What Is a Lock-Up Expiration? Definition, How It Works and Examples

What does lock-up expiration mean in practice? It is the end of the restricted period in the agreement each holder signed with the underwriters, the banks that ran the IPO. No regulation fixes the date. The agreement does. It often counts a number of days from the date of the final prospectus instead of the first trade. Sometimes the end is tied to an earnings release, and sometimes it is staggered for different groups. The SEC describes the usual length as 180 days.

Early releases move the date for some holders. They include batches released on price triggers, earnings-linked end dates and waivers by the lead bank. All are explained in IPO lock-up. One rule applies to all of them. It comes from FINRA, the body that regulates US brokers. Under FINRA Rule 5131, the lead bank running the offering must announce any release or waiver through a major news service. The notice must come at least two business days before the release takes effect. So a surprise early release should not happen.

Finding the Lock-Up Period Expiration Date

1. 1.0
   The final prospectusThe 424B4 filed on EDGAR, the SEC’s filing database, states the restricted period in the “Underwriting” section. It also lists the shares that become eligible for sale, and when, under “Shares Eligible for Future Sale.”
2. 2.0
   Your own agreementCheck whether you signed a lock-up or are bound through a market standoff clause in your equity plan, a promise made when you received the shares. The terms can differ.
3. 3.0
   The company’s calendarIf the end is tied to an earnings release, the date moves with the release. The company’s investor-relations page announces it.
4. 4.0
   The insider trading policyThe expiry may fall inside a blackout window, when company policy bars insiders from trading. Then insiders must wait until the window opens.

What Is a Share Lock-Up Expiration?

After an IPO, “share lock-up expiration” and “post-IPO lock-up expiration” mean the same event. “Share lock-up” is also used for restrictions outside IPOs. One example is shares issued as payment in an acquisition. Another is a sponsor’s shares after a merger with a SPAC, a listed shell company formed to buy a private business. Those expire on whatever date their own agreements set. The release can be just as large relative to the shares already trading.

The SEC warns that when lock-ups expire, “the share price may decline significantly if a large number of shares become available for sale all at once.” Field and Hanka’s 2001 study of 1,948 lock-ups measured the effect. Around expiry, the average three-day abnormal return was −1.5%, meaning the shares did 1.5% worse than the market. Trading volume rose 40% and stayed there. Both effects were larger where venture funds held the shares.

The effect is modest on average because the release is no secret. The prospectus states the date and the size of the overhang, the shares not yet free to trade. The market can price it in advance. On the day itself, the information stays the same and the supply changes. A worked example shows the scale.

The lock-up is a contract. When it ends, securities law still applies. It treats holders differently depending on whether they are an affiliate: a person who controls the company or is under common control with it. In practice, that means directors, executive officers and large holders.

Employees with plan shares

Rule 701 covers shares from options or RSUs issued under an employee plan. Non-affiliates can resell them 90 days after the company becomes reporting. They do not need Rule 144’s holding period or its current-information condition. By day 181, that condition has long been met.

Other non-affiliates

Restricted shares bought privately need the Rule 144 holding period. It is six months from purchase once the company has reported for 90 days, and one year otherwise. Most pre-IPO holders have passed it.

Affiliates

Rule 144 still rations their sales. In any three months, they can sell up to a cap. The cap is the greater of 1% of the class outstanding or the average weekly trading volume over the four calendar weeks before the Form 144 notice. Sales must go through brokers’ transactions. A Form 144 notice is required above 5,000 shares or $50,000.

A vehicle holding pre-IPO shares

It is the shareholder and is released like any other. It then sells or distributes the shares as its documents set out.

Here is an example of the affiliate limit. A director holds 3,000,000 shares in the company above, which has 200,000,000 outstanding. One percent is 2,000,000 shares. The average weekly volume over the last four weeks is 1,500,000. The higher number applies, so she may sell up to 2,000,000 shares in any three months. She needs at least two such periods to sell the whole position.

Insiders who want to sell soon after expiry face a second clock. A Rule 10b5-1 plan, a trading plan set up in advance, cannot make its first trade until a cooling-off period has passed. For directors and officers, that period is the later of 90 days after adoption or two business days after the next quarterly or annual report (10-Q or 10-K). It is capped at 120 days. For everyone else, it is 30 days. A director who adopts a plan on day 180 starts selling three to four months later.

So the usual sequence is to adopt the plan during the lock-up, in an open trading window. The cooling-off then runs out close to the expiry. Whether a plan may be adopted during the lock-up depends on the lock-up agreement and the company’s policy. The rule itself does not decide it. The plan’s sales also count toward any Rule 144 volume limit.

1. 1.0
   Confirm the dateUse the 424B4 and your own agreement. Check whether any early-release batch applies to you.
2. 2.0
   Confirm your statusWhether you are an affiliate decides if Rule 144’s volume, manner-of-sale and Form 144 conditions apply.
3. 3.0
   Check the windowYour insider trading policy may close trading around earnings, including on the expiry day.
4. 4.0
   Decide on a plan earlyIf you are a director or officer, a 10b5-1 plan adopted months ahead is what makes an early sale possible.
5. 5.0
   Know your cost basis and taxShares from RSUs were taxed at settlement. A sale creates a separate gain or loss. See RSU taxes. If you exercised incentive stock options (ISOs), see AMT, the alternative minimum tax.
6. 6.0
   Size the sale against the marketSelling in the expiry week means selling alongside everyone else.
7. 7.0
   If you hold through a vehicleRead how and when it distributes or sells. How exits work covers AXEVIL’s structures.

Common Mistakes

• Counting 180 days from the first tradeMany agreements count from the prospectus date instead. Read yours.
• Assuming expiry means unlimited sellingAffiliates stay under Rule 144’s volume and notice conditions.
• Forgetting the blackout windowAn expiry inside a closed window does not give insiders a sale date.
• Adopting a plan on the dayThe cooling-off pushes the first trade months out.
• Anchoring on the listing-day priceThe price that matters is the one at expiry, after the market has priced in the overhang.

Lock-up expiration

The end of the restricted period in a lock-up agreement, after which the holder may sell.

Lock-up

A holder’s agreement with the underwriters not to sell or hedge shares for a period after the IPO.

Market overhang

Shares outstanding but not yet tradable. Their number and release dates are in the prospectus.

Affiliate

A person who controls the issuer or is under common control with it. Typically directors, officers and large holders.

Rule 144

The SEC safe harbor that sets the conditions for reselling restricted shares and affiliates’ shares without registration.

Form 144

The notice an affiliate files for sales above 5,000 shares or $50,000 in three months.

Rule 10b5-1 plan

A trading plan set in advance, which lets an insider sell on a schedule.

Blackout window

The period, set by company policy, when insiders may not trade. It usually falls around earnings.

Rules were last checked on October 2, 2026, and are cited for the United States. The price and volume figures are from Field and Hanka (2001), the same study used on the IPO lock-up page. Lock-up terms are set offering by offering. The prospectus that governs your shares is the one to read.