering process to prevent excessive selling of stocks in the first few months of trading.

The terms of lockup agreements may vary, but most prevent insiders from selling their shares for 180 days. Lockups also may limit the number of shares that can be sold over a designated period of time.

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.

2 Length of Lock-Up Period. In the case of an initial public offering (IPO), the underwriters will seek to obtain lock-up agreements from all, or substantially all, the existing securityholders for a period of 180 days, subject to some limited carve-outs.

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.