Many investors often have this common doubt in their mind: "Can we sell pre-IPO shares immediately after listing?" To solve this, SEBI has released certain guidelines introducing IPO Locking Rules, which involve a lock-in selling shares for a certain period after the IPO. Let's discuss this topic in detail through this blog.
What Is The Lock-In Period In An IPO?
A lock-in period is a fixed time after an IPO during which certain shareholders cannot sell their shares. Simply, “You own the shares, but you’re not allowed to sell them yet.” These are shares bought before a company is listed, usually through an unlisted market broker, ESOPs, and early investors/promoters.
How Does Lock-in Work?
The lock-in period in an IPO begins once the company’s IPO launches. However, not all shareholders can sell their shares immediately after listing. Certain investors are restricted from selling their holdings for a specific duration (usually 6 months), known as the lock-in period. Once the lock-in period expires, investors are free to sell their shares in the open market without any restrictions.
Types of Lock-in Periods in 2026
As per the SEBI rules, different categories of investors are subject to different lock-in periods in the IPO, depending on their role and when they acquired the shares.
1. Promoter Lock-in:
In the case of promoters, 20% of their core holding is locked in for 18 months from the date of listing, while the remaining portion is locked in for 6 months.
2. Non-Promoters/Pre-IPO investors (unlisted share buyers):
In the case of non-promoters, a 6-month lock-in applies from the listing date.
3. Anchor investors:
For anchor investors, 50% of their allotted shares are locked for 30 days, while the remaining 50% are locked for 90 days.
Different Cases Of Pre-IPO Lockins
Case 1: Promoter
Mr. Raj is a promoter holding NSE shares before IPO.
NSE lists on 1st September 2026
What happens:
On 1st September 2026 → Shares get listed, but Mr Raj cannot sell
From 1st March 2027 (6 months) → Mr. Raj can sell 80% of his shares.
From 1st March 2028 (18 months) → Mr. Raj can sell the remaining 20% shares.
Conclusion: Promoter exits happen in phases to maintain market stability.
Case 2: Pre-IPO Investor
Ms Nandanee bought NSE shares in the unlisted market before the IPO.
IPO listing date: 1st September 2026
What happens:
On 1st September 2026 → Shares list, but Ms Nandanee cannot sell
On 1st March 2027 (6 months) → Entire holding becomes free to sell.
Conclusion: Pre-IPO investors must wait 6 months before exiting.
Case 3: Anchor Investor
Mr Chaitanya invests as an anchor investor in the NSE IPO
What happens:
On 1st September 2026 → Shares get allotted and listed.
On or after 1st October 2026 (30 days) → Mr Chaitanya can sell 50% of shares.
On or after 30th November 2026 (90 days) → Remaining 50% shares unlock.
Conclusion: Anchor investors get early exit windows to improve IPO liquidity.
Why Is a Lock-In Period in an IPO Needed?
A. Maintains Market Stability
By controlling when shares can be sold, the lock-in period ensures that shares enter the market gradually. This might avoid panic selling and help the stock price move more stably.
B. Builds Investor Confidence
When promoters and early investors are retained from selling, it sends a strong signal to the market that they believe in the company’s future. This can build trust among retail investors who are entering the stock after the IPO.
C. Ensures Promoter Commitment
Promoters are required to stay invested for a longer period, which ensures they remain committed to the company’s growth.
D. Helps in Fair Price Discovery
When selling pressure is controlled initially, the stock can get time to find its true market value based on demand, company performance, and investor sentiment rather than panic selling.
How Do Lock-In Periods Differ For SME IPOs Versus Mainboard IPOs?
Investor / Promoter Type | SME IPO lock-in | Mainboard IPO lock-in |
|---|---|---|
Promoter minimum contribution (MPC) | 20% of post-issue paid-up capital locked in for 5 years. | 20% of post-issue capital locked in for 18 months. |
Promoter shareholding above MPC | Phased lock-in: 50% for 1 year, remaining 50% for 2 years. | 6 months. |
Pre-IPO investors / non-promoter shareholders | Typically, 6 months for pre-ipo shares, unless a specific category attracts a different rule. | Typically 6 months for pre-ipo shares. |
Anchor investors | 50% for 90 days, remaining 50% for 30 days. | 50% for 90 days, remaining 50% for 30 days. |
Other specified shareholder categories | May have SME-specific conditions depending on issue structure and regulatory categorisation. | Generally follows the standard SEBI ICDR lock-in framework. |
How Do The New Pledged Share Lock-In Rules Work In Practice?
SEBI has introduced a new change from December 25, which says that the pledged pre-IPO shares of non-promoters can be treated as locked in for depositories. So, the lock-in will continue even if the pledge is invoked or released.
FAQs
Q. Is there any lock-in period for pre-IPO shares?
The lock-in period for pre-IPO shares is usually 6 months, but it also depends on who is holding these shares.
Q.Can you buy pre-IPO shares?
Yes, you can buy pre-IPO shares through registered brokers. For more details, you can visit Stockify
Q. Is it legal to buy pre-IPO shares?
Yes, it's legal to buy pre-IPO shares
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