Lockup means prohibiting the sale of listed stocks. Literally translating English into a literal meaning “to lock up” and “to fix capital” means. It is locked up by regulation by acquisition time, agreement etc for prevention of price collapse etc. When enterprises make new shares, company presidents, corporate officers, major shareholders, venture capital and other corporate shareholders are not allowed to sell their shares in the stock market for a certain period (usually 180 days) after the release I will tell you about the system of contracting before publishing to. By doing so, it is possible to prevent the stocks with a small amount of distribution from being sold in large quantities immediately after the IPO (immediately after the listing), so it is possible to prevent a sharp decline in stock prices. Therefore, existence / nonexistence in lockup has a big influence on initial price formation / secondary exchange rate of IPO, so it will be one Merckumar of IPO brand selection. In general, in the case where lockup is provided, its content will be disclosed in the prospectus so we will read the prospectus carefully. However, since there are transactions that do not affect the market price, there are cases where permissible transactions outside the market are permitted.
M & A also suffering a sharp drop in price is important
Lock-up may cause hindrance to the handling of corporate stocks if the stock price falls sharply, but it is also important to prevent it. Also, shareholders holding shares will be advantageous immediately after the IPO is released. If few shares sell shares while they are worth a lot, it will become inequitable for those who will use the shares in the future. In order to eliminate such inequality and enable sound stock trading, lockup has an important role. Therefore, lockup is a system necessary for properly managing stocks. Handling of shares becomes important because lockups are also related to M & A and there is a possibility of newly opening shares through merger of M & A. If a company absorbed by M & A merger becomes a major shareholder, you can not use shares as you like.