A lock-in period is a SEBI-mandated window after a company lists during which specified shareholders are barred from selling. Promoters face longer lock-ins, while many non-promoter pre-IPO investors face a shorter one. The clock typically starts from the date of allotment or listing.
Why it matters to you
This is one of the most important — and most overlooked — risks of buying unlisted shares close to an IPO. Even after the company lists and the price jumps, you may be legally unable to sell your shares for the lock-in duration. Always check the DRHP to see which category your shares fall into before assuming you can exit on listing day.
Example: An investor bought unlisted shares weeks before an IPO, only to find a six-month lock-in applied — they could watch the price but not sell. Read SEBI lock-in rules for pre-IPO unlisted shares.