IPO Lock-in Period Explained: Promoter, Pre-IPO and Anchor Investor Rules

The IPO lock-in period is the window after an initial public offer when certain shareholders can’t sell or transfer their shares. If you buy new listings, this matters more than it first seems. The day a big block of locked shares is freed is a day when fresh supply can land on the market. Below we go through the lock-in rules in SEBI’s Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018 for promoters, other pre-IPO shareholders and anchor investors, look at how the SME framework differs from the mainboard, and show how retail investors can use lock-in dates while tracking a recent IPO.

What is an IPO lock-in period, exactly?

SEBI’s FAQs on the ICDR Regulations sum it up in one line: lock-in “indicates a freeze on the shares.” The shares stay in the holder’s demat account, but they’re marked non-transferable for the stated period. A securities-law explainer from Corporate Professionals adds two useful points. Lock-in is a statutory restriction, not something agreed privately between the company and its shareholders. And it’s enforced through a depository instruction that flags the identified shares as restricted.

Why have it at all? Because listing hands insiders and early investors liquidity overnight. Without a lock-in, a promoter could sell out right after listing, and the public investors who had just subscribed would have no comfort that the people running the business still have skin in the game. The same explainer names three aims: reassure IPO investors that promoters can’t walk away at once, keep promoters financially tied to the company in its early listed years, and slow down insider selling while the market is still working out a fair price.

New to the primary market? Our pillar guide on IPO investing in India takes you from application to listing.

Promoter lock-in and the minimum promoter contribution

When an unlisted company goes public, its promoters have to hold at least 20% of the post-issue capital. This is the minimum promoters’ contribution (MPC). SEBI’s FAQs say that 20% is locked in for 1.5 years, or 18 months. Post-issue capital is simply the pre-issue capital plus the fresh shares issued in the IPO, and the MPC quantity is 20% of that total.

In practice, two refinements come up often. Both are covered in the Corporate Professionals explainer:

• Excess promoter holding. Anything promoters hold above the 20% MPC sits in a second bucket. In a mainboard IPO, that bucket is locked for six months.
• The capital expenditure test. Suppose most of the fresh issue money (fresh issue only, leaving out the offer-for-sale portion) is earmarked for capital expenditure. Then the MPC lock-in goes up to three years and the excess promoter holding to one year. SEBI’s FAQs give the same three-year and one-year periods for this case.

Not every promoter share qualifies for MPC either, the explainer points out. Pledged shares, and shares picked up in the previous one year at a price below the IPO price, are among the ineligible categories. If promoters can’t reach 20% with eligible shares, specified investors can fill part of the gap, up to 10% of post-issue capital, and those shares carry the same lock-in as the MPC.

The promoter lock-in is two separate clocks, not one: 18 months on the 20% minimum contribution and six months on everything above it, unless the IPO money is mainly for capital expenditure.

What changed in 2021

The 18-month rule hasn’t been around that long. On August 6, 2021, SEBI’s board approved a relaxation, as The Economic Times reported. Where an issue is entirely an offer for sale, or where fresh money is raised for something other than capital expenditure, the promoter lock-in on the minimum contribution came down to 18 months from the date of IPO allotment, from three years before. In those same cases, promoter holding above the minimum contribution now had a six-month lock-in instead of one year. Pre-IPO investors other than promoters also saw their lock-in cut to six months from one year.

Lock-in for other pre-IPO shareholders

Promoters aren’t the only insiders, of course. Regulation 17 of the ICDR Regulations locks in the entire pre-issue capital held by people other than the promoters for six months from the date of IPO allotment, barring shares held by certain specified categories. That’s how SEBI itself summarises the rule in a January 2026 board memorandum. Usually this bucket means private equity and venture funds, early angel investors and anyone else who came in before the IPO.

Some shares are exempt. One example from SEBI’s FAQs: equity shares allotted to employees under a company’s employee stock option or employee stock purchase scheme before the IPO.

That SEBI memorandum also tackled a real-world headache. A standard lock-in couldn’t be created on pre-IPO shares the holder had pledged, and issuers sometimes struggled to comply when shareholders were many, hard to trace or simply uncooperative. SEBI’s proposal: where a lock-in can’t be created, depositories mark those shares “non-transferable” for the applicable lock-in period, on the issuer’s instruction. According to the Corporate Professionals explainer, a March 2026 amendment added this to Regulation 17, and the restriction stays for the rest of the lock-in period even if the pledge is later invoked or released.

