Lock-in on pre-IPO shares after a company lists
Reviewed by GrowFast's desk. General information, not advice.
The short answer
In a mainboard IPO, shares held before the issue by anyone other than the promoters are locked in for six months from the date shares are allotted in the IPO. You cannot sell them on the exchange during that time. For an SME IPO the period is one year.
The rule
- It comes from SEBI's Issue of Capital and Disclosure Requirements Regulations, 2018.
- Pre-issue shares held by non-promoters: locked in for six months from allotment in a mainboard IPO.
- SME IPOs: one year.
- Promoters are locked in for longer.
During the lock-in the shares stay in your demat account but are marked as locked. You cannot sell them on the exchange until it ends.
Exceptions
The regulations carve out some holders, for example shares allotted to employees under an employee stock option scheme before the IPO, and shares held by certain registered funds, for which the period is counted from when they bought. The exceptions are narrow. If you think one applies to you, confirm it against the company's offer document.
What the lock-in means for a buyer
- If the share lists below the price you paid, you cannot sell for six months.
- The listing price is not known in advance and can be lower than the unlisted price.
- Lock-in periods have been changed before and can change again. Check the rule in force when the company lists.
An IPO is never certain
Filing a draft offer document is not an approval and not a promise to list. A company can delay or withdraw. SEBI's observations on a draft are valid for 12 months, and for 18 months on the confidential pre-filing route; if the issue does not open in that time the company has to file again.
Questions people ask
Does the lock-in apply to shares I bought from a dealer before the IPO?
Yes. It applies to shares held before the issue by anyone other than the promoters, however they were acquired, unless one of the exceptions in the regulations applies.
When exactly does the six months start?
From the date of allotment of shares in the IPO, not from the date you bought them and not from the listing day.
Sources
- SEBI: Issue of Capital and Disclosure Requirements Regulations, 2018 (lock-in of pre-issue capital), board memorandum of January 2026
- SEBI circular of 7 April 2026 on the validity of observations on a draft offer document
This guide is general information as the rules stood on 9 Oct 2026. Rules and tax rates change. It is not investment, legal or tax advice; check the sources and take professional advice before you act. See the Terms and Conditions.