Lock-up Period

Definition of Lock-up Period

The Lock-up Period is the period of time that certain stockholders agree to waive their right to sell a public company's shares.
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Investment banks that underwrite initial public offerings generally insist upon lockups of at least 180 days from large shareholders (i.e. those who have 1% ownership or more).

The goal of a lock-up period is to facilitate market trading. Without a lockup period, management, directors of the company, strategic partners other large investors might sell their stock quickly, to the detriment of new shareholders. If a shareholder tries to sell shares that are subject to lockup during the lockup period, the sale will not be completed.

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