Anchor investor lock-in: 30 days and 90 days

Anchor investors are big institutions that commit money before an IPO opens to the public. The Corporate Professionals explainer notes that Regulation 2(1)(c) of the ICDR Regulations defines an anchor investor as a qualified institutional buyer applying for at least ₹10 crore in a mainboard IPO, or at least ₹2 crore in an SME IPO, through book building. They get their shares one day before the public issue opens.

Until 2022, anchors had one 30-day lock-in. A SEBI board memorandum from April 2022 records the change, notified on January 14, 2022. Now 50% of the shares allotted to anchors are locked for 90 days and the other 50% for 30 days, both counted from allotment. The rollout was staggered: from April 1, 2022 for issues below ₹10,000 crore, and from July 1, 2022 for issues above ₹10,000 crore.

So after a big listing, retail investors end up watching two dates. About a month after allotment, half the anchor book can be sold. About three months after allotment, the rest is free too.

Lock-in expiry does not mean shares will be sold. It only means they can be, so treat it as a date to watch, not a signal to act.

SME IPO lock-in: tighter on promoters

SME IPOs come under Chapter IX of the ICDR Regulations, and promoters face a stricter lock-in there. Per the Corporate Professionals explainer:

• In an SME IPO, the 20% MPC is locked for three years, counted from the date of commencement of commercial production or the date of IPO allotment, whichever is later.
• Non-promoter pre-issue capital is locked for one year in an SME IPO, compared with six months on the mainboard.

Promoter holding above the MPC in SME issues comes free in two steps. SEBI’s board, at its December 18, 2024 meeting, approved releasing the lock-in on 50% of the excess promoter holding after one year and on the other 50% after two years, The Indian Express reported.

SME issues carry their own set of risks, and our comparison of mainboard vs SME IPO risk goes into why.

IPO lock-in period rules at a glance

Unless stated otherwise, each period runs from the date of IPO allotment. For any particular issue, check the “Capital Structure” section of its red herring prospectus, which shows every bucket and its lock-in separately.

A worked example (illustrative)

These numbers are made up and don’t belong to any real company. Take a mainboard company with 8 crore shares before its IPO. It issues 2 crore fresh shares, so post-issue capital is 10 crore shares. The MPC is 20% of 10 crore, or 2 crore shares. Say promoters own 5 crore shares after the IPO, and the fresh money is mostly for working capital rather than capex.

• The 2 crore promoter shares that make up the MPC are locked for 18 months from allotment.
• The remaining 3 crore promoter shares are locked for six months.
• Shares that non-promoter investors held before the IPO are locked for six months, except the exempt categories.
• If anchors got, say, 60 lakh shares, 30 lakh are freed after 30 days and the other 30 lakh after 90 days.

Now change one thing. If the company had said most of the fresh money would build a new plant, the 2 crore MPC shares would be locked for three years and the 3 crore excess shares for one year.

Using lock-in dates as a retail investor

1. Write down the allotment date. Most lock-ins start from it. Our guide on how to check IPO allotment on NSE and BSE explains the timeline.
2. Read the prospectus’s capital structure section. It shows how many shares are in each bucket and when each lock-in ends, so you can judge how big each possible supply date is against the free float.
3. Set unlocking shares against daily volumes. An unlock that’s small next to normal traded volume matters less than a block worth many days of regular trading.
4. Don’t trade the date blindly. Holders may sit tight, sell slowly or go through block deals. A lock-in expiry tells you what could happen, not what will.
5. Keep grey market signals in perspective. Pre-listing indicators like GMP tell you nothing about supply once the lock-ins end.

The short version

The IPO lock-in period is how SEBI keeps insiders committed once a company lists. On the mainboard, the 20% promoter minimum is locked for 18 months, or three years if the IPO money is mostly for capex. Extra promoter shares and non-promoter pre-IPO shares are generally locked for six months. Anchor investors are locked for 30 days on half their allotment and 90 days on the rest. SME IPOs hold promoters in for longer. These dates help you map a new listing’s supply calendar, but treat them as one input among many, next to the company’s business, valuation and results.