Is there a lock-in period for SME IPO?

Yes, there is a lock-in period for SME (Small and Medium Enterprises) IPOs in India, as mandated by the Securities and Exchange Board of India (SEBI). These lock-in periods are designed to ensure long-term commitment from promoters and to stabilise the post-listing share price. To read more about lock-in period, click here.

Lock-in Periods for SME IPOs

1. Minimum Promoter Contribution (MPC):

• Promoters are required to lock in a minimum of 20% of the post-issue paid-up capital.
• The lock-in period for this MPC has been increased from 3 years to 5 years.

2. Promoters' Shareholding in Excess of MPC:

The excess promoter shareholding beyond the 20% MPC is subject to a phased lock-in:

• 50% of the excess shares are locked in for 1 year.
• The remaining 50% are locked in for 2 years.

3. Non-Promoter Pre-IPO Shareholders:

• Shares held by non-promoter investors before the IPO are also subject to lock-in periods, depending on specific circumstances and SEBI regulations.

4. Anchor Investors:

• For anchor investors in SME IPOs, 50% of the allotted shares are locked in for 90 days, and the remaining 50% are locked in for 30 days from the date of allotment.

These lock-in requirements aim to promote long-term investment and reduce speculative trading in SME stocks post-listing.

However, there is no lock-in for retail investors. They can sell their IPOS as soon as they get listed on the stock exchange.