ABI recommendation on lock-up arrangements

On an IPO or secondary placing, the underwriters will generally require the company’s key management and shareholders be restricted from selling their shares without the underwriters’ consent for a set period. Such lock-up arrangement may also include a subsequent orderly marketing period during which shares may be sold but with the relevant shareholders only able to trade through the investment bank managing the IPO. The terms of the lock-up may permit one-off transfers in certain circumstances (e.g. to immediate family members or a family trust, subject to the provision that the transferee agrees to adhere to the lock-up or the acceptance of a takeover offer).

The Association of British Insurers (ABI) has published its recommended best practice in relation to lock-up agreements. It notes that increasingly banks are, at their sole discretion, waiving the lock-up before the stated expiry date. The ABI considers this to be an unwelcome development but accepts that it is driven by a perceived need on the part of banks to retain flexibility in this area…

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