A contractual restriction that limits specified holders from selling or transferring shares for a defined period, commonly around an offering.
Definition
Lock-up provisions are contractual and vary by offering, holder, security, waiver rights, early-release triggers, and transfer exceptions. Their terms are commonly described in an S-1 or prospectus rather than imposed through one universal duration.
An IPO lock-up is a contract, not a universal statutory 180-day ban. Its parties, securities, duration, exceptions, extensions, waiver rights, and early-release provisions come from the offering documents.
Related Form 4 codes
Where the Terms Live
S-1 amendments and the final 424B4 prospectus commonly summarize lock-up agreements among underwriters, directors, officers, employees, and existing shareholders. The final pricing date, earnings calendar, waiver notices, and early-release clauses can change the expected expiration.
Only holders subject to Section 16 produce Form 4 records. Many employees and pre-IPO investors can sell after a lock-up without appearing in the insider dataset.
Dataset Method and Common Errors
Capture issuer, offering, pricing and effectiveness dates, holder groups, covered classes, base duration, calculated expiration, extension formula, waiver, early release, and source filing. Compare eligible dates with actual Form 4 transaction dates.
Common errors: assuming every lock-up is 180 days; using the initial S-1 instead of final terms; treating expiration as a sale; and calling non-sale after expiration bullish.
Lock-Up Timeline
| Milestone | Source | Analytical Use |
|---|---|---|
| Initial terms | S-1 / S-1/A | Proposed and subject to revision. |
| Final pricing | 424B4 | Anchors final offering and many lock-up calculations. |
| Release or waiver | Issuer/underwriter disclosure | Can change holder eligibility before expected expiration. |
Primary Sources & Filing References
- SEC Form S-1
Primary registration form underlying IPO ownership and lock-up disclosure.
- Investor.gov: Initial Public Offerings
Official investor overview of IPO process and prospectus research.
Why it matters for Whale Tracking
Expiration increases the number of shares potentially eligible for sale but does not prove that a holder will sell or that the market price will decline. Absence of a reported sale is not evidence of bullish intent.
Technical Nuance
Analysts should capture agreement date, covered holders and securities, expected expiration, earnings-related extensions, waivers, early release, and actual offering effectiveness. Only Section 16 reporting persons produce related Form 4 records.
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Real-World Example
"If a prospectus states that a lock-up ends 180 days after pricing subject to an earnings extension, the calculated date must apply that clause and later waivers before comparing Form 4 sales."
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