When a company finally lists on the stock exchange, it’s a moment of celebration. But for the people who built the company, the founders, early investors, and big institutions the celebration comes with a waiting room. Even though they own millions of shares that are now worth a lot of money, they aren't allowed to sell them immediately. This mandatory waiting phase is called the Lock-in Period.

In 2026, SEBI (the market regulator) uses lock-in periods as a safety belt for the stock market. Imagine if the founders of a company sold all their shares on the very first day of listing; the stock price would crash, leaving small retail investors in a lurch. The lock-in period prevents this dumping of shares and ensures that the people who know the company best stay committed to its success during its early days as a public firm.

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The 3 Reasons Why Lock-in Periods Exist

Price Stability: It prevents a sudden flood of shares in the market, which helps keep the stock price stable during the first few months of trading.
Founder Commitment: It ensures that the promoters (owners) don't just exit with the cash. It proves they believe in the long-term future of their business.
Investor Confidence: When big institutions like mutual funds are locked in, it gives smaller retail investors the confidence to hold their own shares.

Lock-in Timelines for Different Investors (2026)

Not everyone has the same waiting period. In 2026, SEBI has categorized these based on how close the investor is to the company.

Category of Investor

Lock-in Duration (2026 Rules)

Promoters (Main Owners)

18 Months for the first 20% of shares; 6 Months for the rest.

Anchor Investors

30 Days for 50% of shares; 90 Days for the remaining 50%.

Pre-IPO Investors (PE/VCs)

6 Months from the date of listing.

Employees (ESOPs)

Usually 6 Months (if shares were allotted before IPO).

Retail Investors (You)

Zero (0) Days. You can sell at 10:00 AM on Listing Day!

What Happens When the Lock-in Ends?

The day a lock-in period expires is a very important date for the stock market.

Increased Supply: On this day, a massive number of shares that were frozen suddenly become free to trade.
Potential Price Drop: If the early investors decide to book their profits and sell, the stock price might see a temporary dip due to the sudden increase in supply.
The Wait and Watch Rule: Smart investors in 2026 always check the Lock-in Expiry Dates (found in the RHP) before buying a stock that has recently listed.

How to Calculate the Lock-in Expiry?

The lock-in period starts from the Date of Allotment, not the date the IPO opened.

The Simple Formula:

Expiry Date = Date of Allotment + Lock-in Duration

Example: If an Anchor investor was allotted shares on January 1, 2026, their first 50% of shares will become free to sell on January 31, 2026 (30 days later).

Frequently Asked Questions (FAQs)

Can a promoter sell shares during the lock-in if there is an emergency?

Generally, no. However, SEBI allows Inter-se transfers where one promoter sells to another promoter as long as the shares remain locked in the new person's account.

Why do Anchor investors have two different lock-in dates?

In 2026, SEBI uses a two-tier system (30 and 90 days) to prevent a massive sell-off all at once. It staggers the supply of shares to keep the price stable.

Do retail investors have any lock-in at all?

No. Retail investors who get shares through the IPO process are 100% free to sell them the moment the stock hits the exchange.

What is a Lock-up Agreement?

This is a private contract, often required by investment banks, that might keep investors locked in for even longer than the SEBI minimum. Always check the RHP for these details.

Can I see which shares are locked in my Demat app?

Yes. Most modern apps in 2026 will show a small lock icon or a Non-transferable tag next to shares that are under a mandatory lock-in.

Does the lock-in period apply to Bonus shares?

Yes. If a company issues bonus shares during the lock-in period, those new shares are also locked for the remainder of the original period.

Can locked-in shares be used for a loan (Pledged)?

In 2026, SEBI allows promoters to pledge locked-in shares to banks, but only to raise money for the company’s projects, not for personal use.

Is the lock-in period the same for SME IPOs?

Mostly, yes. However, SME IPOs sometimes have slightly different promoter contribution rules. Always check the specific SME prospectus.

Why did the stock price fall exactly 6 months after the IPO?

This is often because the 6-month lock-in for pre-IPO investors (like Venture Capitalists) ended, and they started selling their shares in the open market.

How do I find the official lock-in expiry dates?

You can find them in the Details of the Issue section of the Red Herring Prospectus (RHP) or on websites like Chittorgarh or your broker's IPO dashboard.

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