ABI publishes best-practice approach to lock-ups

The Association of British Insurers (ABI) has published its recommended best-practice approach to lock-up agreements.

What is a lock-up agreement? On an initial public offering (IPO) or a secondary market placing, investors with significant shareholdings are asked to enter into an agreement not to sell, or to ‘lock up’ their shares, for a defined period, except in certain circumstances. These circumstances may be specified, or it may be left to the sole discretion of the investment bank to waive the lock-up obligation.

What has triggered the new guidance? The ABI considers that lock-up agreements have a significant market function by helping to regulate the supply of shares and stabilise the company’s share price. The ABI considers that lock-up agreements are being waived increasingly by investment banks before the stated expiry date, which it considers to be an ‘unwelcome development’. Consequently, it has recently published its recommended best-practice approach in relation to lock-up agreements…

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