What is the lock-up period for funds?

Asked by: Prof. Wilfred Corwin IV  |  Last update: July 23, 2025
Score: 4.6/5 (60 votes)

Lock-up periods are when investors cannot sell particular shares or securities. Lock-up periods are used to preserve liquidity and maintain market stability. Hedge fund managers use them to maintain portfolio stability and liquidity. Start-ups/IPO's use them to retain cash and show market resilience.

How long is a typical lock-up period?

The length of the IPO lock-up period varies but typically lasts between 90-180 days, depending on the company. Once the lock-up period has expired, most existing shareholders are free to sell shares. However, it can be important to keep in mind that not all lock-up period terms are the same.

What is the lock-in period fund?

The lock-in period in mutual funds is the minimum duration for which investors must hold their investment, during which they cannot redeem or sell their mutual fund units. This period can vary depending on the type of mutual fund scheme.

What is the lock-up period clause?

The clauses lock up They serve to prevent the sale of shares or interests of a company's partner during a specific period that will generally correspond to the company's positioning in the market. Also seeking to establish a relationship of trust between founders and investors.

What does lock up funds mean?

A hard lock-up is a strict provision that prohibits investors from redeeming their shares during the specified lock-up period, with no exceptions. If an investor attempts to withdraw their capital before the lock-up expires, they will be denied or may face significant penalties.

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17 related questions found

What does lock of funds mean?

Locked Funds refers to the amount of funds temporarily debited to the Resellers Advance Account while an Order is being Modified, Deleted, Extended, Cancelled or Processed. "Confirming Locked Funds" refers to the act of permanently debiting this amount to the Reseller's Advance Account.

What is a fund lock up?

Lock-up periods are when investors cannot sell particular shares or securities. Lock-up periods are used to preserve liquidity and maintain market stability. Hedge fund managers use them to maintain portfolio stability and liquidity. Start-ups/IPO's use them to retain cash and show market resilience.

What is the meaning of lock period?

The lock-in period refers to the period of time during which the units of a mutual fund cannot be redeemed.

What happens after lock-up period?

After the lock-up period expires, insiders gain the ability to sell their shares on the open market. This often leads to increased selling activity, and the stock may experience a price drop.

What investments have a lock-up period?

Hedge funds and other closely-held investment vehicles also have a lock-up period, but hedge fund lock-up periods are much longer than those of IPOs. A typical hedge fund lock-up usually lasts about two years.

What is the lock-up threshold?

Lock-Up Threshold means at such time when the (i) the Company's capital stock actually held by Warrantholder and (ii) Stock exercisable pursuant to the Warrant, in the aggregate, exceeds 1% of the Common Stock of the Company on a as converted basis.

What are the benefits of lock-in period?

The lock-in period benefits both the company and investors by reducing short-term volatility and ensuring long-term stability in stock prices, thereby attracting more long-term investors to the market.

What is holding period for funds?

The holding period is calculated from the date when a share is bought till the date it is sold. It helps to determine the returns and taxing procedure of any security. The return and tax differ based on the holding period of shares.

How to calculate lock-up period?

At the moment the best way to calculate WIP lockup with the information you have is to run a WIP Comparison for 12 months, take your most recent Closing WIP balance, divide this by the sum of last 12 months invoiced values and multiply that number by 365.

What is the standard length of a lockup period?

How Long is a Lock-up Period? The lock-up period is usually 90–180 days, depending on the company. Although lockups used to be fairly simple – typically lasting 180 days – they are gradually becoming more complex. Investors and employees usually want lockups that are shorter so that they can cash out earlier.

Is lock-up period legally binding?

A lock-up agreement refers to a legally binding contract made between the insiders and underwriters of a company during its initial public offering (IPO) that prohibits them from selling any of their shares for a set period of time.

What happens after lock-in period?

The ULIP lock-in period is the duration within which you cannot make withdrawals from a ULIP. Once the lock-in period is over, you have the option to withdraw amounts from your plan. The policy term represents the total duration of the ULIP. This may extend beyond the lock-in period.

What is the usual lockup period?

Typically, lockup periods last between 90 and 180 days. Lockup periods are important for investors to monitor because the supply of stock available in the public market (known as the float) can increase significantly once insiders begin selling.

What is the lock-in period for banks?

The lock-in period in a fixed deposit refers to the duration during which the invested amount, along with the interest earned, remains locked with the financial institution without the possibility of premature withdrawal.

What is the interest lock period?

Since mortgage rates change frequently, a rate lock helps protect you from those fluctuations, so you won't pay more if prevailing market rates rise before you close on your loan. You can lock your rate for anywhere from 30 days to 120 days, depending on the lender.

What does locked pay period mean?

Your employee's contracts : if a locked pay period is in between the start and end date of your employee's contract, then the weekly contracted hours and the beginning of the contract date are locked and can't be edited.

What is the lock period of a contract?

Lock-in contracts in BPO are agreements where both the client and the service provider commit to working together for a set period, during which neither can end the contract without facing penalties. Think of it as a long-term commitment designed to create stability and predictability for both parties.

What is a lockout period?

A lockout period is a specific, predetermined amount of time after the loan's origination in which the loan cannot be prepaid. Lockout periods, when present, are defined within the loan contract and can be a negotiable condition in some situations.

Do mutual funds have a lock-up period?

There are two major types of mutual funds depending on their lock-in periods. Closed-ended mutual funds have a fixed term, usually 3 years, during which investors cannot redeem their units. However, Equity Linked Savings Schemes (ELSS) are open-ended funds that have a relatively short lock-in period around 3 years.